Don't think of your home as an investment....What?!?!?
Isn't that sacrilegious or something?
Despite evidence to the contrary, new homebuyers continue to believe that buying a home is the same type of investment as stocks, bonds, CDs and their 401K. If the housing boom taught us anything, it is that the purchase of the house you plan to live in is not your sole asset toward retirement. Nor should it be.
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Over long periods of time, the return on investment for the home you live in is nearly zero compared to stocks and other types of investments. That is because the combination of taxes, inflation, insurance, interest and the cost of repairs and upgrades absorbs most of the increase in the home's value. At the same time, that huge downpayment you plunked down isn't earning interest and the other costs to purchase the home are tied up in the "investment." This is especially true when you own the home for seven years or less. In fact, many Americans continue to believe that the value of their home will increase faster than inflation, but according to economists, history does not bear that out.
So why buy a home?
Ahhhh! The real reason to buy a home is because you want to live in it and make it your own. You want to raise your family there, become part of a community and establish your presence. Once the mortgage payments end, you'll have a less expensive place to live in your retirement years and something to pass on to the next generation. In fact, here are the top reasons to buy a home:
Should you buy a home?
Yes. Absolutely. But…only when it's right for you and your circumstances. And only if you truly understand its value, both now and in your future. A professional real estate agent can help you understand how homeownership can benefit you and your family.
When a house is an investment
Investment property is property that has the potential to increase your cash flow. These types of property include commercial properties and rentals (both multi-family and single-family homes). If you're interested in pursuing investment property, I can help you with that too.
I have purchased many houses for real estate investment and can help you find an investment house that is right for you. Contact me to find out more about buying your first home or buying a house for investment.
Keller Williams NWRE, LLC
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