While there are some advantages to renting, your house is a great investment. Here are a few reasons why I say that.
Your House as an Investment Reason #1: Growth
Over time, most properties increase in value. A lot factors into that growth, but you can expect the average growth to be about 3.7% per year. That may not sound like very much, but it compounds over time. So even though your house’s value (typically) won’t grow much in a year or two, it definitely will over the course of 10 or 20 years.
And if you buy the house in a down market, you can expect even more rapid growth. Homebuyers who got into their homes after the 2008 crash were able to get great deals on homes, then enjoy the rapid growth over the next few years.
The best part is the amount of money you’re putting into your house doesn’t change. So your mortgage payment stays the same but your home is growing in value. That’s something I’ll take any day of the week, because it means each year you are essentially getting more leverage with your payments.
Your House is an Investment Reason #2: You Need to Live Somewhere
Everyone needs a roof over their heads. You essentially have two options for that:
- Rent your home, or
- Buy your home
When you rent your home, the primary advantage is you don’t have to deal with home maintenance. But the big downside is that your money is going into building assets for your landlord and property management company.
If you purchase your house, every payment you make to the bank is building your assets. Those assets will grow faster with certain types of loans, such as a 15 year loan. But even on a 30-year loan, every payment is paying off part of the mortgage and building equity.
So you’re killing two birds with one stone. You’re providing a place to live for yourself and your family, but you’re also building up a tangible asset.
Your House is an Asset Reason #3: It’s Yours
Not everything is about ROI. There is no ROI on your relationships with family members. You can’t calculate an ROI on the time you spend with friends to relax and have a great time.
A home that you’ve purchased is the same way. While you can technically calculate an ROI when you sell the home, you can’t when you’re living in it. That’s because it’s more than just dollar signs – it’s your home. Your nest. The safe place you go to wind down, relax and enjoy time with your family.
When you buy a home, you can do anything you want with it. Paint the walls any shade of color you want. Take out the trees in the back yard and build a basketball court. Install a swimming pool with a waterfall. Turn the inner room of the basement into the sweetest movie theater ever.
That’s why your house is a great investment. You can do whatever you want with it, and that’s a nice feeling to have.
There are both financial and emotional reasons a house is a great investment. Give us a call at 949-651-6300 and we’ll help you get started down the path of buying your dream home.
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