Let's make a deal question.

[Scanner]

No answering "depends" on this poll.

You have to pick one or the other in that you can learn what's important to you - money or freedom. However, you can substitute the "Condo" for any "illiquid" type of investment. . .like say even a $100,000 lump sum to your 401(k) or your pension.

[Broken Arrow]

Fortunately, it does not require a "depends" because I think it's a no-brainer. Almost always, $100,000 > $25,000 regardless of asset class.

Perhaps it would be better to leave out the quantity and ask the more open question, "Do you value money more or freedom more?"

[Scanner]

No brainor? Really?

I would pick the $25,000. I value liquidity. Now. . .only to a point. I think 1/4 is about the point. . .if you were to offer me $10,000 or a $100,000 house, I would pick the house.

(assuming very illiquid conditions in real estate, like nowadays)

[MonkeyMama]

I'd take the $100k.

On the condo - it DOES depend where it is. Though I suppose I would not take any condo worth $100k. They are FAR more valuable and sellable in expensive areas. (& thus, would cost much more - not sure I'd see much value in a condo you could buy for $100k).

But, I know know. No "ite depends," and not what you are getting at. Heck yeah, I'd take a $100k investment over $25k. I'm with BA on this one.

[MonkeyMama]

I have a caveat - real estate can be expensive to upkeep and I would think more about it. But you said we could pick retirement assets. Those would be very different, in my opinion. Retirement assets don't require HOA fees, property taxes, and repairs.

[disneysteve]

I say "no brainer" too. I'd take the 100K condo and immediately put it on the market for well below the going rate but high enough that I'd walk away with more than 25K after all expenses and taxes. If it is worth 100K, surely I could find a buyer at 75K or 65K or 50K.

[Caoineag]

I took the 100k condo only because you told me it could be a 100k deposit to a 401(k). A 100k condo would not count as an investment in my book, only as a liability ( I already have a house to live in). Otherwise, I would have chosen the $25k.

[disneysteve]

If you change the condo to 100K into my retirement account that becomes even more of a no-brainer. Why would anyone pick 25K over 100K?

[Caoineag]

I say "no brainer" too. I'd take the 100K condo and immediately put it on the market for well below the going rate but high enough that I'd walk away with more than 25K after all expenses and taxes. If it is worth 100K, surely I could find a buyer at 75K or 65K or 50K.

Actually knew an entreprenuer who tried to sell a "100k" condo for those lower prices and still couldn't move it (he had it for 3 years before finally selling it for 50k). With condos, you can lose a lot of value from just one change in the HOA assessments. I have seen this happen more than a couple of times so I am leary (we also had a whole complex nearby of 100k+ condos selling for 30-40k because people couldn't afford a massive special assessment).

[disneysteve]

Actually knew an entreprenuer who tried to sell a "100k" condo for those lower prices and still couldn't move it (he had it for 3 years before finally selling it for 50k). With condos, you can lose a lot of value from just one change in the HOA assessments. I have seen this happen more than a couple of times so I am leary (we also had a whole complex nearby of 100k+ condos selling for 30-40k because people couldn't afford a massive special assessment).

Good point. I guess it would depend on where it was and what the circumstances were. Still, I think I'd take the 100K property. I don't want to be a landlord but if I owned the property free and clear, I could probably handle renting it out for a little while until it sold.

[buildmybudget]

Actually knew an entreprenuer who tried to sell a "100k" condo for those lower prices and still couldn't move it (he had it for 3 years before finally selling it for 50k).

Even at a rate of 10%, the 50k in today's dollars would be worth over 37k so you would still take the condo. The entrepreneur would have had an excellent return if he got the condo for free(in the case of the poll).

[Scanner]

The condo was probably not the best choice - $100,000 of land may be a better choice because that tends to be even more "illiquid" than condos (you need a speculative land developer to buy it).

I think liquidity commands a premium, at least in my life (and I respect for the more stable it doesn't)

The condo is going to have taxs, repairs, assn' fees that even if it doesn't sell for 7 years let's say, it eats into your investment.

What's the saying, "Cash in hand is better than a pig in a poke?" ( I am probably mixing up my sayings, lol)

[Scanner]

I wasn't sure where to place the "break-even" point for liquidity in this poll.

Like if I am playing "let's make a deal". . .what if I offered you $75,000 in cash or $100,000 piece of undeveloped land.

There's gotta be a point where the cash means more than the potential investment value with an equity. Every man and woman has their price.

[disneysteve]

The condo was probably not the best choice - $100,000 of land may be a better choice because that tends to be even more "illiquid" than condos (you need a speculative land developer to buy it).

what if I offered you $75,000 in cash or $100,000 piece of undeveloped land.

There's gotta be a point where the cash means more than the potential investment value with an equity. Every man and woman has their price.

That would be totally different. Selling undeveloped land is typically harder than selling an existing home. In that case, I would want to say "it depends" but for the purposes of the poll, I might take the 25K and be done with it.

In the offer of 75K cash or 100K of land, I would absolutely take the cash.

[Broken Arrow]

what if I offered you $75,000 in cash or $100,000 piece of undeveloped land.

Now, THAT is a much better comparison.

The issue here appears to centered around liquidity. If that's the case, I think it needs to be examined within some kind of context rather than in a vacuum.

For example, if the original condo is also your residence, and you're not in a hurry to find another place to live, then liquidity may not be an issue as opposed to that being an investment property.

Another factor that has yet to be brought up has to do with upkeep cost. A condo and even undeveloped land is subject to at least property tax, whereas (net) savings does not.

Related to that, we also have to consider the time frame. Perhaps it's worth the upkeep cost for a few short years, but it would be quite a different story if I am expecting to maintain it for the next 30 years.

Yet another factor is future potential. $100,000 in old North Korean Won wouldn't be that good of a currency right about now. For that matter, I wouldn't want a depreciating asset either, such as a car.

So, in the larger scheme of things, It Depends. Either way though, it's a nice problem to have.