Hey folks, if you were donating to The Pacific Room, could you make sure you're settled up with PirateNinja? (Or just let him know you haven't forgotten) Thanks!
Purchase price: $46,000 (including closing) Total spent on repairs and infrastructure so far: $51,000
Guesstimation of remaining repairs: $30,000 (prior to occupancy permit) Total funds remaining after that: -$21,000 (plus a $30,000 loan) Oops
Icrontians that have donated: 39 people ICHQ rooms/spaces named: 19 ICHQ rooms/spaces available: 3 (back porch, vestibule, downstairs hallway - $250 each) Total donated by Icrontians: $14,000, of which $10,000 was from naming rights (with $400 more pledged) Total donated by others: $12,000
I can't calculate the hours of work invested by Icrontians, but it's hundreds by now
PS If you'd given me an all-in estimate of $125,000 back in January I would've told this whole project to screw right off. Dammit.
You almost did!
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Straight_ManGeeky, in my own wayNaples, FLIcrontian
Lincoln, we have houses here, small 2-Bedroom ones in flood zones, that sell for $250,000 to $300,000 again and folks moving into the area buy them to tear them down and build new $500,000 to one million dollar houses on TWO lots next to each other. Thus total in for them in this neighborhood is now 1.5 to 2 million dollars for a three bedroom house that is two story.
So, $125,000 is an utter bargain for a three story 4-bedroom house from my POV.
Perhaps my perception is colored by living in a different housing market, but $125K for that house finished seems like a great deal.
Finished? No, "able to get the certificate of occupancy" so we can legally live there. That's all we're gunning for here.
It is a great deal, but so's the $750,000 mansion on the other side of town. That doesn't mean I'm buying the damn thing.
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Straight_ManGeeky, in my own wayNaples, FLIcrontian
Well, you are improving an asset, financially. I understand about the personal wealth part, but for many the house has traditionally been the biggest part of personal wealth. Mom and Dad spent about $150,000 on the house, and then bought carpet, painted the house inside and out with help from me and my brothers, and later did other improvements, again with help from brothers.
In essence if you handle things right over 5-10 years, you have increased wealth from sweat equity poured into your house and your total assets will have grown. Perspective from an older guy, growing up in a growing family which needed bigger and bigger houses and poured a lot of sweat equity in houses-- Dad taught us kids how to fix things and pay our way in life. I CAN"T do that now for myself, am disabled, and feel guilty about it. 125K is huge now, but the house will sell, if maintained right after major fixing, for 1.5 to 2 times what you paid for it and put into it initially if you can be patient about selling.
Also, Icrontic has chipped in a bunch-- in money and sweat equity. So you folks are keeping it running.
Unfortunately, John, since the housing bubble popped most homes have become more of a liability than an asset. I know many people (myself included) who currently live in homes that subtract from personal wealth rather than add. A house is such an illiquid commodity that placing a tangible asset value on it is very difficult in this market.
That being said, your house can be viewed as just that: the place where your family lives. That's what makes it worth paying for, since it is satisfying that basic human need for shelter.
My house is a massive liability. It was the worst purchase I have ever made in my entire life. It has absolutely eroded and evaporated my personal wealth, and I am far worse off now for having purchased it. I was doing pretty good when I bought it, and now I am flat broke and probably will be for years.
I think it would be very challenging to sell the house for over $110,000, even fixed up, in the next 5-10 years. The average range in Woodbridge seems to be 65-80K. Not that I'm selling it any time this decade.
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midga"There's so much hot dog in Rome" ~digi(> ^.(> O_o)>Icrontian
Unfortunately, John, since the housing bubble popped most homes have become more of a liability than an asset. I know many people (myself included) who currently live in homes that subtract from personal wealth rather than add. A house is such an illiquid commodity that placing a tangible asset value on it is very difficult in this market.
That being said, your house can be viewed as just that: the place where your family lives. That's what makes it worth paying for, since it is satisfying that basic human need for shelter.
This.
Unless someone is paying you rent for living in it, a house is not an asset, it is a liability.
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Straight_ManGeeky, in my own wayNaples, FLIcrontian
True, @Ghoosdum , but here in Florida housing values are rebounding. What now is true for houses is changeable, yes, but it fluxes usually back to positive if one can wait long enough after buying and paying for the thing-- if lots of the maintainance can be done by the owner and relatives.
It is BOTH things, @Ghoosdum. CAPITAL long term asset and place that is more than just a house. Long term, read more stable on 10 year plus average ranges. Folks who want to move a lot and career building need to rent more in today's economy, unless they can work (like Lincoln does) remotely. If they work remotely, they can live anywhere that has a remote-in connection that is reliable. Thus, they can afford to BUY and wait out depressed value swing-back time frame to appreciated value. Lincoln has a unique opportunity given his circumstances. And Lincoln is core to Icrontic now-- very much so. It is because Lincoln works remotely that he does not have to relocate a bunch unlike many folks who do not have the luxury of staying until things improve. primesuspect is rooted in Detroit, he will contribute a lot of sweat equity to ICHQ and that will count for a lot-- he can also remote in to Icrontic and mange as community manager.
I am not attacking, just trying to calm them as they seem to be somewhat rooted in present and have the luxury due to circumstances of being able to look long term. They are deep enough into this house that they need to finish it and live in it, not give up and spend huge chunks to start over, also.
Unless someone is paying you rent for living in it, a house is not an asset, it is a liability.
No, unless you are in one of the areas hardest hit by the housing crunch, MOST people's homes are worth more than they owe on them, thus they are an asset, not a liability, and always have been. Typically houses appreciate in value, not depreciate.
Eric, if the house was purchased before around 2001 and the owner managed to avoid taking out any of the equity after that point, then yes the home can be worth more than what was originally paid. However, for the majority of current market homeowners, this doesn't seem like it is the case. I bought my house in 2005 for $125,000 and it is in a market that was largely unaffected by the housing bubble, and it is currently worth about $110,000. My wife bought her house in a market that was a bubble market, but she bought it at FMV after the bubble popped, but it is currently worth about $80,000 less than even that post-bubble purchase price.
There's no way that either house will see a return on "investment" allowing them to become assets by your value prop until 2020, at least.
Lincoln's math on the Sullivan house above seems correct; since the cost to improve the house is more than 50% of the value, the total cost will be higher than market value for quite some time.
Unless the market pricing is undergoing the kind of escalation experienced during a bubble, it is rare for housing values to appreciate more than 2% over inflation, and that 2% is largely eaten up by the additional expenses of owning vs. renting (maintenance, property taxes, interest, etc). This leaves the normal market value appreciation of a home as mostly a break-even proposition.
What redeems the house as a vehicle for building personal wealth is not any great increase in housing prices, but rather the fact that it is essentially a forced savings method, assuming the equity is not withdrawn. In a country where the personal savings rate is essentially 0%, owning a home is a way to lock your money away in what is an illiquid medium so that average Joe American can't easily spend the value.
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midga"There's so much hot dog in Rome" ~digi(> ^.(> O_o)>Icrontian
Unless someone is paying you rent for living in it, a house is not an asset, it is a liability.
No, unless you are in one of the areas hardest hit by the housing crunch, MOST people's homes are worth more than they owe on them, thus they are an asset, not a liability, and always have been. Typically houses appreciate in value, not depreciate.
Houses don't make money for you. Yes, it is a thing that you own that is worth money, but regardless how much a thing is worth, and no matter what the banks who want to loan you money with that thing as collateral, or the gubmnt who wants to tax you for it, or the insurance companies who want to protect it (for a "nominal" fee), if it is not contributing to your positive gains it is not an asset.
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Straight_ManGeeky, in my own wayNaples, FLIcrontian
Houses don't make money for you. Yes, it is a thing that you own that is worth money, but regardless how much a thing is worth, and no matter what the banks who want to loan you money with that thing as collateral, or the gubmnt who wants to tax you for it, or the insurance companies who want to protect it (for a "nominal" fee), if it is not contributing to your positive gains it is not an asset.
Houses eventually repay someone something. They are not pure money-dumps. They are long-term assets rather than short term assets. They are, moreover, CAPITAL long term assets. CAPITAL assets have an average return minimum of 15 years if wisely bought. Long-term assets flux within 10-15 year periods but over that time range tend to be more appreciative.
Let's take bubble period flow of house, a period of sudden appreciation. Had Mom sold her house just before Hurricane Charley she would have gotten a 125% GAIN of appreciation on it. Now, selling it close to now, it would have only appreciated 25%. This area is a popular retirement area.
Opportunity costs do not equate to depreciation, they are pure opportunity losses or gains and usually temporary. For business, it is important to evaluate opportunities before investing. For LIFE, broader strategies apply.
Location Location Location, gents! Appreciation or liability TOTALY depends on location. True 6 years ago my house was worth $169,000 and I paid $150,000 for it. Now Id be lucky to get $145,000 out of it, BUT if my house were 20 min away it would be worth $165,000 easy.
JBoogalooThis too shall pass...Alexandria, VAIcrontian
If I can jump on it next pay period I'll toss in $250 for one of the spaces left and contribute to that house becoming a home And we'll certainly put in some labor hours when we get there in Oct for ICOK, damn the weather.
Houses don't make money for you. Yes, it is a thing that you own that is worth money, but regardless how much a thing is worth, and no matter what the banks who want to loan you money with that thing as collateral, or the gubmnt who wants to tax you for it, or the insurance companies who want to protect it (for a "nominal" fee), if it is not contributing to your positive gains it is not an asset.
Don't make a blanket statement like that. My parents are certainly not the only ones, but I will use them as an example. House built in 1979, Mortgage paid off x years ago. House and property now valued at almost 5 times the original mortgage/loan.
I am not talking about 2, 5, maybe even 10 years in a house, but all I wanted to get across is that you shouldn't be using the absolutes that you used in your statement. Homes CAN make money for you and they ARE an Asset.
When calculating someone's net worth (and yes we all have a net worth positive or negative) any home you own will be listed in the Asset category with its value and then any outstanding mortgage amount in the liability category. If there is no mortgage, then the house is purely an asset. That does not mean you made any money on it, this is just an example to explain why it IS an asset.
My parents also bought their house in the early 80s, and the value may have gone down in the last 10 years, but it certainly is worth much more than when they bought it, and it has been paid off for a few years. Wonder what rent would cost for 30-some years...
If you live somewhere long term like that, you are more likely to make money on the house, or at least less likely to lose money on a house (also renting). Similar cases with cars. If you like a new car all the time, get a lease. But if you plan on driving a car until it dies, purchasing is typically cheaper than leasing/renting.
Unless someone is paying you rent for living in it, a house is not an asset, it is a liability.
No, unless you are in one of the areas hardest hit by the housing crunch, MOST people's homes are worth more than they owe on them, thus they are an asset, not a liability, and always have been. Typically houses appreciate in value, not depreciate.
Houses don't make money for you. Yes, it is a thing that you own that is worth money, but regardless how much a thing is worth, and no matter what the banks who want to loan you money with that thing as collateral, or the gubmnt who wants to tax you for it, or the insurance companies who want to protect it (for a "nominal" fee), if it is not contributing to your positive gains it is not an asset.
I had my house for 2 years and made $12k. Sold it for $17k more than I paid minus $5k in renovations.
Comments
Purchase price: $46,000 (including closing)
Total spent on repairs and infrastructure so far: $51,000
Guesstimation of remaining repairs: $30,000 (prior to occupancy permit)
Total funds remaining after that: -$21,000 (plus a $30,000 loan) Oops
Icrontians that have donated: 39 people
ICHQ rooms/spaces named: 19
ICHQ rooms/spaces available: 3 (back porch, vestibule, downstairs hallway - $250 each)
Total donated by Icrontians: $14,000, of which $10,000 was from naming rights (with $400 more pledged)
Total donated by others: $12,000
I can't calculate the hours of work invested by Icrontians, but it's hundreds by now
So, $125,000 is an utter bargain for a three story 4-bedroom house from my POV.
It is a great deal, but so's the $750,000 mansion on the other side of town. That doesn't mean I'm buying the damn thing.
In essence if you handle things right over 5-10 years, you have increased wealth from sweat equity poured into your house and your total assets will have grown. Perspective from an older guy, growing up in a growing family which needed bigger and bigger houses and poured a lot of sweat equity in houses-- Dad taught us kids how to fix things and pay our way in life. I CAN"T do that now for myself, am disabled, and feel guilty about it. 125K is huge now, but the house will sell, if maintained right after major fixing, for 1.5 to 2 times what you paid for it and put into it initially if you can be patient about selling.
Also, Icrontic has chipped in a bunch-- in money and sweat equity. So you folks are keeping it running.
That being said, your house can be viewed as just that: the place where your family lives. That's what makes it worth paying for, since it is satisfying that basic human need for shelter.
Unless someone is paying you rent for living in it, a house is not an asset, it is a liability.
It is BOTH things, @Ghoosdum. CAPITAL long term asset and place that is more than just a house. Long term, read more stable on 10 year plus average ranges. Folks who want to move a lot and career building need to rent more in today's economy, unless they can work (like Lincoln does) remotely. If they work remotely, they can live anywhere that has a remote-in connection that is reliable. Thus, they can afford to BUY and wait out depressed value swing-back time frame to appreciated value. Lincoln has a unique opportunity given his circumstances. And Lincoln is core to Icrontic now-- very much so. It is because Lincoln works remotely that he does not have to relocate a bunch unlike many folks who do not have the luxury of staying until things improve. primesuspect is rooted in Detroit, he will contribute a lot of sweat equity to ICHQ and that will count for a lot-- he can also remote in to Icrontic and mange as community manager.
I am not attacking, just trying to calm them as they seem to be somewhat rooted in present and have the luxury due to circumstances of being able to look long term. They are deep enough into this house that they need to finish it and live in it, not give up and spend huge chunks to start over, also.
There's no way that either house will see a return on "investment" allowing them to become assets by your value prop until 2020, at least.
Lincoln's math on the Sullivan house above seems correct; since the cost to improve the house is more than 50% of the value, the total cost will be higher than market value for quite some time.
Unless the market pricing is undergoing the kind of escalation experienced during a bubble, it is rare for housing values to appreciate more than 2% over inflation, and that 2% is largely eaten up by the additional expenses of owning vs. renting (maintenance, property taxes, interest, etc). This leaves the normal market value appreciation of a home as mostly a break-even proposition.
What redeems the house as a vehicle for building personal wealth is not any great increase in housing prices, but rather the fact that it is essentially a forced savings method, assuming the equity is not withdrawn. In a country where the personal savings rate is essentially 0%, owning a home is a way to lock your money away in what is an illiquid medium so that average Joe American can't easily spend the value.
Let's take bubble period flow of house, a period of sudden appreciation. Had Mom sold her house just before Hurricane Charley she would have gotten a 125% GAIN of appreciation on it. Now, selling it close to now, it would have only appreciated 25%. This area is a popular retirement area.
Opportunity costs do not equate to depreciation, they are pure opportunity losses or gains and usually temporary. For business, it is important to evaluate opportunities before investing. For LIFE, broader strategies apply.
True 6 years ago my house was worth $169,000 and I paid $150,000 for it. Now Id be lucky to get $145,000 out of it, BUT if my house were 20 min away it would be worth $165,000 easy.
CA is wacked, so they don’t count!!!!
I am not talking about 2, 5, maybe even 10 years in a house, but all I wanted to get across is that you shouldn't be using the absolutes that you used in your statement. Homes CAN make money for you and they ARE an Asset.
When calculating someone's net worth (and yes we all have a net worth positive or negative) any home you own will be listed in the Asset category with its value and then any outstanding mortgage amount in the liability category. If there is no mortgage, then the house is purely an asset.
That does not mean you made any money on it, this is just an example to explain why it IS an asset.
If you live somewhere long term like that, you are more likely to make money on the house, or at least less likely to lose money on a house (also renting). Similar cases with cars. If you like a new car all the time, get a lease. But if you plan on driving a car until it dies, purchasing is typically cheaper than leasing/renting.