Sold my house…

Mixed feelings here today – I’m on the road, sitting in a Starbuck’s in Alabama after travelling down here to sell my house. I’m listening to David Bowie’s Changes, as I did when I first decided to leave Alabama a year ago, so there’s a certain kind of symmetry. I spent 10 years living here and I already left once last year to move to Michigan and it feels like that all over again. It’s been great seeing some old friends again though.

I bought the house in 2004 for $143,000 and I’m selling it 10 years later for $135,000. So as an investment, it’s not been a great deal. Or was it?

As with all things, it’s a matter of perspective. Here’s my estimate of the total cost of house ownership over the 10 years that I lived in it.

Mortgage 74,100
Escrow 1,000
Association 7,920
Remodel 9,500
Repairs 9,480
Total 102,000

The money I received after paying the mortgage was $38,000. So my total accommodation cost was $102,000 – $38,000 or $64,000.

This amounts to about $560 a month and excludes the additional tax benefits from interest deduction. Renting a similar house would have cost maybe $1500 a month or about $170,000, although there likely wouldn’t have been any significant repair / remodeling costs.

So despite selling the house at a “loss”, I think it’s still a win – it’s going to improve my cash flow by about $800 a month, and I won’t have to worry about another house halfway across the country any more.

I did consider renting the house instead of selling it, but ultimately I didn’t want the hassle and my experience in selling this house which was on the market for over a year hasn’t endeared me to real estate investing. For the moment I’m happy owning a tiny part of Marriot [MAR] and if I do get the urge to invest in real estate, there’s always Monopoly and failing that, REITs.

While thinking about house ownership and realizing that I’m about the least-handy person with any kind of repairs, a chapter in Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence: Revised and Updated for the 21st Century [1] has made me re-think DIY and work around the house as a money saving tool; usually I’d be on the phone for the nearest professional when something needs work.

</usual plea for comments> Do you own an investment property or REITs or otherwise would consider it for passive income?

The wisest rule in investment is: when others are selling, buy. When others are buying, sell. Usually, of course, we do the opposite. When everyone else is buying, we assume they know something we don’t, so we buy. Then people start selling, panic sets in, and we sell too.

[1] Got to love concise book titles that just roll off the tongue.

2 thoughts on “Sold my house…”

  1. Congrats on the sell of the property. I’m sure that the year long process of selling was not the most pleasant one.

    I’m a big fan of DIY work and this is coming from someone who only recently realized he even had DIY muscles to flex. I’m not handy, I’m not naturally good with my hands nor am I what you would call mechanically inclined, and yet I’ve managed to do most of the rehab work on my current residence that I bought as a foreclosure. Never underestimate what you can teach yourself with a little patience and desire.

    YOYL is an excellent book. It was one of the books responsible for my financial turn around a few years ago.

    The Stoic

    1. Hi Stoic,
      Thanks for dropping by and for the encouragement!

      Yes I was glad to sell the house – all things considered, I think I like Mr. Market more than Mr. Realtor, although both can be equally capricious!

      I’m in awe of your mad remodeling skills on your blog – it’ll be a while before I’m that brave I think. This month we bought our first ever ladder so we could clean the leaves out from the gutters – that’s a small step, right?

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