^This^
People who are too focused on the resale value seem to be missing that you have to live in the house before you sell it. Usually for years, sometimes decades.
If you want an investment, try mutual funds.
I find the OP’s question absurd.
Typically White Privilege should have prevented the couple from loosing money on such an investment.
I wasn’t aware that white privilege protected against stupidity.
I’m two pink eyes away from albino and I have managed to loose my money on a number of stupid things. Fuck, I wish my privilege protected me from loosing money.
The problem is you need to treat something like an investment. Haimerl and Kaebnick spent their retirement savings and borrowed money on top of that to buy and renovate this house.
It’s not necessarily a problem to spend way more for a house than it’s worth. If you love the house and will live there a long time, consider the premium as part of the requirement for the benefit you get. But in that case, you need to be able to afford to live there. That means being able to pay off the loan and stay on top of regular upkeep. It sounds like this couple may struggle to even do that.
Sometimes I news reports of unique houses in my city and it’s clear the owner isn’t going to make a profit when they sell. They do kooky or artistic things because they enjoy living in a unique looking house. But when they go to sell, they’ll have trouble finding someone who has their same taste. The only way they’ll make a profit is if the area appreciates so much that the new owner is buying the place for the land much more than the house.
It’s not a problem to spend more on your house than you can sell it for. Treat your house like a vacation trip; it’s something you spend money on and enjoy without any expectation of a financial return.
But if you’re going to do this, you have to live within your means. Don’t spend more money on a house or a vacation trip than you can afford.
Maybe we should start a movement: White Money Matters.
I didn’t answer your poll because the answer is both not possible and completely irrelevant at this point.
They are happy and don’t care about the current stated value because they bought this and worked on it with the plan to live in it - not sell it.
Of course you would generally watch the value as things in live occasionally change and force you to adjust but they are happy now because the house is delivering what they want - a place to live that they are happy with in the area they wanted to live.
Who really cares what your house is worth, if you like your house and have no reason to move? I have only a vague idea what my house is worth (although I’m pretty sure more than I paid for it 15 years ago). If I ever need to sell it, then I’ll worry about it.
Cashing in your retirement and going in to debt for your house - that’s dumb, whether your house is worth $100k or $10M.
No, that’s not how it works. I’ve explained to people that if black people move into their neighborhood the white folks won’t turn black. Their grandchildren might.
They are White, they will be alright! Until someone burns there house down for calling the cops on the kids that are cutting through or hanging out in “their” neighborhood.
I’m assuming that is a dressing room, which is all the rage among white people.
White people are just naturally smaller in the bedroom.
Exactly. Not one I’d make, not one they should have made, but too soon to judge as an investment.
Let us assume that they plan on living there for a long time, maybe 30 years plus.
The value right now is immaterial, a paper loss. The investment bet is on what similar houses in the area will be worth in 30 years and if, in the meantime, they are getting “more” out of their monthly living expenses (inclusive of servicing debt and investment missed opportunity cost) than they would have otherwise gotten.
It is a contrarian investment strategy and a contrarian investor is not excessively concerned about getting in at the exact bottom. They believe that that area of Detroit is right now undervalued significantly relative to its long term value and therefore feel it is a reasonable long term play. Right? Wrong? Check back in 30 years.
She’s also going to make some money and possibly some career hay out of the book she wrote about the experience - which apparently is well reviewed and now advertised with “unearned media” as part of that NYT article and links like this. That is some degree of return on investment as well.
Not arguing that it is a good idea to be house poor. Having no cash reserves and a negative net worth is not a great place to be, even with more secure careers than freelance writing and a family income of more than their $100K/yr. And it seems less a conscious investment choice than having made one of the most common errors of investing … the “sunk cost trap.” Having pretty much all future worth tied up in the potential appreciation of the house is also foolish even if you have high confidence that appreciation.
It may turn out to be a good investment on resale in 30 years. Detroit is indeed rebounding. It has been attractive to startups and to companies like Mahindra. The DINKs of the article are not alone and more are coming.
But yeah, believing that they could rehab “a pile of bricks with character” for $150Kish, was ignorant, and leaving themselves with a pretty home and negative cash reserves, dumb.