Yesterday, I responded to a post on the MBN Forum. The question was about Net Worth. Do you calculate your real estate equity into your net worth? or not?
I do both. I had such a struggle purchasing this house in SF. that it's important to me to know that this investment is worth something!
According to this article in today's SF Chronicle"Your Bay Area Home as Profit Center", 97 percent of people who sold their house in the Bay Area in November 2006 got more than they paid for it. The article admittedly states that in this number they do not include improvements on the property, nor do they include equity lines of credit. So, this number is a bit unrealistic; however, I still believe that the number is high and that most people are making money when they sell their house.
Also, you can see from the article that with a median holding period of 6 years, the appreciation rate of these homes was 11.1% per year. That's awesome. Looking at it from a more conservative approach, housing only appreciates 3.5 percentage points a year over the rate of inflation (which was 2.7% during the same time period). So, conservatively, my house should "technically" increase at least 6.2% per year. Not too shabby.
I get to live in my house, not pay rent, and still "make" 6.2% in appreciation this year. I can live with that. I have no intention of taking out an equity line (unless, we are in absolute dire circumstances and there is NO OTHER way out.) I finally feel pretty good about this purchase.
To answer the Net Worth Quetion too, I like to look at both numbers, because as long as we are living here, the real estate equity is an intangible number. I like to know that it is available, but not count on it. Our current NW is $454,054 with our RE equity and $209,622 without. Either way you look at it, I'm pretty happy with the number.
What about you? How do you calculate your Net Worth?
Showing posts with label Real Estate. Show all posts
Showing posts with label Real Estate. Show all posts
Thursday, January 04, 2007
Wednesday, August 30, 2006
Our handyman---The house Part 2
We have done a tremendous amount of work on this property, ahem, my home. So, when I left off, we had just purchased our house here in San Francisco. This house was in horrible shape when we bought it. It was, what my husband calls, a cosmetic fixer-upper. We got to work right away.
In the two weeks before we moved in, we cleaned and painted the walls and ceilings, resanded the hardwood floors (well, it was done by professionals), and cleaned the kitchen and both bathrooms from top to bottom. I even painted the red linoleum on the kitchen floor as a temporary fix until the kitchen remodel. It was crazy dirty. Hello, there were rat-traps throughout the house when they were trying to sell it. Did these people EVER clean here? And, didn't they think that removing the rat-traps might help them sell it? Luckily for us they weren't smart and we weren't scared!
We moved in and continued to work on project after project for 2.5 years. Early in our remodeling days, my husband found this guy to help us out. Well, actually, he was a homeless guy. You know the guy on the street corner with the sign that says "Will work for Food." Well, his sign said something like I've been a carpenter for 18 years. Will work for food. So, my husband, being frugal (well maybe here cheap or psychotic) rolled down the window on his sedan and said, "If you are serious, give me a call. We've got some work that needs to get done." This guy followed through and actually called us. He came over and helped to install a back door to our house. When we moved in the back door was not much more than a piece of plywood on hinges with a hook-and-eye-type of lock. I could have huffed and puffed and blown it down. The homeless guy-turned handyman (HGTH) looked at the project, gave my husband a shopping list, built a new casing and installed the door. It was top-notch, professional, and not so expensive. Of course, we cut a deal with this guy. After he expertly installed this door, we told him we were going to pay him $8 more an hour and continued to give him more projects.
We invited HGTH to stay for dinner, washed some of his clothes, suggested *ahem* he take a shower. A few days into this business relationship he told us that he was a heroin-addict and that he wanted to quit using. OK, we figured there was a reason he was homeless. This professional relationship went on for about a year and then it became a little too personal. We (meaning me) wanted to be his savior. I thought I could help him quit drugs, clean up his life, and help him get settled into a new life. Nope. Although, he said he wanted me to help, he really didn't. So, I severed the personal attachment and again it became strictly professional. There were times that he wouldn't show up for days, most of the time he never showed up on time. It became old quickly. He still did amazing work, but we would get so fed up with his erratic behavior. A couple of Christmas's ago, we got pissed off at him and he with us, and he quit coming. That was for about 6 months. Then he called one day and he came back to work for us. We began that bathroom remodel about a year ago. When HGTH got stuck on some plumbing work, we called in a professional plumber. He got upset. We got upset. Words were exchanged. We ended up firing him again and hired "professional" and licensed folks.
Now, after our bathroom and kitchen remodel, we look back on the work that was done and aren't very happy with the "professional" work. Sure it's ok. The kitchen looks great. But we had to deal with the same bullshit from these other handymen and we paid them about 3 times as much. HGTH could have done the job, probably better, probably with more professionalism, well, lets not get carried away:)
About a week ago, I saw HGTH on the street begging for gas. (He bought a used truck during the time that he worked for us.) I dug deep into my wallet for money, $3 to be exact. I rolled down the window and waved him over. As he took the money, I said, "Hi HGTH". Well, actually, I said his name:) Anyhoo, I said that we had more work for him to do. He asked what it was. I didn't know specifics, but told him to call my husband for details. He said he'd just come by the house later.
He looked pretty rough. I'm sure he was back on the street (or more likely living in his truck.) He still hasn't come over. I'm not sure he will.
In the two weeks before we moved in, we cleaned and painted the walls and ceilings, resanded the hardwood floors (well, it was done by professionals), and cleaned the kitchen and both bathrooms from top to bottom. I even painted the red linoleum on the kitchen floor as a temporary fix until the kitchen remodel. It was crazy dirty. Hello, there were rat-traps throughout the house when they were trying to sell it. Did these people EVER clean here? And, didn't they think that removing the rat-traps might help them sell it? Luckily for us they weren't smart and we weren't scared!
We moved in and continued to work on project after project for 2.5 years. Early in our remodeling days, my husband found this guy to help us out. Well, actually, he was a homeless guy. You know the guy on the street corner with the sign that says "Will work for Food." Well, his sign said something like I've been a carpenter for 18 years. Will work for food. So, my husband, being frugal (well maybe here cheap or psychotic) rolled down the window on his sedan and said, "If you are serious, give me a call. We've got some work that needs to get done." This guy followed through and actually called us. He came over and helped to install a back door to our house. When we moved in the back door was not much more than a piece of plywood on hinges with a hook-and-eye-type of lock. I could have huffed and puffed and blown it down. The homeless guy-turned handyman (HGTH) looked at the project, gave my husband a shopping list, built a new casing and installed the door. It was top-notch, professional, and not so expensive. Of course, we cut a deal with this guy. After he expertly installed this door, we told him we were going to pay him $8 more an hour and continued to give him more projects.
We invited HGTH to stay for dinner, washed some of his clothes, suggested *ahem* he take a shower. A few days into this business relationship he told us that he was a heroin-addict and that he wanted to quit using. OK, we figured there was a reason he was homeless. This professional relationship went on for about a year and then it became a little too personal. We (meaning me) wanted to be his savior. I thought I could help him quit drugs, clean up his life, and help him get settled into a new life. Nope. Although, he said he wanted me to help, he really didn't. So, I severed the personal attachment and again it became strictly professional. There were times that he wouldn't show up for days, most of the time he never showed up on time. It became old quickly. He still did amazing work, but we would get so fed up with his erratic behavior. A couple of Christmas's ago, we got pissed off at him and he with us, and he quit coming. That was for about 6 months. Then he called one day and he came back to work for us. We began that bathroom remodel about a year ago. When HGTH got stuck on some plumbing work, we called in a professional plumber. He got upset. We got upset. Words were exchanged. We ended up firing him again and hired "professional" and licensed folks.
Now, after our bathroom and kitchen remodel, we look back on the work that was done and aren't very happy with the "professional" work. Sure it's ok. The kitchen looks great. But we had to deal with the same bullshit from these other handymen and we paid them about 3 times as much. HGTH could have done the job, probably better, probably with more professionalism, well, lets not get carried away:)
About a week ago, I saw HGTH on the street begging for gas. (He bought a used truck during the time that he worked for us.) I dug deep into my wallet for money, $3 to be exact. I rolled down the window and waved him over. As he took the money, I said, "Hi HGTH". Well, actually, I said his name:) Anyhoo, I said that we had more work for him to do. He asked what it was. I didn't know specifics, but told him to call my husband for details. He said he'd just come by the house later.
He looked pretty rough. I'm sure he was back on the street (or more likely living in his truck.) He still hasn't come over. I'm not sure he will.
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