The Best Investment You Can Make
Buying a home, if done right.
An investment that has helped economically elevate more people than any other is real estate. That realization was a long time coming for me. One of my profs in business school had said that buying a home was not a good investment. The price just went up with inflation and when you sold you still needed a place to live, and you would have to buy another house. You were no better off.
I accepted that without much thought. Read that again. That is what is wrong with our education. We accept what we are told without much thought. I like to think that I do not just accept what I am told. In that case, it made enough sense that I did accept it.
My wife wanted to buy a house. I delayed the purchase because I “knew” it was a poor investment. Finally, we bought a house. Ten years later, I took the coursework to become a real estate agent. My eyes were opened. We sold our home for a $100,000 net profit. Even more importantly, there was no income tax on that amount.
My down payment for the home had been $6000. Now I had $100,000 to put down on a home. I could afford a nicer home.
I am helping my niece find a home. Although she has a well-paying job as a physician assistant, she has difficulty qualifying for a home because she is single. Two people with incomes above average beat a single person with an even better income.
It goes back to supply and demand. Nearly all couples have two earner incomes these days. The demand for houses is based on two incomes. That has driven prices higher than the days when men were the only workers in the household.
The problem can only be improved by increasing the supply of homes or reducing demand. Giving people money for a downpayment, as proposed by some politicians, will only increase demand and cause prices to rise higher.
Some young people are opting for purchasing a condo. That option is being promoted as a solution for over-crowding. It is more difficult to add value to a condo. Adding value (making improvements) is one of the reasons homeowners gain equity. That was what I learned. In fact, I systematized the approach and wrote a book on it. You can purchase it through Amazon.
Buying a home is the best investment you can make, if you do it right.