Owning and buying a house has always been a great dream for many people. It’s hard to deny that many go through life with certain goals in mind, such as going to college, getting a job, getting married, buying a house, and having kids. While this may vary between person to person, more often than not, buying a house is a priority for someone who has managed to find a stable job, and could be considered an adult. There are several things though you should be informed of with regards to home investment before taking the plunge.
Let’s say you finally managed to finish college and paid off your college debt, building up a reputable credit score while doing so. You have started investing in several funds such as an emergency fund or opportunity fund and have even thought about your 401k. These are good signs that you’re ready to become an adult and make the big decisions in life.
Everyone Needs a Home
Now a house is probably one of the biggest, if not the biggest purchase you will probably ever make in your life. However, this is money spent at its finest – everyone needs a place to live in, and you could be tired of just endlessly throwing your money away paying for rent. This is going to be one of the most important decisions in your life and could have far-reaching consequences. However, did you know that a home could also be a worthy investment?
Robert Kiyosaki, the author of Rich Dad, Poor Dad, once said that a good investment is something that will pay more than you paid for it. In finance, an asset is anything that puts money into your pocket, while a liability is anything that takes your money from your pocket, Naturally, we would want our homes to be good investments which could be assets to us. Now, the question that comes up would be – is a home a good investment?
Factors to Consider
By now you must realize that having a house is a constant stream of expenses, ranging from the mortgage payments each month, towards paying for utility bills, and the occasional repair and maintenance costs. Even if and when you finally pay off your house, there are still costs such as insurance and property taxes you need to consider. Looking at it from a distance, your paid-off house might make your net worth look good, but truth be told, that amount is locked up in the home itself. Accessing that money would need you to take steps such as refinancing or selling the house, which would mean you would not have any place to live in at all.
Investment in Property
How then can your house become an investment? An option you could consider is putting your house up for rent. This means that your house’s tenant’s rent would pay off the mortgage dues, utility bills, and even the property taxes. If you have a house in a good location and find responsible tenants to rent it out, the house could actually become a good investment tool – bringing cash into your pocket, and not taking anything out.
Where do I live then?
Renting out your house isn’t the only option to make it into a good investment. The most basic type of investment it could become is to be a shelter of your own. It is true that you would be paying recurring monthly bills and dues, but this is all part of your living expenses and should be covered in your monthly budget. The personal space, freedom, and comfort living in your own house is something you could hardly find anywhere else. Now, that in itself, is something that is close to priceless.