What Is My Property Worth?
Is your home really an asset? Ask this question in any
social setting and you will probably be met with puzzled
gazes, because it is obvious to anyone that knows anything
about anything that your home is not only an asset but it
is your most prized asset. To most people their home is
the one thing they know they can't go wrong on, they have
put their money into bricks and mortar and there is no way
they will not see a healthy profit. The question, what is
my property worth? Is normally met by eager anticipation
from those who believe they have accrued a significant
amount of equity.
For years it has been the accepted truth that your home is
an asset, yet perhaps this truth has been blindingly
accepted without fully understanding what an asset really
is. To fully understand what an asset is in relation to
property it may help to understand that an asset, in
property terms, is often linked to what is known as good
debt, once we understand what good debt is and its
relationship with assets it will help us to have a better
understanding of what true assets really are.
So, what is good debt?
Good debt is debt that you have incurred by purchasing
something that appreciates in value and/or can provide you
with passive income that pays for itself, and doesn't need
you constantly putting money into it. Even better still, as
well as paying for itself and often appreciating in value,
good debt can sometimes put money in your pocket in the
here and now. In short good debt normally comes about when
you have purchased a true asset, which is a product or
service that meets the description above.
In this vein, your home could not be classed as an asset,
because you live there and you have to pay the mortgage
yourself through other means i.e. through working at your
job for a wage to pay the mortgage or through the money you
get from other assets. And even if you have paid off the
mortgage, you would still have things to pay on the house,
such as utility bills, taxes, repairs etc. So you will
always need to have some income from some other means in
order to finance the upkeep on your home.
However, some may class their home as a sleeping asset
ready to be realised whenever they choose to cash it in or
remortgage? This theory appears logical enough, yet what
has to be understood is that while this sleeping asset
appreciates in value, so are the other sleeping assets
(houses) around it so when you want to sell and move else
where, even though you may be able to sell it for much more
than you bought it for, you will not be able to cash this
amount in as the likelihood is that wherever you are moving
to will also have increased in value by a similar amount.
The only way you will truly be able to realise the value of
your property is to either move to a smaller or less
expensive property, remortgage and use the equity to invest
in assets that will appreciate greater than your property,
or when you die and meet your maker and leave the house to
a loved one, however this third option is very drastic and
I would not recommend it to anyone. As well as you not
being around to enjoy the fruits of your labour, the tax
man might be only too eager to grab his chunk of your
property pie even before your loved ones have got their
hands on it.
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Carlton Johnson is an entrepreneur, property investor and
author who specialises in helping others to reach their
financial and personal goals through property investing and
Internet marketing. For more information on property
investing and developing in the UK you can visit his
website at:
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