carcassgrinder (43.23)

Am I working for my bank in my off time?

March 26, 2009 – Comments (2) | RELATED TICKERS: SLA , VE

This thought has been occuring to me as I spend time in the evenings on various projects in my house.  Am I essentailly earning my mortgage lender money by enhancing the house and property i bought last year?  Here's the problem.....

Last year I purchased my first house in July (great timing, heh?).  I purposely bought under what I could afford because I have always been leary of a heavy 30 year commitment.  i biught a place for 72k that was clean and livable the day I possessed it, and it lies in what stands a great chance of being the next "beautified" neighborhoods in my township.  There are already some beautiful rehabed properties in the neighborhood that are listing in the 150k-200k range...but they have been on the market for a while, and the ones hitting the market now in need of comlpete rehab are ranging from 15k-45k. 

I bought my house at 72k knowing that i could use it immediatley as my primary residence, and then spend a couple years updating it....and possibly turn it in a few years at 90k-100k and make a little profit off of it.  I have already replaced all the flooring w/ wood, painted all rooms, new appliances, total bathroom update, bumping out kitchen to add about 180 sf.  I'm doing all the work myself with a little labor help from a friend.  I have spent a ton of my off time pursuing these projects, and have done it all on current income.  I have not taken a single loan for the work....that was part of the reason i bought at below what i coudl afford...so I would be able to do buildout on current income.

So with what has happened to the housing market since July....here is my fear.  My house bought at 72k is probably only worth 58k now because of the decline in housing.  I cannot get any adjustments to my principal because my mortgage is well below 1/3 of my monthly salary.  So...my fear is that i am simply investing in my house now just to get it back closer to the value I purchased it at....thus just really earning the bank their money back.....

If the house appraises at 72k when I am done with the work....then I have just spent all that money to get back to 0.  Please tell me I am looking at this wrong!!!  The house was not meant to be an investment...and I want the changes for my environment...not in the hopes of making profits.  But I was doing it in hopes of selling in a few years..and using the proceeds to upgrade.  That doesn't look promising at this point....looks more like I am just getting it back closer to the over-appraised price that I purchased it at.  

Your thoughts.....?