**Note from Paula: You’re probably going to wonder how this article’s introduction relates to the headline. Just stick with me for a minute.
An elderly farmer and his horse tilled the fields for many years. One day his old horse ran away.
The man’s neighbours came to offer sympathies. “How unfortunate,” they said. The man shrugged and replied, “Maybe.”
The next day, the old horse returned, bringing with him three strong wild stallions that could work the fields. Again, the neighbours came. “How lucky!” they cried. The man shrugged and replied, “Maybe.”
The following day, the man’s son was thrown off one of the stallions and shattered his leg. The neighbours came by. “How unfortunate,” they said. “Maybe,” the man replied.
One week later, the military instituted a draft. All young men had to fight on the front lines of a bloody war from which few returned home. But the son, whose leg was broken, was awarded a draft exemption. “How lucky!” the neighbours said. “Maybe,” the man replied.
The story above is a Taoist myth. Today I had an experience that reminded me of the tale.
We’ve been trying to borrow against our triplex to buy another rental property. About four months ago, our broker asked us to hire an appraiser. The appraiser’s job is to decide how much our property is worth.
We paid $400 to have an appraiser visit our home. He sent us a figure that was $25,000 more than we paid for the house one year ago. We celebrated. How fortunate … right?
The mortgage broker kept requesting “just one more document.” This stretched for weeks. Weeks turned into months. We diligently kept sending in “one last document” and watched as homes we wanted got snapped up in the meantime.
Two weeks ago our broker informed us that the never-ending string of “just-one-more-things” had lasted for so long that our appraisal is now more than 90 days old. This means it’s out-of-date. We’ll have to pay another $400 for a new appraisal.
Ugh. How irritating, right? …. Maybe.
The second appraiser came to our home last Sunday. We heard the results today: Our house is valued at $100,000 MORE than we paid for it one year ago — a 45 per cent increase in value. WHAT????
How fortunate, right? … Maybe.
In the foreseeable future, I guess this is good news. It means we have more access to capital to buy more rental houses. That’s good news, if everything goes according to plan (let’s hope for strong cash flow and good tenants!). Of course, this also exposes us to additional risk, so perhaps it’s bad news. Who knows?
Any “good news” or “bad news” may have far-away consequences we can’t predict. So I’m not celebrating my sudden $100,000 boost in home equity, which is an imaginary concept anyway. (Home value is theoretical except on the day you buy or sell.) And I won’t get too glum if the house later appraises for less than what we paid.
In theory, the house is worth whatever the appraiser says its worth. In reality, the house is worth whatever the free market says its worth, and since I never plan on selling, that number will always remain a mystery.
In the meantime, all I can do is scratch my head, shrug my shoulders and say, “Let’s see.”
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