Make Money From Home

Is a Home Really a Good Investment? Here’s What You Need to Know – Motley Fool

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It’s OK to want to own a home. But does it count as an investm…….

Image source: Getty Images

It’s OK to want to own a home. But does it count as an investment — and a good one at that?

Key points

  • When you buy a home, it has the potential to gain value.
  • But homes also come with expenses, like maintenance and repairs.
  • There may be better ways to grow wealth, like investing in the stock market.

Back when I rented an apartment, I used to groan every time I slipped a check into my landlord’s mailbox. Granted, part of that was due to the fact that I was living in New York City and spending half of my income on a tiny studio. But also, it sort of pained me to throw my money away on rent rather than put it into a mortgage.

Fast forward to now, and I can say that while owning a home makes sense for me, if it were possible for me to rent a home that’s comparable to my current house, I’d do it. In fact, there are many aspects of homeownership I don’t like, and I’m not convinced that a home is automatically a solid investment.

Apparently, I’m not alone. In a new survey from finance expert Ramit Sethi’s website, 29% of people are tired of hearing homes are a good investment for everyone. In fact, they think that particular advice is toxic. Here’s why they’re onto something.

Is a home an investment or an expense?

The answer to that question depends largely on your mindset. And the reality is that both answers are correct.

Or, to be more accurate, a home is sort of a hybrid expense and investment. It’s an expense in that you’ll spend a lot of money on costs other than just a mortgage — things like property taxes, insurance, maintenance, and repairs. That’s money you don’t get back as a homeowner.

At the same time, homes have the potential to gain value over time. So it’s possible to buy a home for, say, $300,000 and sell it many years later for $500,000.

But most of the time, it’s not that simple. Yes, you could make a profit when you sell a home. But that profit will have come at the cost of having sunk money into that property through the years. Say you’re looking to sell your home for a $200,000 profit after 20 years of …….


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