{"id":1941,"date":"2015-09-30T00:15:10","date_gmt":"2015-09-30T08:15:10","guid":{"rendered":"http:\/\/www.cultofmoney.com\/?p=1941"},"modified":"2015-09-29T07:51:32","modified_gmt":"2015-09-29T15:51:32","slug":"why-your-house-is-not-an-investment","status":"publish","type":"post","link":"https:\/\/www.cultofmoney.com\/why-your-house-is-not-an-investment\/","title":{"rendered":"Why Your House Is Not an Investment"},"content":{"rendered":"

\"Common<\/a>I\u2019m the type of person who has to learn lessons the hard way.<\/p>\n

And sometimes I feel really stupid when I do. It\u2019s like I should\u2019ve known this stuff all along. But no, I chose to believe the mass advice that is normally completely wrong and backed by a hidden agenda. #GoFigure<\/p>\n

One thing I\u2019ve recently learned the hard way is that the house you buy to live in isn\u2019t a financial investment. It just isn\u2019t.<\/em><\/p>\n

Here\u2019s why.<\/p>\n

# 1 \u2013 You DID NOT Buy It as an Investment<\/h2>\n

Let\u2019s go ahead and get the obvious out of the way. The vast majority of the population did not buy their homes as investments.<\/p>\n

Not at all.<\/strong><\/p>\n

There\u2019s nothing wrong with this, it\u2019s just a fact that can be hard to admit. You bought your home because it seemed like a great fit for you and your family. You loved the land, the kitchen, the beautiful backyard etc.<\/p>\n

You didn\u2019t buy because the house was in an up and coming neighborhood and through ten years of sweat equity you\u2019d be able to sell and make thirty grand. No, you bought out of emotion. And so did I.<\/p>\n

There\u2019s nothing wrong with this. Let\u2019s just not pretend we bought our houses as investments, because we didn\u2019t.<\/p>\n

(Of course, there are exceptions to this. If you\u2019re an exception then you already know it.)<\/p>\n

# 2 \u2013 Your House is Worth What Someone Will Pay You<\/h2>\n

My husband bought his first house in 2006. This was before the local market crashed and every other home was in foreclosure.<\/p>\n

He paid $86,500. Since then we\u2019ve done a myriad of things like replace the heating system, completely gut and remodel the bathroom, replace pipes, had the house professionally painted and more.<\/p>\n

We\u2019ve put more than $10,000 in the house and just went under contract for $84,000. That\u2019s not even counting the several thousands of dollars paid in closing costs \u2013 both from buying and selling the home. (Which are both very real costs of owning and selling a home.)<\/p>\n

Does it look like our house was a smart investment now?<\/p>\n

With as many homes for sale as there are in my neighborhood we\u2019re probably lucky we got an offer at all.<\/p>\n

Houses do not always appreciate. Real estate markets crash. People over improve their homes. The list could go on and on. There are a ton of reasons why you may never get out of your house the cash you\u2019ve put in.<\/p>\n

# 3 \u2013 Asset vs. Liabilities<\/h2>\n

This is a much more extreme way of looking at things. This line of thinking comes from Robert Kiyosaki. (It\u2019s been a long time since I read the book so I\u2019m paraphrasing here.)<\/p>\n

As asset is something that earns you money. A liability is something that costs you money.<\/p>\n

A normal balance sheets shows your home as both an asset (the value of the home itself) and as a liability (your mortgage.) But for the bank your mortgage is their asset. Your home makes the bank money and costs you money.<\/p>\n

If an asset is something that earns you money then your house isn\u2019t an asset, it\u2019s a liability. Even with a paid off mortgage you have to cover property tax, homeowner\u2019s insurance, and maintenance.<\/p>\n

I\u2019m not saying this way of thinking is right or wrong. Simply something to take into consideration.<\/p>\n

So, Should You Never Buy a House?<\/h2>\n

That is not what I\u2019m saying.<\/p>\n

I just bought my \u201cforever\u201d house. It absolutely is not a financial investment. If anything, it\u2019s an investment in my happiness. It\u2019s where I want to be for the rest of my life.<\/p>\n

I think it\u2019s important for us to recognize that when we go to purchase a home to live in we are looking at it with a completely different set of eyes as someone who is investing.<\/strong><\/p>\n

Real estate investors are pretty smart. They know that even when the housing market crashes they\u2019re still going to be collecting rents. The fact that the value of their homes (assets) may go down is irrelevant. In the event of a housing crash the rental market becomes more competitive and houses are on clearance sales. For investors the cash is still flowing.<\/p>\n

But when you and I buy a home to live in we aren\u2019t thinking of things like these. No. Instead we\u2019re picturing our kids running around outside, our families gathering on the back deck, and in my case, a space for animals to roam.<\/p>\n

There\u2019s nothing wrong with this.<\/p>\n

When you need to sell you might make some money and you might lose a hell of a lot of money. Either way, let\u2019s not pretend we bought the home we\u2019re living in as an investment. Because we didn\u2019t.<\/p>\n","protected":false},"excerpt":{"rendered":"

I\u2019m the type of person who has to learn lessons the hard way. And sometimes I feel really stupid when I do. It\u2019s like I should\u2019ve known this stuff all along. But no, I chose to believe the mass advice that is normally completely wrong and backed by a hidden agenda. #GoFigure One thing I\u2019ve […]<\/p>\n","protected":false},"author":4,"featured_media":1942,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[14,13],"tags":[34,252],"acf":[],"_links":{"self":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/posts\/1941"}],"collection":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/comments?post=1941"}],"version-history":[{"count":0,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/posts\/1941\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/media\/1942"}],"wp:attachment":[{"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/media?parent=1941"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/categories?post=1941"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.cultofmoney.com\/wp-json\/wp\/v2\/tags?post=1941"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}