Mike.....
We looked for over a year at buying a house in the Napa Valley... a second home... I started at 2MM... nothing.... and raised that to 4MM... for which you got orange formica kitchen... or so far out that I couldn't take the drive into "town" (St Helena or Yountville) for dinner....
While laying in bed at our hotel (Meadowood Country Club -- you'd love it!) I realized the true cost of 4MM invested in a second home would cost me 200K in income loss (5% that I make off that now in TAX FREE bond income)... so that is "opportunity costs" which one has to calculate to see the true costs! I would need gardeners - and housekeeping - and property taxes and the gutters need cleaning and the windows washed - and more cars to make it "easy" to come and go... and furnishings.... so figure at least another 100K per year... so the income off another 2MM....
To which I said to the Misses.... "Ya know.... we could stay here a MONTH and our room is ONLY 60K".... so if we ate out every night for the month - we might spend 100K. Sounds ridiculous - until you compare the "loss" of ownership costs to just traveling and not owning or worrying about diddly squat. We're traveling.... I gave her a yearly budget (HA!) and we'll just blow that messing about rather than having a second house we'd rarely use since we're traveling anyway.
|