I typically can’t stomach a lot of the political news making headlines, but one did catch my eye this last week from Sen. John McCain. Since it touched a financial nerve and set-off the debate of what it means to be wealthy in America, I think we should take a closer look at the comment.
My intent is not to debate whether Sen. McCain has a pulse on the working middle class in the U.S. or whether he thinks a wealthy person is someone making over 5 million dollars. I do want to ask what you consider a “Home” to be, and whether you would consider investments as a second “home”?
“How Many Homes Do You Own?” This statement can be taken many different ways and could even be hard for you to answer. Yep, I mean myself, you, your friends, anybody. What do I mean? Well, let’s take a look.
One answer would be how many homes do you have legal title over? In other words, how many property titles have the name John or Cindy McCain?
Now here are some other interpretations of the same question, “How many homes do you own?”
1. I really don’t own my home, as my mortgage is with a bank. I make payments to my bank and they own the home. In fact, they own more than 50% of my residence. Technically, I don’t own a home until I have paid back 100% of the mortgage. Now this may sound extreme, but is it?
2. Are you a partner of a trust? Maybe the trust owns buildings, property, or rentals and you own a share of those properties. Technically, you don’t own 100% of anything. If you have one partner, you may own 50% of the properties. I think we would all argue this as owning a property, but would you?
3. Do you own mutual funds or REITs? Could it be possible that you own thousands of properties? I own shares of VNQ Vanguard REIT ETF that tracks various REITS. Could I possibly name all the properties held in VNQ? No way! Do I own thousands of properties? I own a small fraction or interest in these properties as a shareholder. But, technically I don’t own any of them as my name is not on the title.
4. How about a timeshare? Do you include this as a home? Do you own a Hilton, Disney, Marriott or RCI timeshare? Typically these timeshares allow you to buy points or credits towards time at various properties, making it fractional ownership. You may hold a title and you may not. Check your contract as you might just own points. Although, I’m sure if you own a timeshare, you feel like you are making one extra mortgage payment a year.
5. What about a co-op or vacation house you share with friends and family? You might have that cabin in the woods or maybe you have a beach house near the Jersey shore that you share with friends. Do you include this as a residence? You own a partial interest, but would you consider this a “home”?
I’m not try to speculate what Sen. McCain was thinking when he was asked the same question, but it does appear that a lot could have been going through his head. Most homeowners would probably answer “one”, even though we might have a partnership or condo timeshare. If you have a real estate partnership, vacation property, or timeshare, it might take you a few minutes to answer. Well, how would you respond to the same question?
If you want to read the full context of the story and even hear McCain answer the question, you can go to the Politico website here.
photo credit: fotografar
{ 3 comments… read them below or add one }
We have one home, but don’t own any homes, since we’re still paying our mortgage
That being said, given John and Cindy’s current track record (“The only way to get around Arizona is by private jet” quote comes to mind) and his desire to win over the vote, I would have suggested to John that he add some clarification to his “I don’t know” statement… perhaps he should have taken a look at your blog before responding!
I pay mortgages for 2 homes. One is my primary residence and the other is a rental property.
@Money Love and Change I’m with you, I have one house but the bank owns it
@ Single Guy Money Great to see you have a rental property as they are a great source of passive or alternative income. I would love to have a rental but am concerned about managing another property.