Remodeling is A Waste of Time & Money.....

[SteveC]

Originally Posted by gburnet

I like the fact the writer recommended the following as a worthwhile investment...

"Declutter. Pack up at least a third of your belongings and store them ($200 to $300 a month for off-site storage)."

Right. There's nothing smarter than spending money every month to store "stuff". Unless it's when the amount of rent one has spent to store the stuff has exceeded the value of the "stuff". Brilliant.

Stuff !
http://www.youtube.com/watch?v=MvgN5gCuLac

[gburnet]

Originally Posted by SteveC

Stuff !
http://www.youtube.com/watch?v=MvgN5gCuLac

That's exactly what came to mind when I was typing the post, Steve. Classic!

[Carl Sperry]

Carlin is a legend for sure. He seemed a little subdued from a usual Carlin show.

[philthegreek]

I just wanted to add this to the mix and the notion that owning is not worth it. These numbers are for a typical middle of the road house in my area. Comparable to what I have and with a rental rate from the time I bought (to make things even)
Mortgage carried 200K at 6.5%, 30 yr fixed. vs, same size house rental with CT applicable laws.
Purchase- 1st yr $1681/mo (incl taxes)........................ Rental- 1st yr $1600/mo
taxes increase 4%/yr (higher than average)..... rent increase 5%/ 2yr (3% if 1 yr lease) use 5%
Purchase- last pyment $2564/mo (incl taxes).....................Rental - $3164/mo

purchase - total paid $735,636.00(incl taxes)...............Rental - total paid $828,336.00
you own the home worth $500K .......................................You own bubkus
You got to deduct interest and taxes in April....................You got to deduct JACK!
you actually paid about $500K for the house ................You actually paid $828K for nothing


I was not able attached the amortization schedule I used. So tell me how renting is better, and how not putting money in o increase the value is not worth it. If you guys really think this, what are you doing in the industry? do you really believe in what you do?? I'm just trying to understand the arguments.

[MarkMc]

There's more to owning the home cost wise than taxes, the new boiler, painting etc that will allow it to maintain its value. One can Hope™ that in being a member of the ownership society, what they own appreciates faster than the cost of ownership...and is more than the invested maintenance savings possibly accrued to the renter.

[Lavrans]

Originally Posted by philthegreek

So tell me how renting is better, and how not putting money in o increase the value is not worth it. If you guys really think this, what are you doing in the industry? do you really believe in what you do?? I'm just trying to understand the arguments.

I don't believe anyone has said that renting is better than owning- Within the author's reasoning I made the point that an investment property wouldn't be "smart" unless it outperformed the market- possible, especially if you can afford to buy the property outright (hence you can borrow money for next to nothing), but not guaranteed. My point was meant to help illustrate that her position remodeling is debatable. Along with the really bad idea of looking at the house you are buying to live in as an investment equal to or the same as a stock or bond.

Who wants to live in a bond? or stock?

But her point is good that if you're looking at a house as an investment the best thing to do most of the time is nothing except perhaps a coat of paint. But that's a pretty grim world to live in, and one in which most of us are doing something else.

[philthegreek]

Lav,
I also ran the numbers on investments. A $200,000.00 lump sum, invested at 6.5% and running 30 yrs, would return $1,322,873.00. As an aside, renting, by year 10 you would have paid out the initial purchase price of the home.
Mark,
Maintenance would not equate to $500K, but it would be interesting to add regular stuff like painting and roofing. I'll figure those in. Now, take into account that I'm talking about a "maintained" property, not a fix-er-upper.

phil

[Lavrans]

Phil- how do you plan on factoring in having the right to paint it any color you want, remodel it as you please and not have a landlord with the right to enter & inspect upon 24 hours notice for any reason they wish?

Money is a small reason for owning, IMO.

[MarkMc]

I admit it, I did not read the orig link out of laziness, but have seen similar arguments made with some regularity. Too many variables to make any real valid comparisons that hold for more than the next rate increase or change in school district map overlay... Buying a home 10 years ago and selling 3 years ago in a number of locales could have done real well opposed to buying 5 years ago and trying to sell now; but even that carries many ifs with along for the ride. Adding in maint costs also needs to also factor the investment loss potential. Then you have to wonder on the pride of ownership costs - A HO would be more likely to drop 5k on vanity carpet replacement vrs the renter with a higher rate.

[philthegreek]

Lav, I agree with you 100% I was addressing the "strictly" investment point of view. I want to be able to do what I want to my home, which is why we bought a house and sold our condo.

Mark, kinda lost where you were going with that, but agree that there are so many variables. I am assuming a stable community without redraws of maps and an established education system. Without those assumptions, it would be impossible to compare, but when someone looks for a house, these are some of the things they look at ( or at least should look at)
I find the notion of spending money on junk pleasure instead of a home quite ridiculous though.


phil

[MarkMc]

Another variable...

http://www.telegraph.co.uk/expat/exp...n-bedroom.html

[Overbuilders]

Yeah, I found a couple of those in the crawl space of my last house. Sold quick at a garage sale.