Wednesday, August 1, 2007

House Wisdom: Part One

“Our houses are such unwieldy property that we are often imprisoned rather than housed by them.” - Henry David Thoreau

As soon as one is able, one should buy a house. A house is a fantastic investment though it does cost a bit more then renting and it will take time, energy, money, and occasionally stress to maintain. I feel blessed to own a house. I'll tell you why - because every night while I'm sleeping, my house is making me money. How you ask? Because it is appreciating in value.

Houses almost always appreciate in value. Occasionally they will plateau or even decrease for awhile during a bad market (unless you bought it in a one-industry town), it will eventually go back up in value. Almost everyone can buy one. When we bought our first house Jobina felt sick but I felt like it was the smartest thing I had ever done. I felt sick (literally) about renting for 7 years! Renting may be convenient and occasionally necessary but its also like throwing away money. Renting gets you nothing in the end.

So here's the kicker; owning one house doesn't really get you anywhere. True, it's better then getting nothing (throwing away your money renting) but think about it. Let's say you buy a house for $100,000 and two years later sell it for $130,000 (that's what appreciation has been like in Winnipeg). You think, "Wow, I just made 30 grand!" But, if you want a new house to live in you need to go buy another one which has also been appreciating. Thus buying a new home cancels out the appreciation profit of your old one.

The solution: buy at least two houses. Getting a first home is a lot easier then you think. Then when you buy and eventually sell a second house, there will actually be real profit. Jobina and I are economically challenged but we have two houses and will hopefully some day buy some more. This may seem impossible, but if you already own one house, you almost certainly can get another. Think I'm crazy? Tomorrow, I will share some simple ways to do this.

May Light increase!


Lee said...

I actually can't wait to hear this - I think it's such a smart investment, I'd love to know how you guys got into it!

siiri said...

hei humble man i ve put you in my reading list, lets