A party has pointed out- smugly I may add- that his father was quite successful buying houses in need of repair, fixing them up, and reselling them for profit. Surely I was wrong in thinking that houses could not be investments?
Answer: Your father owned a small business. The inventory for that business was old stock housing. Through a business process he altered the characteristics of the inventory to reach a finished product. Re-manufactured them if you will. He was not relying on the original state of the house itself to provide a return. He was using it as an input. The return came from his process, labor and skills. All the characteristics of a business venture.
Next, someone asked about the common practice in 2004-2006 to buy and flip houses. These people made LOTS of money she points out. Surely those were investments?
Alas I have to disagree. While such an activity bears some relation to investing as discussed in the article, what these people were doing was "speculating". They were traders, much as people left good dependable jobs in the late 90's to trade stocks online at their kitchen tables, these people used Deeds and other ownership interests to entice a "greater fool" to take the piece of paper off their hands for a higher price in a rising market. That is not "investing". Money was made, surely. Buckets of it by some. But it was not investing.
My point in the article is not that no one ever makes any money through house ownership. Some people surely do. In fact, *I* have made money buying dilapidated housing, fixing it and reselling it. That activity paid off all my wife's student loans and got us debt free early in our lives. But that activity was not investing and the notion of houses as "an investment" is just wrong thinking in my opinion.
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