Re: return on investment of partial basement finishing?

On 3 Feb 2006 00:28:47 -0800, trader4@xxxxxxxxxxxxx wrote:

"Well now lemme see... I bought Simon Property Group (SPG) on 11/14/01
at $28.68 a share. I had a stop loss order in place and sold at
$51.10 on 4/12/04. A slightly bad move but I worry about preservation
of capital. When it was clear that I had found the bottom, I bought
it back on 4/16/04 for $51.32. It closed today at $82.95. "

And what does any of that have to do with considering which of several
home improvements
one is considering would add the most value to a home?

My response was more to a subsequent poster's comments than to the OP,
so I think it's applicable. It's called "topic drift." The question
was asked about what I thought was a better investment, stocks, bonds,
REITs (really a stock) or single-family houses (by this I mean a
primary residence). I offered an assessment.

BTW, the
statement
"when it was clear that I had found the bottom...", is a dead give away
as to your expertise
in investment matters. Anyone but a rank amateur knows that it's
never clear that a stock
has hit bottom, which is only clear from hindsight. Plenty of
investors in Enron and Worldcom
thought those stocks had bottomed at dozens of points, all the way to
zero. And getting stopped
out at one price, only to buy it back later at a higher price doesn't
look to smart either, does it?

It makes sense if you travel a lot and can't have the latest prices at
your fingertips. Most of my stuff is in index funds, but a (fairly
small) fraction is "play money" that is more activily traded, if you
want to call reinvesting dividends "active" trading.

Of course my observation was from hindsight, I never said otherwise.
I was on the road but stopped out at a nice profit, so what's the
problem with that? When I got home and it looked like "irrational
panic" was the driver for the price fall and that had subsided and the
fundamentals still looked good, I bought it back at a few cents more
than I sold if for. Big deal. It's appreciated nicely since then and
had I never owned it in the first place you wouldn't have a thing to
complain about.


"Now I don't know how my house has appreciated in the same time period,

but it doesn't match that but what does it matter? "

Then you must be pretty ignorant of what is going on around you. I
have a pretty good idea of what
homes are selling for in my area. Just because you happen to like to
live in blissful ignorance doesn't
mean we all should.

No, I like living in a custom home in a semi-rural area where there
aren't daily sales of cookie-cutter houses with paper-thin walls next
door to use for "comps" and I'm not about to get appraisals made on a
yearly basis to determine my "profit." The tax assessor and my
insurance agent seem to do that for me.

I need shelter. I don't want to live anywhere else. If I sold this
house only to buy another equally inflated one in the same area, the
only "profit" from the deal would go to real estate agents, title
companies and the rest of the leaches in that business. Frankly, I
wish the prices would fall, taking my tax and insurance bills with
them.

And if I had a basement (I don't) and wanted to paint the floor
purple, I'd paint the floor purple and not worry that the next guy
might want to put tile down.

I'm only suggesting that (IMHO) thinking of your primary residence as
an "investment" is flawed. If you think of it as an ever-inflating
investment, do this experiment: stop putting money into it. Do no
further maintenance, do not upgrade appliances, don't paint, don't
replace carpet, don't water the plants, etc. See how much growth you
get when you quit sinking new capital into it.

I'm all in favor of home ownership and making improvements that
improve quality of life. I simply disagree with the idea that
decisions of this sort should rely so heavily on ROI criteria.

.

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