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It’s Not an Investment

Scrolling through your news feed, you might have noticed a couple articles here or there that states “buying a home is not an investment” or that “home ownership is not part of the American Dream anymore”.

It is very good to broaden your thoughts and challenge what you know to be true. But lets look into the points that are made on these articles and think it through for someone considering buying in our market, Huron, SD.

Let me summarize these articles for you.

Investments make you money, not cost you money.

 

But isn’t it true that if you were to invest in the stock market, it would actually cost you money? Often when investing you would contribute monthly, even. What’s the difference?  You will not find an investment that doesn’t cost you money. The very definition of investment is “The action or process of investing money for profit or material result.”

After cost of maintenance you will end up paying more than renting.

 

This of course is different for every single house purchase. But if you buy a house in disrepair you can get a good deal on it!

Lets look at an actual situation that happened in Huron recently.

A landlord bought a house for $29,000. It looked really bad. The siding was falling off, it was dirty, had a bad central air unit, broken windows, etc. The landlord puts less than $4,000 into the house and 2 months later had tenants renting it for $650/month.

Hypothetically, the tenant could have bought the house and fixed it up. If they did that they would only have to pay $250 a month instead. That would have been a savings of $400 a month.  Now I’m sure the landlord will have to go in and fix things on occasion. $100 here, $200 there. Over 5 Years how much do you think the maintenance would cost? Over 24,000? Of course not! But that is the break even point.

If you over pay for a house that needs a lot of work, it is possibly a bad investment. But realistically, you will pay less for a house you own then a house you rent in the Huron Area.

Who wants to go to jail for 30 years? You can be mobile and nimble if you rent.

This is an actual statement pulled from an anti-home buying article. This is very misleading. Signing up for a 30-year mortgage in no way obligates you to stay in a house for 30 years. It is just a payment plan that guarantees your interest rate for 30-years, and if paid consistently every month, it will be the end of your mortgage.  That is a very long time, so please see attached inspirational quote by Earl Nightingale. If during this time your home needs change you can always sell and buy somewhere else.

Image result for time will pass anyway quote

 

 

 

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