Why investing in real estate is not buying a house to call home

As a professionally licensed real estate agent in Florida I see a lot of people get caught up in this myth of their primary house being an investment. It’s important to teach and educate when selling real estate, figure the cost of the average home in the U.S. according to the national association of REALTORS was $214,200… That’s a large sum, yes it’s an investment….

But, the 1st rule of investing is… 

 

Never put all your eggs in one basket, that saying holds true when investing. If you’re buying an average priced house and put 20% down, say $40,000, which could easily be your whole savings… maybe all your life’s work so far… The investment savvy thinker realizes this doesn’t do anything for them in the form of diversification. All the eggs are in one basket. That would break the 1st rule of investing; never put all your eggs in one basket.

 

How much is in your other investment accounts …stocks, bonds, mutual funds? How diversified do you become after purchasing a home and doing everything you can to pay it off sooner instead of later? I’m a fan of both Dave Ramsey and Suze Orman, and every other person that believes the sooner your house is paid off the easier life becomes.

 

Considering the house you call home as an investment compared to a house you purchase and turn into a rental is a hugely different story. A smart option for 1st time home buyers transitioning out of renting an apartment is to consider the purchase of a duplex or triplex. The rent you take in from the 2nd or 3rd unit is usually enough to cover the mortgage, insurance, and some of the expenses… and that offsets your cost of living compared to footing the bill for the whole mortgage payment of a single family home.

 

Resources:

http://20somethingfinance.com/a-home-is-not-an-investment/
http://www.realtor.org/topics/existing-home-sales
http://www.investopedia.com/university/risk/risk4.asp
http://www.daveramsey.com/articles/article/articleID/the-truth-about-real-estate/category/lifeandmoney_realestate/
http://www.suzeorman.com/resource-center/home-ownership/

 

 

 

Do you feel people who comment are more intelligent? ...Prove it.