Top Reasons a House is More Than an Investment

Purchasing a home can be one of the most rewarding and meaningful transactions folks will ever be a part of. Outside of the obvious reasons for owing a home (shelter from the elements, more space for a growing family, shortened commute to work/school/family, etc.) using your home for its investment aspects is especially attractive given current rates and market conditions. I would, however, argue that you should not just consider the investment, the pricing, or the timing of the market to inform your decision to purchase. You need to consider many other factors that might seem to be a bit outside of the box.


1. Stability
Renting a home or apartment puts you at the mercy of someone else. Whether it is a landlord or a property manager, they can decide what to do with the property at the end of the lease. If you own a home, as long as you can pay for your monthly housing expenses you can remain in the home. This provides the stability that most folks need to put down roots and can be an important milestone for you and your children (assuming you have or want to have some).


2. Consistent Cost
When you own a home, you have a relatively steady monthly payment. Yes there are some slight fluctuations with regards to property taxes and insurance, but if you have a fixed rate mortgage you will have a consistent monthly payment that will not be subject to changes over time even as property values rise. If you are renting, your monthly payment is at the mercy of your landlord once it is outside of the terms of your lease.


3. Hedging Against Inflation
Owning real estate can be a great way to stave off the effects of inflation because you keep paying the same basic amount over time regardless of how the market effects the purchasing value of money. This can serve to increase the value of your home. Renters will have to deal with the diminishing value of the dollar over time which is why owning a home can be better than a bank account for stashing your cash.


4. Savings
Quite simply, owning a home forces you to save money each month. With every monthly mortgage payment a portion of the payment goes towards the principal balance of the loan (assuming it is a fully-amortizing loan). This can “force” the homeowner to set aside a specific amount of money each month for the life of the loan or until such time as they sell the property. Having a mortgage can require you to save regardless of the type of saver you are.


5. Location, Location, Location
This particular reason for owning a home isn’t necessarily outside of the box, but choosing a place to live that puts you closer to school, work, family, or activities can cut down on your commute and the amount of time and money that is spent daily. Depending on where in the country you live, this can also have an impact on your daily stressors (traffic, time management, etc.). The value that this can add to your life is immeasurable.


6. Additional Space
Another important reason to purchase a home is to have more space. If you are of the mind to start a family, having the extra space both inside and outside of the dwelling can be a great asset to your sanity. This can be a simple as having an additional room for a nursery or as ambitious as having an entire basement for a man-cave/she-shed/playroom. Renting a home can afford you some of these benefits, but you are limited with what you can do to them as you are, again, at the mercy of what your landlord will allow.


7. Backyard
In addition to having extra bedrooms or a basement, having a backyard gives you more space to call your own. This means another part of your home that you can personalize as you see fit. If children or pets are in your family (or in your future), having an outdoor space will give them all room to explore. As an apartment dweller you may or may not have the option to even have pets, and even if you do, there are limits to the number, breeds, and size of the pets. This is not the case if you have your own home.


8. Personalization
When you own your home you can design and decorate it as you see fit. You are not subject to the same rules or guidelines as a renter. If you want to tear down a wall, renovate a room (or the whole thing!), or change the landscaping you can do so at your discretion. Although you can personalize a rented property to some degree, it is really never more than a temporary space since you will ultimately have to either change it back to the previous state or pay to have it done when your lease is up.


9. Pride
Owning a home can provide a sense of pride of ownership. In other words, you are the boss and can relax with a feeling of satisfaction regarding all of the hard work and creativity that you put into your home over the years. It just feels good to own a home knowing that you are taking part in the American Dream.


10. Creating an Estate
Lastly, owning a home means that you will have something to pass down to future generations of your family. This is not the case with renting. Once your lease has expired, you walk away with nothing to show for it. With all of the personalization, hard work, and creativity you put into your home it is a wonderful benefit to be able to keep the property in the family. There is also the added benefit of knowing that you are taking care of your loved ones.

Until next time….

-The FMT-