My $3,000 pen
October 16th, 2006 by Kenric
Last night I while signing another contract for another hard money loan that I’m funding, I thought about the history of the pen I was using. The pen came to mind because the other party was using a nice shiny diamond encrusted pen (no they weren’t real diamonds). I told them that my pen was probably more expensive than theirs. I went on to explain the story behind the pen.
It is just a simple red click pen that I keep in my car. I think it was early ’05 during the Arizona real estate boom where I was able to purchase a new construction home via lottery in Buckeye, Arizona. I picked a nice home, I believe it was 2,500 sf and $205,000. I signed the contract and put down my $3,000 non-refundable deposit. In return I got the signed documents in a nice 3 ring binder complete with business cards and a clicky red pen embossed with the builder’s name and logo.
Three months down the line, the real estate market was turning and I decided to back out. Of course, I did not get my original deposit back. I threw away the contract and the binder, but I kept the pen. In hindsight, I’m not sure if I made the right choice. The builder raised the home prices up to $298,000 before mine was done. Realtors were asking $325,000 for the finished product. I don’t think mine would have been built in time to catch the top of the wave. I’ll never know. Today (I just checked online), the builder is selling the same home for $261,000. With incentives, I’m not sure what the real price is.
I didn’t plan on it, but I always take this pen into the bank. I seem to use it only for financial documents. Maybe my $3,000 pen is symbolic to me. It represents the reality that I can lose money investing.
Honestly, I never even thought about that house and that pen until yesterday. I just went through my blog and I found it odd that I totally forgot to write about that investment before now.
Posted in Real Estate | 3 Comments »
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So, you really lost a lot more than $3000 on that deal. So, the pen has the cash value of $3000 plus the unknown symbolic value of what you could have grossed on the property.
Nice anecdotal post, I mentioned it in my last post.
By NLG on Oct 17, 2006
Well, I’m not so sure if I would have made money on the house had I closed. I believe it would have been a close call. If the builder is asking $260k, I would have to be listing around $245k to move it. After fees, I’d get about $230k. Toss in a few months of holding costs and I’d maybe have a $15k profit. That’s not alot of spread on a flip.
By Ken on Oct 17, 2006