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View Full Version : Is Owning a House a Good Investment?



Ken Fenner
09-28-2008, 10:38 AM
I'm a numbers guy. If something doesn't appreciate in value or make my life dramatically more comfortable, I don't buy it. I have owned three houses in my lifetime and only the one I am in now has shown any return on investment (because of the out-of-the-ordinary rise in housing prices in the last 5 years) Before I read the book Rich Dad Poor Dad, which is a beginner's guide to building wealth, I always wondered why everyone was so adamant about owning a house. All I owned was a mortgage payment, taxes, insurance and maintenance costs. I bought my first house in 1990 for $78,000 at the end of a real estate bubble. After putting in $80,000 in payments and renovation over five years, I sold the house for exactly what I paid for it. I figured I just bought a house at the wrong time with a bad interest rate. My second home, which I bought because we needed more space was a similar story.

I'm curious as to your thoughts on home ownership versus renting. An excellent article to read is "Renting Makes More Financial Sense" (http://realestate.yahoo.com/promo/renting-makes-more-financial-sense-than-homeownership.html;_ylc=X3oDMTFta3Jqcjk3BF9TAzI3MT YxNDkEX3MDOTc2MjA0NjUEc2VjA2ZwLXRvZGF5BHNsawNyZW50 aW5nLWJldHRlcg--)

Doug Dahlke
09-28-2008, 05:26 PM
Renting is fine if you only plan to be in an area for a short while. My wife and I bought our first home in 1984 and we are in our fifth now. Each one, except the second, sold for well above what we paid. The problem with the second was that we were in it less than two years and had to move out of the area. Rented it for several years and sold it.

The thing with a house is that at least at some point if you stay put and pay it off you own something. Rent is forever and will only continue to rise. If you own your home you will still need to pay property taxes but if you rent those are figured in anyway so either way you will be paying the taxes.

I still think a house is a good investment especially if you buget the payment you can afford within your means.

Terry Miller
10-02-2008, 11:14 AM
I have owned three homes. I would love to invest in more as rental properties. If I had someone paying my payments and actually getting a home free and clear, without me paying for it, why not. As far as me renting, I don't see any value unless you move a lot. Times are bad now and the return is low or none. However we all know History repeats itself. There will be good return and profits to come. My 2 cents.

Scott Stone
10-03-2008, 01:03 AM
I have only owned one home that has not appreciated, and it did not lose money. It was my first home and was in a low budget townhouse development.
My second home doubled in value in the 10 years I lived there, and my current home has more than doubled in the 8 years I have been here. I would go for the owning is better than renting.
The payment is less for me to have the home I want.
I am building equity for a future purchase, or retirement. (I really do not think I will need a 3000 sq.ft home when I am retired)
And, I can do what ever updates my wife wants. (really, I have to consider that a positive, usually)

Ken Fenner
10-03-2008, 11:10 AM
From the article:

Shares of businesses return 7% a year over long time periods. I'm subtracting for inflation, gradual price increases for everything from a can of beer to an ear exam. (After-inflation or "real" returns are the only ones that matter. The point of increasing wealth is to increase buying power, not numbers on an account statement.) Shares have been remarkably consistent over the past two centuries in their 7% real returns. In Jeremy Siegel's book, "Stocks for the Long Term," he finds that real returns averaged 7.0% over nearly seven decades ending 1870, then 6.6% through 1925 and then 6.9% through 2004.

The average real return for houses over long time periods might surprise you. It's zero.

There are many ecomists and planners that will mention that as a personal investment, the home one lives in does not give a good return. Outside of bubbles and abnormal growth in localized markets, there is little real growth in RE. At the very least there are more sound growth investments. It can definitely be argued that a house is an appreciating tangible and for a person not seeking as much growth as they are security its a viable option. Like I said initially, I am a numbers guy so I look at hard ROI on investments as well as cash flow and liquidity.

I'm a little over the whole home maintenance and renovation portion of my life. I would prefer a scenic luxury apartment where everything is taken care of versus the uncertainty of failing roofs, expensive repairs and changing decor taste. When my kids fly the coop, my house will be the first thing that goes up for sale.