As far as having money (FIRE) house is a bad investment. For investment to be terrible:
It should be not just an initial, but if we do it right, a relentlessly ongoing drain on the cash reserves of the owner.
It should be illiquid. We’ll make it something that takes weeks, no – wait – even better, months of time and effort to buy or sell.
It should be expensive to buy and sell. We’ll add very high transaction costs. Let’s say 5% commissions on the deal, coming and going.
It should be complex to buy or sell. That way we can ladle on lots of extra fees and reports and documents we can charge for.
It should generate low returns. Certainly no more than the inflation rate. Maybe a bit less.
It should be mortgaged! Another beauty of leverage. We can charge interest on the loans. Yep, and with just a little more effort we should easily be able to persuade people who buy this thing to borrow money against it more than once.
It should be unproductive. While we’re talking about interest, let’s be sure this investment we are creating never pays any. No dividends either, of course.
It should be immobile. If we can fix it to one geographical spot we can be sure at any given time only a tiny group of potential buyers for it will exist. Sometimes and in some places, none at all!
It should be subject to the fortunes of one country, one state, one city, one town…No! One neighborhood! Imagine if our investment could somehow tie its owner to the fate of one narrow location. The risk could be enormous! A plant closes. A street gang moves in. A government goes crazy with taxes. An environmental disaster happens nearby. We could have an investment that not only crushes it’s owner’s net worth, but does so even as they are losing their job and income!
Why your house is a terrible investment