Would you buy Michael Jordan’s house?
After reading through a few popular news sites earlier I couldn’t help but mention this story, especially with our blog being called Money Rebound!
Apparently the home of basketball’s all time legend Michael Jordan recently failed to sell at auction because it didn’t meet the reserve price. Jordan’s home had been listed at a huge $29 million in February 2012 only for the price to be dropped to a cool $21 million when there was a lack of interest. Now with it failing to sell at auction poor Michael might have to take a big hit on the property – which has its own full size basketball court, putting green and and chipping area – and somehow survive on just his bank balance, investments and meager earnings from his lucrative deals with Pepsi, Gatorade, HanesBrand and Nike. According to this CNN Money article he also owns his own a motor-sports team, restaurants, and holds a majority stake in NBA team the Charlotte Bobcats. How will he get by, right?
I suppose we can all learn a little lesson here – perhaps on a smaller scale than Michael – about what not to do when you renovate your house. As much as I think that your house should be viewed as a home rather than just an investment, if you are going to spend a heck of a lot of money making changes to a property, then you might want to try and avoid making it a shrine to yourself and think about whether you will ever recoup that money if you come to sell in the future.
If you are going to ignore that advice and you want to spend a fortune putting your personal tastes into every corner of the property, then you have to be prepared for the fact that you might also take a hit when it comes to selling your home in the future. The other option would be to spend a bit more money on the property at the time of sale to make it more neutral and appealing to potential buyers, but this obviously means more expense. I doubt this was an issue at the forefront of the mind of one of the most marketable men in world sporting history because as mentioned in the CNN article, he can probably afford to take that hit. For us lowly folk though who need to make wise financial decisions, it is good to think ahead before spending a fortune on renovations.
Another thing to keep in mind when making renovations is that property prices usually have a ceiling limit on how high the price of a property can go. If you want to find out what that ceiling price is then get yourself online and research the prices of houses that have sold in the area over the past 5 years or so, perhaps even before the crash so you have some idea of what it might be when prices return to those levels, which they inevitably will be it in 3 or 10 years time. Sometimes it is possible to break through that ceiling price but even if you do, you can be sure that the ceiling price will have an affect on the potential return on your investment.
Oh and one final thing, you might want to avoid putting your old basketball number on the giant gates leading to your estate.
So would you buy Michael Jordan’s house if you had the cash?