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Author Topic: House a liability or an asset?  (Read 2738 times)
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« on: December 12, 2010, 08:56:30 PM »

Saw this on survivalist boards.  It's a very good point and not often said.

http://www.survivalistboards.com/showthread.php?p=2177026&posted=1#post2177026

Remember that a "house" is a liability, not an asset. You have to carry it on your back every month. The only time you recuperate some of what you put in is when you find someone to pay more for the privilege purchasing the liability than you did.

A homestead, on the other hand, is an asset. It pays you in food, water, electricity, fuel, security, and freedom. And, considering that most places conducive to homesteading have low taxes and few zoning regulations, you can build a very inexpensive and energy efficient house for pennies on the dollar, with no constant need to keep up with the Joneses, or have a fescue monoculture for a lawn, or any of those other petty minutae that forces suburbanites to discard the bulk of their wealth curbside every trash day.
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seekortry
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« Reply #1 on: March 07, 2011, 01:49:13 AM »

It's not so much the house that is the asset but the land. If you rent, and food becomes scarce, you will not be able to simply grow your own food out in the lawn. The owners *might* allow you to grow food for them and give you some of the surplus as compensation. If you own, even if you own a condo and thus collectively the property around the buildings, then you own that land and have the right to cultivate it. I am not so sure people should discount this fact. It can be the difference between serfdom and independence. For people who have lived in urban or suburban environments their whole lives, heading out into the countryside is a dangerous proposition in such circumstances.

I have been interested in how we all can develop indoor greenhouses which offer us a more secure method of growing food. The lighting would need to be powered by solar energy and you will need plenty of replacement bulbs (enough to last you until order is restored if this awful thing comes to pass anyway). This also would free renters from such an awful condition as tenant farming.

The problem I have encountered here is that the only solutions I can find that approximate these requirements are for the cultivation of narcotics. I don't care about a hydroponic system to grow pot plants. I need something that maximizes the growth of vegetables in a small but vertical space. I also cannot bring myself to get involved with marijuana growers in order to learn how to do this.

As far as the rest of the issues with owning homes.. I think if the liability side of home ownership begins to harm you, it also would harm renters. It would not matter so much at that point. Also.. if we ever reach a deflationary period, you might be able to pay off what is left on your mortgage rather quickly.
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fuzzy
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« Reply #2 on: March 07, 2011, 08:45:45 AM »

I recently watched a science show that dealt with the vanished civilizations of history.  Usually the societies had just picked up and moved into other areas and melded into other societies.  These were more or less people that were not saddled with deeds, and large capital investments in their houses, lands, etc.  They were nomads temporarily staying put as long as the land would support them.  When prolonged droughts, climate changes, etc., hit then they would just migrate to a better area.

We can't do that!  We are stuck where we are with huge capital investment in a house & land that would be impossible to sell, unless you can find a sucker that is willing to buy into a situation that everyone is desperately trying to escape.  Our system and customs of "owning" real estate has made us captives of the property.  It owns us, we don't own it!  Our only out is to merely "walk away" from a lifetime investment.

An example would be the situation in the farm land of west Texas.  Ground water is rapidly disappearing and irrigation wells are failing.  Without irrigation those farmlands are worthless.  The farmer can't just migrate without loosing all of the capital that has been sunk into his farm.  No other farmer wants to buy a developing dust bowl.  Small farming towns in the area are withering and dying.  Those people are stuck in a terrible situation that will only get worse.

It seems to me that the old nomadic indians had the right idea.  "Owning" houses and land was an alien concept to them.  When bad conditions are prevalent in an area, whether they be climatic, economic, etc., modern "owners" are caught in a trap of their own making.

But, on the other hand, who wants to invest large amounts of capital & labor into a piece of land or house that you don't own?  The only approach that I can see for the modern-age American trying to situate himself to weather any kind of SHTF situation is to be diligent in choosing the area before laying out the capital to buy.  One question that one should ask himself beforehand is, "Will this property sustain me or is it a trap?"
« Last Edit: March 07, 2011, 08:53:42 AM by fuzzy » Logged
seekortry
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« Reply #3 on: March 07, 2011, 12:31:21 PM »

We need small communities of landowners who are able to produce their own food and organize the production of products and services they can market with other communities. The principle issue is that these must be self-sufficient communities and there should be no egregious wealth disparity as now exists in the United States. Ownership of homes and land to produce food is a sign of a healthy society. When you lose that to a small oligopoly of wealthy families, just as happened in many Roman provinces, everything eventually collapses. If you travel to any time and place and notice one group of people living in extreme priviledge and another group of people toiling in misery, it is a safe bet to assume that the former group stole that wealth from the latter group through some means. Of course they won't call it stealing in their societies. They will find a way to justify it and any attempt to repatriate that wealth definitely will be called stealing.

Anyway, what we have today is not going to last. It cannot last. We are watching more than a century of unsustainable economic systems falling apart around the world. The one thing we all NEED very much is a home and a little bit of land to grow vegetables. That property must be unassailable. Nobody should be able to wrest that land from the owners in any way. Not the government and especially not banks or some other vulture-like organization.

Yes, a house is a huge liability. It is NOT an investment. It never was. But it also provides you with the ability to survive. It gives you a place to live and store your possessions. The land gives you the opportunity to grow food if our unsustainable economic system of producing food and shipping it around the world, rather than producing locally, collapses around us. It also would help to maintain peace and calm if (when) very tough times descend upon America. People with no shelter, no food, and no ability to secure those things will tend towards organized violence.

Homes are probably the most important problem facing our nation today. People still seem to miss the true value of homes to them and to society as a whole. They don't see it because they still live in the illusion that there will always be some place to rent and some career to provide them with money to pay that rent. It's not terribly impacting us yet but I strongly believe it has the potential to devastate our society.

We should do everything we can to keep our homes safe and well-maintained. We should harden them from economic shocks by developing indoor and outdoor gardens, water collectors, solar and wind generators, and establishing meaningful relationships with our neighbors. The home is the very heart of this process. That is the heart of society.
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« Reply #4 on: March 11, 2011, 07:58:36 AM »

These are great points.  Too many peopls are held captive by this huge liability called a large house with a large payment!  They were sold a lie, that it would be an investment.  Now what?  Now they have this huge burden and they can't get out of it.  So many people were told, don't rent, go out and get that big house because it will continue to rise in value and you get sell it off one day and retire.  How did that work out for them?  If your home helps you become self sufficient and you have a good plan to pay it off soon, then it may be an asset, otherwise it's not.
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« Reply #5 on: March 12, 2011, 05:09:28 PM »

We shouldn't think of property with a house as an investment to buy and sell. We should look at it as potential wealth that can produce for us. Land ownership does tie us down, but can also produce food for us. If you can afford your property and it provides what you want/need, then the resale value isn't as important.

Pat
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« Reply #6 on: March 14, 2011, 02:46:46 AM »

What I find interesting is how many land owners don't use their land. Time obligations are obviously a big factor. I get that. But if I had the option of selling my home and getting the equivalent land in a rural area, I would definitely use it to produce something. You can maintain a small orchard, a garden to provide most of your vegetables, and you could probably maintain a small chicken coop to provide your eggs.

If you are retired or in a similar situation, you could produce a surplus of something. For example, I have wanted to own an apple orchard for many years. You can sell organic apples at local farmers markets. You can purchase an old cider press and sell cider. Keeping your own bees produces honey which you can also sell at a market. I suppose people might be more interested in livestock. I am not sure how that would work on relatively small parcels of land though.

I have a feeling that what people call "hobby farms" today will not be so much hobbies in our future. Our level of overcomplexity and highly specialized economy, allowing us to cheaply purchase food from practically anywhere in the world, is about to begin a slow descent. The expenses to do anything will continue to rise like economic friction. You guys who outright own land will be very well sheltered from hardships and expenses. I think life for you guys will be somewhat like it was for Americans before the second world war. You will produce much of your own food, sew at least a portion of your own clothes, etc. That part of decline appeals to me personally. The part I face, what happens in urban centers, is not so appealing.

What will very much make a difference for anybody, anywhere, is home ownership. A home, and especially land, provides you with the same stability it provided people before the postwar boom. The alternative, just like in those days, is that of the disadvantaged working class. When times are tough but improving, they have a better time of it. When times are worsening, they will get the short end of the stick, every time. They won't have much protection from eviction when they are between jobs. Even mortgage holders can oftentimes make it a few months between jobs. People who own their homes will have no such economic pressures. If they also own the land from which they can grow their own food, rather than purchase it, then they are very much independent of economic turmoil.

It's preaching to the choir I guess but I do very much agree that home ownership should not ever be considered an investment but one of the principle goals of life. That is your stability. It definitely ties you to a place and community but that really is a good thing.
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« Reply #7 on: March 17, 2011, 03:11:48 AM »

seekortry - Very nice post.
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« Reply #8 on: May 08, 2011, 08:15:37 PM »

What a great debate.  I try not to get too caught up into the material things, but you need a place to live, too.  To me, a paid-off house with a lot of land for gardening is ideal.  It's all about making a home a castle.  And castles are designed to protect their inhabitants for SHTF scenarios.
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« Reply #9 on: May 09, 2011, 01:28:00 PM »

Remember that a "house" is a liability, not an asset. You have to carry it on your back every month. The only time you recuperate some of what you put in is when you find someone to pay more for the privilege purchasing the liability than you did.

Y'all are darned depressing.  Whatever happened to the proud proclomation of "that's my home"?  I'm always amazed at how folk call their house their home but treat it mostly as a piece of capital or debt.  They are not one in the same.  I did not start paying on my house with the thought that sometime in the future I could turn it over as a profit.  I really don't care if some bureaucrat says that, on paper, my house is not worth what I originally paid for it.  It is my home.  I live here.  I paint the walls the color I want.  My wife, my dog, my subwoofer, mail, and the rest of my life are situated under this roof.  I work so that I can go home at the end of the day.  I don't work so that I have somewhere to call home.  Ok, perhaps right outta school that was the case.... anyways, I don't know if this makes sense to anyone, but that's just the way I believe it should be.

For what it's worth, we (wife and I) originally started with a standard 30 year fixed, watched everything go down the toilet, then refinanced to a 15-year fixed for about the same payment.  I will own my home in less than 10 years.  It will be mine long before I retire.  That what I call long term planning and prep, agreed?
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« Reply #10 on: May 09, 2011, 05:09:23 PM »

If/when my fiancee and I make a purchase, one option would be to get at least an acre or two and build on it. My dad and his dad both built their own homes, never having a mortgage, and some of my friends have done the same. If it fits local building codes, an earth sheltered home would be great. Something hurricane, fire, and burglar resistant with low utility bills. It will depend in part of where we end up wanting to live, and if we want to remain mobile or settle in one place. For assets I would focus on training and Harry Browne's Permanent Portfolio (a quarter each of gold, index funds, t-bills, and money market) rather than housing.

The main reason to own a house is to have more say in how it is managed than if renting. You can always lose it, even if it's fully paid for, whether by not paying taxes (as happened for many poor people with land in the past), homeowner's association dues, or getting sued. At least in renting there is the security that you can easily move with minimal loss if economic winds change and a different location looks more promising. For some people a tiny house like those dreamed up by Tumbleweed could be a solution - a comfy house that is cheaper to build and can potentially be moved.
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« Reply #11 on: May 10, 2011, 02:37:16 PM »

In my opinion, the important thing to realize is that many realtors and mortgage lenders "sell" homes based on being good investments.  They make it sound like it's a lucrative asset.  I think the past 5 years has proven otherwise and the big assets people thought they were buying have depreciated substantially.  So don't forget to analyze the liability.  The only home that's an asset, in my opinion is the one that's paid off.  Then it's truly an asset but still fluctuates in value.  If you have a mortgage, it's a liability until the mortgage is paid off.
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« Reply #12 on: May 10, 2011, 02:40:27 PM »

Y'all are darned depressing.  Whatever happened to the proud proclomation of "that's my home"?  I'm always amazed at how folk call their house their home but treat it mostly as a piece of capital or debt.  They are not one in the same.  I did not start paying on my house with the thought that sometime in the future I could turn it over as a profit.  I really don't care if some bureaucrat says that, on paper, my house is not worth what I originally paid for it.  It is my home.  I live here.  I paint the walls the color I want.  My wife, my dog, my subwoofer, mail, and the rest of my life are situated under this roof.  I work so that I can go home at the end of the day.  I don't work so that I have somewhere to call home.  Ok, perhaps right outta school that was the case.... anyways, I don't know if this makes sense to anyone, but that's just the way I believe it should be.

For what it's worth, we (wife and I) originally started with a standard 30 year fixed, watched everything go down the toilet, then refinanced to a 15-year fixed for about the same payment.  I will own my home in less than 10 years.  It will be mine long before I retire.  That what I call long term planning and prep, agreed?

Yes, that's indeed long term planning and once it's paid off and if the land is producing for you, then it's truly an asset.  You make good points about the pride of ownership.  However, too many people bought homes with the intention of flipping them for a profit and got burned, real bad.
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« Reply #13 on: May 10, 2011, 04:12:15 PM »

Houses can be assets. 

But a house becomes a BIG ASSET when it becomes a homestead that goes to work for you.  We are involved in making our homes into homesteads and putting them to work for us.  When we retire, the home where we live now will be sold.  The smaller, older BOL will be our permanent home.  Any proceeds from the sale of our work home will be used for our BOL homestead retirement.
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