Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next
Author: ffour Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 265  
Subject: My Favourite Investment Date: 1/22/2002 4:57 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 4
Greetings!

Most of you already own one of these investments. Those of you who don't,
pay rent to use one of these.(temporary situation I hope) Banks own a lot of
these. I am talking about my favourite investment, my house. I am not talking
about the specific house I am currently living in, but houses in general. I will give
you a little background to tell you why.

In 1984 my bank informed me not to use my credit card anymore since I was not
making any payments. I was unemployed at the time and unable to make any monthly
payments. (In hindsight, I should have been able to make the minimum payment
just to keep them happy. I didn't realize how this would affect my credit
rating.) I moved to a different city for a job. Within a year I bought the
cheapest single family residence I could find in a decent neighbourhood. It was
good timing, since we were in a very depressed housing market. I fixed up that
house and sold it within 18 months for a 40% profit. I then bought another house,
fixed it and sold it. I then bought a third, fourth and a fifth house, making a
little profit each time I sold. This all occured within 6 years. While owning
the houses, I put every spare dollar into paying down my mortgage. I paid cash
for my fifth house. (Using $8000 from a line of credit.)
What a wonderful feeling. I have since sold that house and bought a house in the
country with 17 acres. I also have a second house in town that I am fixing up
and paying down that mortgage.

Reasons why this was a good investment.
1) You have to live somewhere. Its better to make mortgage payments toward
something you will own than to pay rent to someone else.
2) No restlessness with the up and down markets. I don't get up each day
to check the value of my house.
3) No capital gains on my profits. In Canada any increase in value of your
principal residence is tax free. Mortgage payments are not deductible
though.
4) The incentive to pay down the mortgage caused me to be more frugal. When
I don't have a mortgage I tend to spend it elsewhere.
5) Most of my stock investments I have made end up being JWTIGBTWIPFI. That
is short for 'Just Wait Till It Gets Back To What I Paid For It'. With
the help of The Motley Fool, I am learning to invest more patiently.

My advice to anyone wanting to try this investment. Pay off your mortgage. Your
principal residence is always a liability (unless you take in renters). The more
you spend in interest, the more costly the house will end up.

Thank you for your time,

ffour


P.S. - Your house is an asset - on the mortgage holders balance sheet.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (1) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Should You Be an Index Investor?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement