Why Your House is NOT an Investment

Why buying a house is not an investment

I know this sounds crazy but let’s talk about why people believe houses are investments:

We get it from our parents and grandparents. They had simple lives and typically bought a home in their 20’s raised a family and sold the house when the kids moved out or at retirement for a nice profit.

But Brad, that sounds like an investment!? Yes, yes it does...to most people.

But what is an investment: To me, it’s an income-producing asset. A house you live in is not that. It’s a place you eat, sleep, and poop in.

Yes, as a whole, real estate goes up in value in the long run. However, our generation wants to move around the country and constantly upgrade lifestyles. This means that we don’t plan on having a house for a long period of time, maybe 3-7 years.

This is dangerous because real estate follows the market. The more jobs people have, the more people make and the more people want to upgrade their lives. People that live in small apartments buy small homes, people in small homes, buy nicer homes, etc.

When the economy is down, a lot of people are unemployed and can’t get approved for a mortgage or afford a down payment even though the prices are low.

When you own a house for yourself, you’re paying for it every month. Mortgage, insurance, repairs, HOA, taxes, etc. What is it doing to bring in money? Nothing! Instead, you have in your mind that it will be worth a lot one day….and it very well may.

But until you sell it for a fat profit, it’s a liability. Think of it like an unopened vintage hot wheel car or rare football card. It sits there for years and years. You hope your home gains value, but what if your neighborhood and school zone gets more dangerous, your town loses a major industry, or an airport gets built next door.

Fortunately for you, there are ways to actually invest in real estate, rather than just buying a primary residence.

Look for income potential. Buying a 3 bedroom house or duplex and using a bedroom to AirBnB or rent monthly turns your house into somewhat of an asset. I consider it an asset if you make more in revenue than the house costs.

Forcing appreciation. While this won’t pay off right away, buying a fixer upper and rehabbing it will make it more valuable to a renter or potential buyer at some point.
Invest in REITs which are funds of numerous income producing real estate properties. Though you won’t get the tax benefits of real estate, that’s more of an investment.

Lastly, here’s an example of a small property I bought almost 3 years ago. It was a little 2 bedroom, 1 bathroom home 850sqft I got for $56k in Tampa. There was a long term renter who was paying $850/month. Since it was paid cash, I got roughly $600 per month after paying taxes, insurance, and having a reserve for repairs.

I ended up selling it for about $90k just a few months ago. This was over a $30k profit, but the appreciation was just icing on the cake. The real investment for me was the $600 in positive cashflow every month. When you view investments in terms of monthly cashflow, you’re in a much safer position. It’s like having a museum pay you every month for displaying that rare baseball card or memorabilia.

Dominate your finances, re invest in yourself, then own your life. That's my mission and vision for you. To start owning your life, visit BradleyJarryd.com/BestBuys and get 50 pages of the best products, services, and companies that have helped me live debt free and save $100k+ with only a $50k salary.

Looking to eliminate your stress, rebuild your marriage, and gain further clarity with your finances? Schedule a 15 minute call with me BradleyJarryd.com

Thank you so much for watching! I'd love to hear what you think so please leave a comment and let me know what information and videos you would like to watch. :)

Best wishes!

-Brad
Dave Ramsey Preferred Coach
BradleyJarryd.com // IG: @IamBradleyJarryd

#financialeducation #realestateadvice #daveramsey

Видео Why Your House is NOT an Investment канала The Millennial's Guide to Money