There are so many investment options out there for a smart investor to choose from, but owning a home is a "no brainer" for most. Here are five reasons why YOU should own your home:
1 - Privacy / Freedom
Heres an easy one. Have you ever lived in an apartment with thin walls? Had a roommate who didn't clean their dishes? When you own your home your space is truly your own. You are in control of your level of privacy, and you can express yourself creatively through the design of your home. You can choose the improvements and amenities you want to fit your lifestyle!
2 - Equity
This is a big one for me. As an investor, I am always looking for the best way to make my money grow. When you rent a home, that rent is money you will never see again. You will earn nothing for it (other than a temporary roof over your head) which means the cost is actually even higher than the rent amount you pay!(Opportunity Cost) When you take on a mortgage for a home, the money you spend each month goes towards your equity in the home. As such, every dollar spent (aside from interest...which is at generationally low rates!) is essentially being saved in the equity in your home. It's like a savings account...that you live in! Not to mention that the asset you are purchasing may increase in value over time...which is our next point.
3 - Appreciation
While no investment is guaranteed to appreciate, real estate is a "hard asset" which means it carries some protection against inflation. Inflation is the rate of devaluation of currency (A can of Coke in the 50s cost a lot less than a Coke today) and, like a Coke, your real estate will increase in value relative to that declining currency. In addition, housing (especially in California) is always in demand, and where there is demand there are people who will pay ever higher prices. As such, property owners have historically enjoyed stable growth in the value of their assets over the long term.
4 - Stability
I have moved a lot in my life, and while it can be fun, it is also stressful! By owning your own home you can truly make it the perfect place for your desired lifestyle. You never have to worry about the place you rent being sold or rents increasing. If you have a fixed mortgage then what you pay is what you will always pay. In addition, staying in one neighborhood allows you and your family to build long lasting, high quality relationships, and allows children to benefit from educational and social continuity.
5 - Tax advantages
Who loves taxes? I certainly don't (at least not paying more than my fair share) Uncle Sam wants you to own a home because he knows it is one of the best ways for people to build wealth in America. As such he offers you some tax advantages, including:
- Mortgage interest is deductible.
The amount that you pay as interest on your mortgage is deductible dollar for dollar from your gross income, meaning the interest charge is actually less than the stated amount (after deducting your tax bracket)
- Property Taxes
While these can seem expensive they are deductible dollar for dollar from your gross income, so again you will be paying significantly less in taxes!
- Other tax credits
The first $250,000 ($500,000 for couples) in capital gains on personal residences are not taxed at the federal level! This is a HUGE gift from the government if you live in your home long enough to build this kind of equity.
There are numerous other tax advantages available to homeowners that are first time buyers, and many more for investors and other special situations! Consult a qualified tax pro to see how you can benefit from the tax advantages a home offers.
Buying a home is a big decision. It requires commitment and sacrifice, but as I have shown above, the benefits from both a financial and personal level make it something EVERYONE should do. If you have any questions about how to get started (you can get a plan in place no matter what your financial situation is) or are ready to begin your journey, we would love to speak with you! Thank you for reading this post and happy investing!
Take care,
- Gabe
Featured Listings
Elegant 3 bed 2 bath home on a quiet and attractive street in Sherman Oaks. Convenient access to the 101 and 405 freeways, and located within two excellent school districts. Upon entering the home you will find real hardwood floors, a beautiful natural brick fireplace, and a spacious living room with a well constructed skylight to bring in plenty of natural light. Pass through the dining area and you will find a size-able kitchen with beautiful oak cabinets, sparkling new appliances, large premium washer/dryer and vast storage space. The master bedroom has a large and attractive en suite bathroom, also with extra storage space. The large tranquil backyard features impressive, low maintenance turf and has plenty of room to add a pool, ADU, or garden. This home has enormous potential for both homeowners and investors and is ideal for a young family that wants to stay close to the action!
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LA Creative Realty is a boutique real estate brokerage firm. We combine generations of real estate and investment experience with modern technology exceptional client relationships and thoughtful investing to deliver the dream home for our Buyers, the best prices for our Sellers, and the best returns for our Investors.
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