Why do people think they can buy a house and all of a sudden become Warren Buffett?
“We gon neva have to work again now that wees got this mortgage!”
We will spend $800 on an iphone but we’ll refuse to pull up the calculator app installed FREE on that phone so we can test out the numbers on the sh*t we keep telling ourselves.
We won’t do simple math if our lives depended on it.
The truth about holding costs
IF, in a rising market, a house is sold in 2010 for $595k and then resold for $800k in 2015, how much money did you make? Whatever your answer is its LIKELY incorrect. You didn’t just make $205 thousand dollars, dude!
It costs $4,900/month in whats called “holding costs” for you to have gotten from point a to the point you’re only focused on, the sale. And you can only take that number down by $100/month for every $10k increment you place down on the property.
Don’t believe me? Well the internet made it even simpler for you on top of it already being simple. Go to https://www.zillow.com/mortgage-calculator/ and click on “advanced”, then use 2% of the price on whatever house you’re looking at so you can place that number in “HOA dues”. Why? Because this is the only field where you can place repairs and maintenance.
Or even simpler way: you could take whatever monthly mortgage you’re being quoted on the property and add 60-70% on top of that for all of the ancillary real estate costs associated.
So after you know the true cost to carry property, how much did you spend to carry said property from point A to point B over those 60 months?
(two hundred ninety four thousand dollars)
How in the f*ck does this type of math make you rich, let alone wealthy?
And you haven’t even paid your real estate agent her 6% of the property’s price yet, champ.
Nor did you deduct the cost to bring the property up to code/marketable value for sale.
But you sure did just get a plaque from the national negro league for “not paying rent” lol
Meanwhile the future business owners in the community see this and with limited resources, go to the “uncle Jody made “$205,000 just by buying a house!” camp even with all the $1 calculators available to them in the world. Because the truth is if that potential business owner doesnt fall in line, they’ll be made fun of for “paying rent all of their lives”. And with limited resources you have pretty much one of two options early in life – overhead costs at home or overhead costs in business.
Adolescents being locked up for robbery and drug dealing because there are no economic opportunities. Local police who are funded by property taxes with their hands caught in between it all.
But hey…if only you had that mortgage, your life would be set!
Its the businesses that are the economic hub and job providers in any growing community. Any house appreciation is a RESULT of business owners creating economic opportunities. This is why black houses don’t appreciate (really no houses appreciate but thats for another math discussion).
If you have no businesses (or nothing but liquor stores and fish frys on every block) you have no economic opportunities.
But you got a whole lotta fish though.
Don’t just have a whole lotta fish.
Encourage undercover employees who should be entrepreneurs to play their part, today.
Its time to “unveil some of these b…”
Oh and please fall in love with a calculator…
Recap: A house does not make you wealthy. The business you started to BUY the house does.
Are you ready to avoid the math on that?