There's a gossipy item in the most recent issue of Canadian Real Estate Wealth that talks about the expensive real estate mistakes made by stars like Scarlett Johannson, Nicolas Cage, Lenny Kravitz and others.
It's a story of buying high and then deciding within short order to sell. Sometimes the market intervenes, as it did in the U.S. where prices are down following the near collapse of the U.S. economy in 2008.
The story talks about how the stars spent big money on exclusive properties and then tried to sell for more during the down market. Some, like Lenny Kravitz, bought high, couldn't sell and then did more expensive renos in an effort to attract a buyer.
Lenny was ultimately forced to sell for $3 million less than he paid for the property, despite his pricey renos.
You might never be as rich, beautiful, talented or famous as a rock star or movie star but you can be smarter and save yourself money, headaches and nightmares when it comes to property investment.
Buy for the long term. At the very least, buy with a one- or two-year outlook.
When you think about it, the simple act of buying a property costs plenty, beyond the purchase price. Think about the notarial fees (about $1000, moving costs, $1000, inspection about $500, painting, fix ups.) You will proably spend close to $5,000 before you sleep a single night in your new home.
Unless you are buying at the very low end of the spectrum or make an extremely opportunistic buy, it will take a little time for your house to appreciate in value. No sense selling until you can sell for a profit, right?
I can't imagine buying a home in an exclusive area, as Johansson did and then deciding less than two years later to sell at a loss. Maybe her neighbor Charlize Theron wasn't good about mowing the lawn or putting garbage out ONLY on garbage night. Who knows.