Friday, January 25, 2008

Expenses vs Investment

I read with interest this article dated back in July 2006 about the cost of remodeling your house. Differentiating between an expense and an investment is tricky. Is buying a house an investment, or an expense? We have to know is the house an asset, or not. An asset will bring in revenues. The post talk about renovation of an existing house and Forbes reported that most remodeling and renovations did not bring in profit, or even recover its full cost.

In essence, I think the author put it clearly and nicely here:
"Real renovation investments involve cheap improvements to the house that make it look good, right before a sale. You generally try to spend as little as possible to make the house look a lot better than it [currently] actually is." (I don't think we should cheat to make it look better than actual.)

Especially in my country, I heard that renovation is not considered when a home is being valuated because the assumption is that most buyers will re-do it to their likings.

Post Sponsored by Free The Drones Personal Finance Blog.

No comments:

Related Posts with Thumbnails