CFB
Is there a way to see if it is really the same house, or if it had a massive upgrade and just has the same street address? Maybe a new foundation at least? Otherwise it is a really scary story about overvaluation in Calif real estate...
I was looking at it with the zillow 'birds eye view' satellite imagery, which is pretty darn good. Looks like its had a little work done, and i'm sure its had many layers of remodeling. Bottom line is that it seems to have returned 3x what the same amount invested in traditional investments would have produced. That leaves some room to do a few upgrades.
Thankfully, my stocks don't have termites, and my bonds don't need painted...
But you cant live in 'em. And "Hey, theres a big party over at my stock certificate tonight!!!" just doesnt cut it.
By the way, as is fairly common when we have these discussions...it seems that theres an urgent need to wrap it all up in technicalities, special rules, and dire parameters...probably to force the point we feel we desperately need to make. And this ones got a couple of emotional hairballs wrapped around it.
I'm not a flipper. I'm not calculating annualized gains going forward 10 years and calculating net present value of improvements, cash flows or any of this completely unnecessary hoo-hah.
I buy a house to live in. I look hard to find something I really like thats priced reasonably against the area and any work I want to do to it or that needs work. I buy in an area thats usually had a little excessive sales slide.
When I decide on a property, I show up with a ladder and a bag of tools do my own inspection for major problem areas and along with my offer I include a 4 page letter outlining how the property would be catching fire and exploding if it werent for all the leaks.
When I do improvements, I do so with an eye towards eventual resale value and use sweat equity, contractor relatives, cheap labor, 10% off coupons, one year no interest/no payment deals, and anything else I can use to slice into the price.
If and when the value has risen, four, seven, fifteen years later, i'm tired of living there or my circumstances call for a different kind of property...I sell at the highest price I can get, minimize my sales costs, and take the profit.
No profit and no big motivator to sell? Then I'd wait a while until there is. It still has the value of being a residence as well as an investment.
While this strategy has limitations for a working stiff that also has to deal with employability, an ER has no such limitations.
Pick an area that you'd like to live in, one that has upside potential (aka the "value investment"), find a property with funny paint or that is priced well below market but needs a little work, live in it and do a little of this and that as you go, and if and when you want to move and the prices have come up...sell it and make your profit.
But lets not make a stupid discussion out of this. I'm not running a spreadsheet every morning to see if today is the day we sell and run like mad animals down the street with our belongings strapped to our backs.
If you choose to live in a non-appreciating area, to not spend a little time and money optimizing the value and livability of your home, to not take a little time to figure out how to do those improvements at low cost, or the home has to be placed in an emotional lockbox...then its just not for you! Some people dont like equities, bonds, gold, or beeever cheeeese.
However, that has little bearing on whether something is an investment or not.
We all talk about excruciating analysis of investments, carving into expense ratios, twiddling and slicing allocations, deep 100 year analysis of historical returns, construct complex simulators and run them ad nausem.
But jeez louise...spend some time on a half million dollar item with half an eye towards making money on it when you eventually sell? Inconceivable!
