Primary residence as investment

[Siress]

Here's an interesting thing about real estate investments... I almost posted this in the mortgage thread but it's really only tangentially related.

Consider the typical home: ~1 acre land near a city, single residential structure, and access to the municipal road.
The land will appreciate at a rate that is, typically, most correlated to the relative population density increase of the local city compared to other cities under the same state/national law.
The structure will immediately depreciate a lot upon completion of construction, then marginally appreciate for a few decades with a few positive bumps thanks to renovations, then rapidly depreciate if/when the owner fails to maintain the structure, damage from natural disaster, or tangential factors such as increased crime rate, a decrease in school rankings, or simply a change in acceptable styling.

The lesson? Buy recent construction with as much land as you can afford in a healthy town with a stable future. Maintain the structure. Sell it before it needs significant remodel. Rinse and repeat.

Thoughts?

[Axel]

There's a lot of money to be made in real property if you know and have a passion for real estate and construction. My only advice would be to make sure this describes you and that you research the hell out of the local markets you wish to deal in, for all the reasons you mentioned above, plus surprise maintenance can be a killer

I am not so passionate about the topic so I personally treat my house as a home only. It's nice to have the equity if SHTF but I don't plan to ever tap it

[Shaftski]

Location, location, location.

A lot of rules get thrown out if everyone wants into the same zip code. I honestly cannot believe what even an empty lot goes for in my town right now.

Couple across the street just subdivided their property. One lot, 1.05 acre, asking price was 275K, nothing but tall pines and roots. It lasted 7 days on the market, with a bidding war well above the asking price. They sold the other lot w/ the existing house on it just as fast. Once again, multiple offers well above asking.

I own 2 acres and I'm getting out while the getting is good. I want to be on the market by the end of the year.

[Siress]

Recently had a property go in my area for 33% above asking. It's insane. Hundreds of thousands above asking...and these nutters are waiving inspection rights... It's insane.

[Mr. Hick]

Much like piranha with chum in the water... This ends. Poorly. Up here in NH the banks are now rescinding Construction loans and mortgages. Homes in my small town are up nearly 200% or more in approx 5 years.

Mostly you red and white plates fleeing taxachuesetts

[Paintslinger16]

I am on house number 14 lived in 6 stick built 1 of the 6, flipped the rest. Do it right, you will never lose money, I don’t recommend building to many variables.
One of the best rules of thumb, its true location, but buying the cheapest house in the best neighborhood you can afford is also good.
The cheapest house will, with minimal upgrades appreciate the most

[Cdn_Cuda]

I live in one of the hottest housing markets in the world. It cooled off slight but has shot right back up. People buying houses without inspections, no subjects, or even sight unseen. It's crazy. Bidding wars for houses and selling for well above asking price. My property has almost doubled in the 10 years I've owned it and is now worth more money than I'll ever be able to earn working and it's an older 70s home that will be bulldozed.

[Ego10Baller]

I'll leave this here: https://www.businessinsider.com/pers...planner-2021-5

[Grendel]

I would have to agree with the article, I try to accrue capital with each sale of a primary residence but the real goal is to not lose any capital, anything above that is gravy and more luck then skill.

[Grendel]

Main part of my retirement portfolio is land. Primarily I have been buying wooded lots or fields I can turn into tree farms since I was single and in the Navy. I harvest every 10-15 years and plant back this brings me a tidy sum that I turn around and invest in more land. When I finally retire I can either keep occasionally harvest wood or harvest and sell off acreage or just sell off as I need an influx of cash. I am up to 57 acres ranging for $8k-$25K/acre (estimated this last year), might be up a little from there. Harvesting yields me right now ~$85-$100K every 10 years [my lots are staggered for harvesting so that is total over a 10yr period]

I think investing in your primary residence as an investment is a little more complicated then implied. I am on my 5th home sale and have increased my available capital for down payments every time but that has not always been because of smart purchase decisions but more due to market timing. Real Estate investing is more about the market timing then the buy low sell high. I have made a large profit in 5 years with the current sale of our home but that is more the market then our investment. We were going to be happy to get back our down payment from 5 years ago but we are in a seller's bubble right now and have over trebled our down payment here. The down side is it is just as big a sellers market where we are heading and a lot of the will be eaten up by the inflated market. This is another temporary home (5-7years) with the goal of appreciating our capital investment but given the current market and market trends we are having a hard time being sure of our investment being able to appreciate. It all comes down to the market at the time of sale on the other end. Definitely pick a good location, but I have never bought a new home (other then the one I built myself) and I have been able to put a little sweat equity into the properties and make a profit.

Nothing is guaranteed in the housing market.

[Chuck E Ducky]

Buying Land / Real estate is a great investment. Key is knowing when to buy and when to sell. Also important to not get greedy. Now is time to sell. Not buy. Give it at least a year or two to buy for investment. When inflation catches up it’s going to destroy jobs. Those jobs will no longer be able to afford the upside down mortgages people took out recently and over payed to leave the city because people were literally burning them to the ground. People in my area sold there houses 75k-100k over what that are worth. The people that purchased them are under water as soon as they signed. Foreclosures have been pushed back for a year and will be dropping on the market in bulk around (June July). It’s a bubble and it’s about to pop. Wait for it to pop stash liquid cash and take advantage when others are blowing there stimulus on vacations and new car payments.

I buy and sell a lot of properties and have done very well for myself. Recently I have gotten to the point I can buy small homes in cash.

Capital gains is going to be the nail in the coffin. The game is changing Uncle Sam needs its cut to comp the debt. If they go up the market will slow to a screeching halt. Keep an eye on it and keep your most expensive investment as your primary residence and play the long game. (Slash 30% if it’s not)

Right now the US is getting to the point it can’t cover the interest on the money we are printing. Something has to give be careful stretching your investments now. Taxes have to go way up or it all comes crumbling down. Wait for the crash then buy buy buy, and hold for better times. It’s a long game the days of quick flips are out as soon as they rase interest rates, taxes, material costs, and capital gains. All at a time when the value of the dollar is getting slashed. Hang on it’s about to get bumpy.

The safety net of renting out extra property’s use to be decent. While rent is up. Renters rights are out of control now they can stretch out the time while not paying you. That eats profits quickly. Specially If you have multiple properties all leveraged on rent. It’s nice using others money to build Equity. But the recent rental climate makes it so you are left holding the bag when they all just stop paying and it takes a year plus to dig them out of your property.

[flyweightnate]

Buying the cheapest house in the neighborhood has worked well for us. The first is a rental now, but only because we got it so cheap we don't need to sell it to cover the mortgage.

That aside... home ownership gets pricey fast. I can't imagine having more than a very modest house, given costs of everything.

[Chuck E Ducky]

Definitely a guy I work with just flipped his house for over 200k profit. But he purchased it super cheap and then dumped 50k into the worst house in the block in an up and coming neighborhood in New Jersey. He Stages the house with discount furniture to get more out of it.

[sniper97]

Historically your house is a huge source of net worth for most people. They appreciate typically 1%/yr. Inventory is super low, const is super expensive. What will change that? Hard to buy in today's mkt. There are not alot of defaults coming, pmts put to the end of loans. Banks are not having a problem with loans. Everyone refinanced to ultra low rates and are not moving.

[vijil]

My house makes more money every year in appreciation than my salary, and it's untaxed. Gotta love NZ - consistent 10% annual property gains for over a decade now.

I don't really have savings, or shares, or anything much, but we decided to get the best house we could stretch to. So far: working brilliantly. I mean it's no doge, but it's good.

[Siress]

Nice. Now tell me how to make that happen here.