Buying a house has been promoted as a wise investment option. While it may be easy to disregard this view due to the large number of things promoted as wise investment options, buying a house as an investment has many benefits. Below are five reasons why you should consider buying a house as an investment.
You will spend less money on rent
Buying a house for yields the long term benefit of less money spent on rent. In actual fact, this is “no money spent on rent” as you no longer have to pay to rent a home.
The money you save on rent can be used in expansion of the current house you own, renovation and restoration of the house, maintenance of the property, or invested into getting another house.
Expansions, renovations and restorations will raise the value of the house ensuring that it brings in more money if you decide to sell it. Investing in another house automatically guarantees an extra source of income.
Houses appreciate in value
Houses always appreciate in value even when there is an economic downturn. This means that with each passing year, the house you buy will be worth more than the price you paid for it.
When your house increases in value, you can always sell it for more money, make greater profit from the sale and invest it in another house that will yield even greater profit.
Buying a house offers you a constant source of cash flow
One major reason to buy a house is for consistent cash flow. This cash flow can come in the form of money from the sale of the house. Another way buying a house can bring consistent cash flow is through rent. There are always people looking to rent homes, either for short term purposes or for long term purposes. Either way, buying a house and using it as a rental property will bring in monthly cash flow.
It helps you save and invest better
One of the most important reasons why buying a house is a good investment is that buying a house establishes a savings and investment plan for you.
Buying a house forces you to save and invest better as you have to pay the monthly mortgage to avoid losing the house. So, instead of spending the money on rent or other things you can save money on, you can simply use the money for monthly mortgage payments. In this way, you are investing in a valuable asset.
Buying a home enables you to save up and invest without affecting your standard of living. It motivates you to budget to enable you pay your monthly mortgage. It is a great teacher on savings and quality investments.
Buying a house gives you financial security
Everyone desires financial security, yet not so many people are doing the work to get there. This is mainly because a large number of people do not know how to go about it. Many do not know much about savings and as such do not have savings. According to a recent report by GO Banking Rates, one in three Americans have no money saved up for their retirement. This means that after they retire they will have nothing to rely on apart from their pension or Social Security. This will definitely affect their standard of living in retirement.
Buying a house as a way to save and invest for retirement guarantees you financial security. The house can be sold at a higher price than it was bought. The money made from the sale of the house can be used to invest in more houses. You can use this to kickstart a career in real estate. It can also be a source of residual income. This will ensure your standard of living does not reduce after retirement.
This benefit of buying a house is not limited to retirement. It provides the financial security of an asset that can be borrowed against to pay for emergencies, or sold to get out of debt.
If you are looking to improve your finances, buying a house might be one of the best investments made. Simply ensure that you do the necessary research before making a purchase.