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Seeing Your Home as an Investment Rather Than an Expense
Dated: September 23 2024
Views: 210
In my life time, I have found that most people only view home buying as an expense. People often speak of how much it will cost and all the risks of home buying. This thinking normally leads the buyer down the road of waiting too long to buy a home. I am here today to propose a different way of thinking. This way is not new, but rather the mindset of weathy real estate investors. Moreover, it is actually the historical understanding of land. Here is the secret: You must view your home not as an expense, but an investment.
Real Estate is a historically proven wealthy-building vehicle that will withstand hard times and bring better returns than any stock or mutual fund. Instead of investing in stocks, invest in your home and enjoy the benefits. Let us run some numbers.
Let's compare John and Peter. John is like most. He sees real estate as an expense and thus, withholds from buying for five years until the "right" time comes. During those five years, he rents a small apartment for $1,000 a month. After those five years, he buys a $200,000 house and begins to let his money work for him.
What is the problem with this situation? Most people would say nothing is wrong. He saved and bought the house he wanted. But that is the problem. Most people see real estate as an expense rather than an investment. During those five years, John paid $60,000 in rent that he will never see again. Moreover, he missed out on the appreciate of the home that he would have bought. Conservatively, homes appreciate 2-3% per year and often times much more. So John's failure to invest in a home cost him $4,000-6,000 per year. That is $20,000-30,000 over his five year waiting period. Thus, John's mindset cost him $80,000-90,000 over five years. And these numbers are extremely conservative! In 2022, houses increased by around 22% in value!
Now let's consider Peter. Peter stretched himself to buy now because he believed that real estate was an investment. Thus, he bought what he could. He bought a modest $200,000 home. In five years, the home appreciated at a modest 2-3% and now it is worth $220,000-230,000. Furthermore, Peter has been paying the basic payments every month, but is thankful to be avoiding rent. After those five years, Peter has saved $60,000 in rent! Instead, he has been investing in his own home that he can enjoy all the benefits of.
Now here is the shocking point. Peter has made $80,000-90,000 and John has lost it. This fact means that Peter now has $160,000-180,000 more than John because he embraced a different mindset. Now let that sink in... Moreover, Peter has enjoyed all the benefits of his home during that time.
Ladies and gentlemen, it is time to educate the masses and share all the secrets with the common folk. This understanding of real estate has been know by investors for ages. This mindset is not new. It is historic and proven. We must start viewing our homes as investments rather than expenses. What will you do with this information?
Andrew Rudd
Andrew Rudd is a trusted real estate advisor based in Shelby County, Kentucky, serving Shelbyville, Simpsonville, and the greater Louisville area, including St. Matthews, Middletown, Anchorage, East L....
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The data relating to real estate for sale on this web site comes in part from the Internet Data Exchange Program. Real estate listings held by IDX Brokerage firms other than United Real Estate Louisville are marked with the Internet Data Exchange logo or the Internet Data Exchange thumbnail logo and detailed information about them includes the name of the listing IDX Brokers. This information is provided exclusively for personal, non-commercial use and may not be used for any purpose other than to
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All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. The data relating
All information deemed reliable but not guaranteed. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) or information provider(s) shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless. Listing(s) information is provided for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. The data relating
