Monday, July 11, 2016
Buy Me a House
I have an adult teen daughter. When I was her age, I was in college, already married, and a mom to a bouncing-baby-boy.
Things were different back then. It was right at the beginning of the push for everyone to go to college, which meant lots of lots of debt acquisition over the next forty years.
My generation grew up with debt as a given. In fact, we welcomed it, like it was some sort of positive character assessment to be deemed worthy of having a company extend credit to us. Some of our favorite credit was credit cards, which gave us an amazing buying power, and rent-to-own furniture, which allowed us to feel wealthy and successful with our shiny, new home-décor (the shabby-chic movement had not, yet, made its debut, and this was well before Martha Stewart was turning old desks into new buffets with a coat of paint, some new drawer pulls and some shelves in place of drawers).
Over the years, I've realized this great lie that I was told. Debt is not good. The credit card company has not bestowed some special trust in me by giving me a credit card. I am not a better person, because I have a good credit rating. It took me a lot of years to get over the idea that credit-worthiness is equal to self-worth.
My teen daughter is not planning to go to college. At the moment, she has a good job and big plans for some awesome adventures, and she's going to be able to pay for these adventures, because she still lives, for free, here at Chez Brown with Mom and Dad. It is a mutually desired circumstance, and none of us wish to change it.
I've been encouraging her to buy a house. Today, she says to me, "Why should I buy a house?"
I thought I had explained it to her, but apparently, I didn't. So, I told her.
I told her that having a house could, theoretically, fund her great adventures. As an example, I mentioned a particular house that is in a desirable location, but which we know to be in very poor condition. I told her, that if she were to buy that house, and fix it up, she could rent it out. The rent would pay for the mortgage, but it could also finance her trips. Or if she decides, in the future, the rent payments could pay her college tuition.
Or, worst case (because I hate house-flipping), she could fix up the house and resell it, easily, for more than one and a half times what she paid, which would give her cash in the bank, and depending on how and where she chose to live, she could have a large enough savings that she could afford to take some career risks.
I live in a tourist town. Even on my side of town, which is suburban, mostly year-round, residents, I could rent my house during the summer for $1000/week. I could earn $14,000 a summer just from renting my house. That would pay the mortgage-plus for the entire year. Basically, if I had a free place to live during the summer, I could live "free" in my house the rest of the year.
And that's what I told her. She lives with her parents, and if she bought a house, it would not mean that she would have to move into that house. If she rented out the space, she could have a passive income.
Those are the practical "normal people" reasons, but there are just as equally practical TEOTWAWKI reasons.
How many times have I said, "In an extreme survival situation, shelter is the first thing one needs." In his great book, Tell Them Who I Am: Lives of Homeless Women, which I often reference, Eliot Liebow states that homeless people are homeless, because they don't have a home. If she were to purchase a house now, when she's still a young adult, has a full time job, has no expenses, and still lives with Mom and Dad, it would be paid off by the time she reaches my age. She would own, outright, a house in what is currently, a desirable location, where she could live, rent and mortgage-free. If she loses her job or ends up divorced or whatever, she would, at least, have a place to live.
That's not a bad risk to take. The thing is, if she went to college, she would be investing tens of thousands of dollars on the hope that she would be able to get some return on her investment in the form of a "good job." I know too many people who aren't working or are working below their educational level, doing jobs that she is doing right now, for the same pay, and she's debt-free.
If she buys a house, for the same amount of money, she is investing in a tangible, transferrable object. She may never want to live in that house, and that's okay, because someone will want to live there. It can be a good house.
The house I was telling her about has about an acre of land and is zoned for mixed-use, including allowing things like chickens. She isn't interested (right now) in following in her mother's suburban homesteading muck boots (or flip-flops as it actually is), but she might in the future. Wouldn't it be awesome to own a place where she could do that? Or better, maybe her future tenant is looking to do some suburban homesteading. Options open up the doors to a wider variety of opportunities.
Our culture has been telling our children for decades that education is the only way to get ahead, but I'm looking at the people in our country who are the wealthiest, and most of them aren't the most educated. They are the people who invested in real stuff early in their lives and then were lucky enough to live long enough to enjoy the benefits of their fore-sightedness.