Remember the great investment your house was when you bought it?

Your house is not an investment – enjoy it

Your house should not have been bought an as an investment. It should have been bought strictly to live in, to enjoy and to grow your family in. Of course everyone tells you these stories of the huge financial killings they made out of buying and selling their house, but that’s not the way it should be.

When do you sell?

The main topic of conversation among property investors is ‘when do you sell?’ Investors carefully plan and calculate what to buy and when to buy it. That gets them about halfway into the property investment business. The other half is much more difficult: When to sell? Many people get it wrong, and to make it even more challenging, we are living in the worst ever period for investment decisions.

Back to the house

It seems that the real victims of the house price boom were not the property investors who have been losing money since the tide started to turn, but people just wanting to have a nice place to live. For various reasons they were always unable to buy a house; not enough money, family problems, work problems, whatever. And then suddenly things turned around for them, they took various Cash Advances and Payday Loans and they managed to buy something. They took a mortgage and are now living in a house worth less than they paid.

What is relevant?

But all is not lost until the house is sold. The fact that it’s less than what was paid for it is not really relevant in, my opinion. The buyer lives in it, hopefully enjoys it, spends time and money maintaining and improving it; so what if it’s worth less than he paid for it?

What counts as a loss?

It may be that our house-owner will decide to live in the house for a longer period than he had planned, hoping to make a profit. But if he lives there for 17 years instead of 15, is it serious? Only if he is forced to sell at a sizeable loss in the case of a divorce, a job in another city, etc., will the whole house thing become serious.

My neighbor’s house

My neighbor is 86 years old. His much younger wife of about 75 has developed Alzheimer’s. I spoke to him as gently as I could about him selling his house and moving into a retirement home. I was stunned at his reaction. “But I’ll lose money on my house!” he cried.

My initial reaction was to say “So what?” Instead I said, “I still think you should think about this. Perhaps you could rent the house until the market revives. Perhaps you should try and sell; you may be lucky and find someone who is dying to live here. Perhaps someone has been transferred to this area. On the other hand, in a retirement center you will have proper meals every day, your wife will get all the assistance and care that she needs and you will be able to relax and not worry about her wandering off into the sunset.”

Meddling neighbor?

Not wanting to become the interfering neighbor, I stopped there and have never raised the subject again. I see them stumbling around the neighborhood, he walking unsteadily and she shuffling along behind him.

My conclusion is that his marriage to his house is stronger than his marriage to his wife – a ridiculous situation.