The Home Is Where Your Heart Is… And Your Wallet!
One of the first facts we learned when we started investing over two decades ago was that a home is rebuilt every 17 years. I don’t know if that was an exact figure, but I do know it made us start a thought process that has continued today… the home is a wonderful place to invest! Not the actual purchase of a house, but everything that comes after you buy that dream home.
Think about how much money goes into running, repairing, and upgrading your house. It doesn’t matter if you bought a brand-new tract home or an old 1929 historical home, you are going to pay to maintain your home. This behavior is what makes it such a solid long-term investment theme from the get go. In essence, we are extremely confident that homeowners will spend on their homes.
The other attractive aspect of the home is the financing available to homeowners. As long you have equity in your home you will have the funds to repair and remodel. So, we now have a customer who is typically emotionally tied to their house (as they should be) and most of the time has the funds available to “reinvest” in their home. Not a bad one-two combination!
With these well-funded, emotional customers we break out the potential home related investments into two categories: 1) Maintenance, and 2) Repair/Remodel. Both areas are filled with well-run, longstanding companies providing potential investment opportunities. On the maintenance side, you have Pest Control companies, Lawncare companies, Paint/Chemical Companies, and many more. On the repair/remodel side there are Lumber, Pool-Related, Appliances, Fixture Companies to choose. And of course, there is the duopoly of Lowes and Home Depot in which we can invest.
The only hiccup with this investment thought is the consistent growth of many home related companies has not gone unnoticed. They are not always the least expensive stocks. But, we stay disciplined and undervalued opportunities will present themselves.
In summary, this a relatively simple investment idea but one I think many investors don’t dive deep enough into and really see the tremendous long-term opportunity.