Thursday, 2 September 2010

Home-Owner-Ist... In action in Maidenhead

Was at a friends house the other day. Lovely place. Recently all done up throughout at a cost of about 50 grand. Nice location too. I speak to them about it all the time. The location being the most valuable thing. In a city sleeper town, near the M4, mainline railway, great schools, town centre, long rear garden with hope value and countryside behind all the way to Henley and the river Thames. Its worth about £500k selling price. I keep on telling them that the location value is what matters.

You can spend a million on the capital in the bricks and mortar and it still might not sell for any more.

Then the other night the topic came up again. The wife was going on about another "property" down the end of the road that was in appaling tumbledown condition but was selling at twice the price.

We've just spent £50 grand on this place, its much nicer than that one, what gives. It's not fair?

I asked how big the plot was. Apparently it was twice as big. Surprise surprise! But she still didnt get it. (sigh) I went through it all again in the language a child could understand.

Land is the valuable bit and always increases in value. The building is the least valuable bit and always decreases in value.*

Still a bemused response. She just could not understand the Simple Facts and went and did some web surfing in frustration. I can only guess because she thinks the value in the "property" comes from the work they put into making the place nice.

The joke is not in how you tell it. Its the joke itself. Home-Owner-Ism at its best.

*Its Capital after all so it will always depreciate unless kept up