re: Crossed the 100K net worth barrier over the weekend

Next time I have to fill out a personal balance sheet at the bank I'm gonna put my home value and the mortgage balance on the liability side after reading this thread

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If a 35 year old couple has 200k in equity in their home, 100k in 401k, 25k in savings, and 50k in college savings for kids. They have no outstanding debt except for another 200k balance on the mortgage. What is the net worth?

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375K

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For me, I builted my house 12 years ago doing 90% of the work. 2700/3900 under roof. Built it for under 67k. Payed off in 7 years. Very little up keep. If I were to put it up forsale, I could easy get over 300K.

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So building > than buying ? I probably sound like a whiny bitch , but, I don't want to deal with contractors. But yeah, if I could build a nice home for < 75K it would be well worth it.
Congrats on your success

Houses are tricky. I am 24 years old, been working for two years. I am up about $20,000. I own a house (major rennovations to add roughly $65,000 that cost me $10,000 cash - all DIY) and some investments. However, that is offset by student loans and mortgage. Houses can be great investments. thanks to my house I am in the black

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You understand that you are in the minority of homeowners, right?

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See, that is the problem the last 20 years. People have been buying these big houses with little to nothing down towards it. If these people would of took the time and just put a little work into building there homes, they would of saved a ton of money. Turn key, my arse! One has just have to be willing to put the time into a project.

Hell, even if they would of took the time to just paint inside, that in itself would save them an avg of 5K. All the info is out there on the net, so no how is not a problem.

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I don't want to burst your bubble, but how exactly do you think you added 65k to your home value with 10k of renovating?

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READ!

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- all DIY

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Labor is 40%+ building now.

YOUNG and some older people just don't want to get there hands dirty anymore. PUSSIES!

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YOUNG and some older people just don't want to get there hands dirty anymore. PUSSIES!

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Maybe where you live, but in my neck of the woods most land has been sucked up due to having one of the top ten public school counties in the US. Developers who suck up these tracks have master builders guild list and no one outside the guild can build in specific development. Due to my years of business with developer where I live, for a fee (25k) they'll let me GC with their name on project, but that is a rare rare exception. 99% of other home owners would not have that luxury.

The cheapest plat without restriction right now in 37069 is 155k off busy street. The least expensive I'd consider is 6 acre plat for 495k. 99/100 someone dropping this type coin on land would lose money playing GC.

Again your material cost would be quadruple in today's economy.

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Labor is 40%+ building now

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No, it isn't. And never was. Before crash we saw some 30%, but material costs are too high and appraisals are too tight to warrant. Builders are lucky to suck out 15% these days.

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I'm sure every successful business owner in history would disagree with you.

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I am going to take a stab at this because I have had this conversation with an econ professor in class

I know I am a little bit late but technically speaking if you have cash in your hand, that is considered an asset though it is producing nothing of value.

Also, technically speaking, having cash on hand is costing you money in opportunity cost as investing in say bonds will give you $ x (1+i ) > $ where $=original money amount

This is an argument against "Assets produce income/don't cost you anything"


Then concerning the ROI of owning a house, what you are saying makes sense if you take the cost of owning said house and subtract the next best alternative living situation. (-$) - (-$) and if that result is >$0 then you are having a beneficial economic living situation that is giving you positive returns. If it is <$0 you are in a poor living situation


Then continued, in terms of valuing it as an asset and what Robert K says (read his books meh), people only see houses as the growth in value of their home. What they fail to factor in is the aforemetioned costs of owning and maintaining said home. (Repairs, constructions, renovations, property taxes, larger homes bigger A/C heating bills and so on). You should then be able to value the growth of your home as an asset as

(Annual growth in value - yearly costs of owning home) = Realized growth of the home



So if you are taking the value of your home as an asset shouldn't you be able to look at is as such?


Home Value - (Years in home)(Costs of owning home per year)


Then if you home value stays constant, you can just look at it as a depreciating asset. Still is an asset though

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A home is still not a depreciating asset though. I wouldn't look at it like that. The home value may increase or decrease in value depending on the situation but it is not a depreciating asset.

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That is under the assumption that there is no growth in home value so it is a constant value. Because you have your initial asset minus cost of holding, the cost of holding is a yearly liability and since you are subtract ing from the constant value that isnt changing, the v a lue of your asset is going down or depreciating

Very similar to flow of capital model.

Just imagine a home which you own empty that you receive no benefit from other than value. It is already paid off.Also assume that home values stays constant (hypothetical)

How much money you will gain from selling your asset = value of asset minus cost of having asset

Think of owning a brick of gold in a safety deposit box and value of t he brick today i s 50$ and value of brick tomorrow is 50$. The cost of one night in a safety deposit box is 1$

Your economic value of the brick today is 5 0$ while tomorrow it is 49$ dueto cost cost of safety deposit box


With a home same concept applies. With growth in the economy ,you just add total real growth