Tag: investing

Real Estate is the Spice of Life

Continuing the theme from last week’s Priority Pulse of offering something insightful and unique to your potential customers rather than reposting a meme that every realtor and their cat have already posted, I’ve prepared this idea for you.  This idea is meant to reach those who believe they know enough about the “investing world” that it’s hard for them to decide between purchasing a home or investing their money elsewhere.  (My “preferred” message for these types of people is to slap them upside the head and say something profound like, “Don’t be a fool,” but this idea involves less violence and will persuade more people.)

When you meet these folks who are weighing a purchase against another type of investment, ask them this simple question: Have you given your choices the SPICE test?  No, this isn’t a test designed to determine what investment the Spice Girls would recommend – it’s far less complicated.  While you still have their attention, tell them that SPICE stands for the following: Security, Payoff, Imitation, Control, Effort.

Security:  Because real estate is brick and mortar, it’s not going to vanish.  Even if catastrophe (fire, flood, tornado, etc.) were to strike, you can insure your property against loss.  Most other types of investment don’t have any mechanisms that allow you to insure against loss – they have far less security than owning property.

Payoff:  Even when things went to hell in a handbasket in the earlier part of this century, if you didn’t do anything drastic and continued living your life in your home, your values have likely recovered, and you’re ahead again. (The same can be said moving forward.)  If your investment is stock in a particular company or product, you can’t decide whether that company or product will stay in business, and your payoff could be gone.  With a house, it’s still yours and the potential for payoff still exists.

Imitation:  Millions of people have done this before you, and just as many will do it after you – they’ve all demonstrated that the success of purchasing a home and owning it is easily imitated and repeatable.  Other types of investment don’t have anywhere close to that type of track record that you can trace and follow like you can with home ownership.

Control:  It’s your property.  You maintain it and improve it.  You’re the CEO and Board of Directors of your home.  With other investments, you’re HOPING the CEO and the Board will do smart things, but you have no control.

Effort:  You have to live somewhere.  You might as well make some money through paying down your mortgage and appreciation while you’re living your life – renting’s not going to do that – so no extra effort is required. Other investments don’t offer that effortless combination.

You might say that I’ve oversimplified it, but the fact of the matter is when someone is trying to decide between purchasing a home or investing their money elsewhere, they’ve over complicated it.  By asking them to apply the SPICE test to their choices, they’ll have a clearer view of what they’re truly undertaking, and you’ll be seen as the expert who helped them gain that vision.