by Jonathan Beasley
Make no mistake. I think EVERYONE should own Real Estate. It’s where your financial domination will begin AND end.
Are we biased? Absolutely. But that doesn’t make us wrong. . .
Joking aside, it is one of my major thesis’ in life that your financial victory begins when you embrace Real Estate as a life changing financial (and wealth building) decision. Did you play “Monopoly” as a kid??
Do you remember who wins?
It was whomever owned the property…
Then put green houses on them, then big red hotels!
If you ONLY passed “GO” (ie., worked for a paycheck) you would NEVER win
The same is true in the real life financial game
So it’s safe to say from our vantage point the “Pro’s” FAR outweigh the “Con’s”. See for yourself…
Pro #1: Debt Paydown: Each time you make a payment, the balance you owe goes down, and this is money that goes right back into YOUR pocket. As time goes on, the amount of your payment that is applied to your principal debt skyrockets! Your mortgage is a lot like a forced savings account that grows over time as you faithfully make your mortgage payments. When you rent, you ONLY pay off the landlord’s mortgage. Think about that!!! Imagine that you are responsible to put money in someone else’s savings account! That is exactly what renting is.
Pro #2: Tax Deductible Interest: The government WANTS you to own a home and 1 of their incentives is the legal deduction of ALL the interest you pay on your mortgage. This comes directly off of your taxable income which is a HUGE advantage come tax time.
Pro #3 Appreciation: This can come in the form of an overall market appreciation (inflation), and/or through improvements that you make to the home to increase its value (forced appreciation). There are endless ways to do the latter.
Pro #4: Pride of Homeownership: There simply is nothing more freeing than moving from a rental scenario where your landlord can literally dictate what you can do, with whom, and when, to completely owning your own personal domain! The freedom my wife and I experienced moving from an apartment scenario with the neighbors stacked (literally) on top of each other, to having a home of our own with the wall colors we chose, and the pets we wanted was truly life changing!! It’s an entirely new level of freedom that you can’t know until you have a place of your own.
Pro #5: More privacy: This is a kin to pride of ownership but at a whole new level. You get to do what you want, when you want, so long as the law allows.! Call me crazy but “run around naked” privacy is super important to a healthy relationship as you get older. Happy Anniversary Sweetheart!
Pro #6: A mortgage payment is often not much more than renting: And in many cases it is actually cheaper to own than to rent. We have found that many of our clients did not have to change their standard of living AND got all the benefits of home ownership around the same monthly outlay as they did renting. It is 110% worth looking into and again is a huge step in improving your financial landscape.
Pro #7: You will eliminate monthly housing payments once it’s paid off: This is self-explanatory but THINK about it. Once you’ve made enough monthly payments…
The home is 100% yours and you are mortgage free! With renting, you NEVER stop making payments to your Landlord’s savings and retirement account.
Pro #8: Consistent payments with a fixed-rate mortgage:
Bottom line – rents will go up over time (I’m a landlord, and that where rental owners make their money). With a fixed rate mortgage, your principal and interest payment will NEVER go up.
Con #1: More difficult to move to a new location: This is a fact. You are a little more tied down when you own. It’s for this reason that we typically encourage our clients to be 100% sure they will be in the area for at least a couple of years before settling down into home ownership.
Con #2 (and final) is Property Maintenance:
This actually is both a pro and a con. Yes you are responsible for maintenance and upkeep, but our experience has been that many landlord’s don’t do a good job at this anyway! So you can do it right, for yourself and your family. To this day we as a family take PRIDE in keeping our home in good working order and looking for us, and our guests.
If you are still renting I hope you make a decision SOON to see what it would take for YOU to have a place to call your own. Happy Investing!