This Inheritance is a Hindrance
Leigh inherited 1,100 acres of timberland worth $2 million with a $1.5 million loan. Leigh paid off $500,000 of the loan, but a tornado destroyed the timberland. Dave tells Leigh to sell it.
QUESTION: Leigh in Birmingham inherited 1,100 acres of timberland. At the time of the inheritance, it was worth $2 million with a $1.5 million loan on it. Leigh has paid off $500,000 of that loan, but the tornado in April destroyed the timberland. She can sell it at the cost of the note or hold on to it. Dave tells Leigh to sell it.
ANSWER: If you had $500,000 in your pocket and you did not own this property and could buy this particular piece of property for $1.5 million, putting $500,000 and getting a 6% interest rate on the $1 million, would you buy it if you didn’t own it? If not, then you need to sell it. For whatever reason that you wouldn’t buy it again is the reason that you don’t need to keep it. You don’t think the market’s good. You don’t fool with it. You don’t know anything about it. You think it’s not going to recover anytime soon. You don’t want to put any more effort into it. Whatever the reason is that you wouldn’t buy it again is the same reason you shouldn’t keep it.
You’ve got an alligator. It’s only going to pay off at the end of the game. The beginning of the game doesn’t pay. It’s not a game you’re in, and by the way, as of this moment, all you’re doing is getting your money back—not any extra benefit for having done all of this. I’m getting out if I’m you. It’s a good thing to stay away from stuff you don’t know. That’s a good place to lose money.