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|User Info||I Want The Coinage Act Back; entered at 2019-04-14 14:13:42|
@Rollformer -- There are two issues that are intertwined yet Realtors lie and so do the crooners in the media.|
All tangible things undergo entropy. Entropy is what turns everything, without the input of energy over time, back into dust. The input of that energy is maintenance and keeps things "like for like" over time.
Improvement goes beyond that. Said improvement almost never, in a Real Estate transaction, is returned dollar for dollar even if the improvement occurs directly in front of the transaction! The premise of inflation means that not only should you get that dollar back you should get more than the dollar, but you never do. In other words the only thing that inflates is the price of the improvement or maintenance -- AND YOU NEVER SEE THE BENEFIT OF ANY OF IT AS THE PUTATIVE "OWNER" OF SAID PROPERTY.
For this reason it is NEVER in your best interest to make said improvements in the context of attempting to "improve" the value of real estate; price for the market as things are now and let the buyer make that improvement, since he's interested in the quality of life upgrade (rather than dollars) and the intangible value to him is both greater (for you it's zero if you're going to immediately sell) AND he maximizes it by making the decision as to exactly what to do (e.g. what color of new paint, etc) where if YOU make it his intangible gain is lessened because the odds of his selections exactly matching yours are vanishingly small.
IF you make said improvement(s) to Real Estate you should ONLY do so because YOU want to live in the resulting space; that is, you do it ONLY for the intangible value. That can and frequently DOES make sense but you should ALWAYS consider the potential transfer value of such an improvement to be ZERO.
The real problem with fixed hard assets such as Real Estate is that the value is diminished by the forward cashflow required to maintain it and a huge percentage of that forward cashflow is not to defray entropy but rather comes in the form of property tax which you cannot control.
A property tax increase places a permanent and forward amount of destruction on the value of said asset that is added to each and every year and, to the extent a pattern of increase is established that's a compound function. It is entirely possible to reduce the value of real property in such an instance to ZERO.