by Drew Sygit
Robert Kiyosaki (author of Rich Dad, Poor Dad) is possibly the most famous person to say it, but is bears repeating: Buying a house is not an investmentunless you do it very, very consciously with the express purpose of buying a home worth investing in. A house that you live in is a liability in every sense of the word. Sure, it might be the most valuable thing that you own, but when it costs you money month after month, is it worth it?
The Reality of Home Appreciation
According to Robert Schiller, author of a book about the housing bubbles called Irrational Exuberance, the average total inflation-adjusted annual Return On Investment (ROI) of homes between 1890 and 2012 was…0.02%. That’s a rate worthy of a checking account, not an investment. And when you sell a home you were living in, you have to buy a new home, which means even if you’re downsizing, you’ll see maybe a third of what you originally spent in actual liquid money.
The Reality of Inflation, Rent, and Property Taxes
People like to say that rent increases with inflation. That’s true — but property taxes almost always outpace inflation, which means the longer you live in a home, the more likely it is that your property taxes are going to outpace what your rent would have been.
The Reality of Maintenance
When you rent an apartment and something breaks, it’s either going to be:
- Something you can fix yourself for $20 and the time it takes to get to Lowe’s and back, or
- Something the landlord will fix on his dime and his time spent.
When you own a home, you fix everything, on your dime, using your time. That’s many thousands of dollars and many hundreds of hours that you don’t get back because your home isn’t appreciating as fast as it’s disintegrating.
The Reality of Renovation
When the concept of flipping became popular, lots of homeowners used it as a great excuse to drop $30k renovating their home. “After all,” they said, “This will increase the resale value more than it will cost!” That is absolutely true — if and only if you sell the house immediately.
If you continue living in the house, a few things will happen that will negate your “investment in your investment.” First, property taxes will rise and you’ll end up paying for that added value. Second, you’ll use the renovated spaces, and their glisten and gloss will wear off just like it did on the rest of the house.
The Reality of Tax Deductions
In 2010, there were significant tax breaks for first-time homebuyers that could make a strong argument for people with certain kinds of income to buy a house. But all that ended in 2011. Today, if you’re not an investor (with an expert accountant in your pocket), the tax breaks are hard to find and hard to notice when you do find them.
The Reality of Being a Real Estate Investor
If you haven’t figured it out yet, being a real estate investor — owning a home that someone else lives in and pays for — is pretty much exactly the opposite scenario. When you turn a home into a source of active cash flow instead of owning it for the purpose of having a roof over your head, the only one of these points you have to worry about is being on the other side of the “maintenance” coin… and that’s what a property manager is for.
So go ahead and buy that house you’ve been saving up for — and keep renting your apartment while you let someone else living in that house. Take the money you would have spent on maintenance and renovations and use it to further your investment portfolio. In 30 years, your bank balance and your stress level will thank you.
Investors: Do you agree with my assessment?
Leave your comments below, and let’s talk!
Interested in Finding out More? Reach out below
Address: 1415 Main St. #823, Grandview, MO 64030
Ireland Investments llc
This information is intended only for the use of the intended recipient(s) and it may be privileged and confidential. Please note that any views or opinions presented in this post are solely those of the author and do not necessarily represent those of the company. This is reposted information and is not original thought of Ireland Investments or anyone associated with the business.
Popular areas we service;
Kansas city Missouri, Overland Park Kansas, Kansas city Kansas, Olathe Kansas, Independence Missouri, Shawnee Kansas, Blue Springs Missouri, Lenexa Kansas, Leavenworth, Kansas, Leawood Kansas, Liberty Missouri, Raytown Missouri, Gladstone Missouri, Grandview Missouri, Belton Missouri, Prairie Village Kansas, Gardner Kansas, Raymore Missouri, Grain Valley Missouri, Ottawa, Kansas, Lansing Kansas, Excelsior Springs Missouri, Merriam Kansas, Harrisonville Missouri, Cameron Missouri, Mission Kansas, Kearney Missouri, Smithville Missouri, Pleasant Hill Missouri, Oak Grove Missouri, Bonner Springs Kansas, Roeland Park Kansas, Parkville Missouri, De Soto Kansas, Richmond Missouri, Greenwood Missouri, Paola Kansas, Basehor Kansas, Tonganoxie Kansas, Odessa Missouri, Peculiar Missouri, Platte City, Missouri, Higginsville Missouri, Lexington Missouri, Edwardsville Kansas, North Kansas City Missouri, Osawatomie Kansas, Louisburg Kansas, Fairway Kansas, Mission Hills Kansas, Sugar Creek Missouri, Riverside Missouri, Buckner Missouri, Pleasant Valley Missouri, Lawson Missouri, Plattsburg Missouri, Lake Lotawana Missouri, Weatherby Lake Missouri, Wellsville Kansas, Edgerton Kansas, Westwood Kansas, Garden City Missouri, Gower Missouri, Claycomo Missouri, Lone Jack Missouri, Drexel Missouri, Lake Tapawingo Missouri, Glenaire Missouri, Dearborn Missouri, Avondale Missouri, Osborn Missouri, Sibley Missouri, Oaks Missouri, Unity Village Missouri, Levasy Missouri, Randolf Missouri, River Bend Missouri, Jackson County Missouri, Johnson County Kansas, Clay County Missouri, Wyandotte County Kansas, Cass County Missouri, Platte County Missouri, Leavenworth County Kansas, Miami county Kansas, Lafayette County Missouri, Ray County Missouri, Clinton County Missouri, Bates County Missouri, Linn County Kansas, Caldwell County Missouri, Crossroads Real estate, 18th and vine Real estate, Hospital Hill real estate, library district real estate, longfellow real estate, dutch hill real estate, quality hill real estate, river market real estate union hill real estate, Greater downtown KCMO real estate, East Side KCMO real estate, Midtown KCMO real estate, Westport Real estate, Hyde Park real estate, Northeast KCMO real estate, Northland real estate, Plaza Real estate, South Kansas City Real estate, Fairway Kansas real estate, Kansas city Kansas real estate, lake quivira Kansas real estate, Lenexa Kansas real estate, Mission hills Kansas real estate, overland park Kansas real estate, prairie village Kansas real estate, Shawnee Kansas real estate, weatherby lake Missouri real estate, westwood Kansas real estate
Leave a Reply