Financial literacy author Robert Kiyosaki fielded the idea that homes are not an asset. But is it true?
Does that mean you do not have to pursue buying a home? Should you just rent a home forever, even if you have started a family already?
That is not true at all. Your very first home may well be the best investment you can make. Imagine what your life will be like in the future when you’re old and gray and still have to pay the monthly rent.
Don’t you want to settle in a home that is rightfully and legally yours; a place you can even pass on to your children?
Rent Is More Expensive
At first, glance, applying for a mortgage is the more expensive option. After all, you would need to pay at least $1,500 every month.
But isn’t that almost the same expenses you will incur when renting a home? Unless you plan to live in a $400 one-bedroom apartment for the rest of your life, buying a home seems to be the more practical choice.
But some may be thinking about the other aspects of homeownership such as home insurance, maintenance, repairs, and replacements. While that is true, there’s such a thing as rental insurance, too.
You would also have to pay for that. As for paying for the best home insurance coverage, it happens to be the best protection you can provide for your home.
Even with rentals, you have to pay for maintenance and repairs. There is no escape from the cost of home maintenance.
Homeownership Is an Assurance
Owning a home is an assurance that you have a house to go back to no matter where you go or where you are deployed. It is yours and nobody can take that away from you.
Experts said that homeownership has a positive impact on a person’s confidence and well-being. The idea of “going home” has a huge impact on your weary body after toiling eight hours in the office.
Maslow’s hierarchy of needs puts safety needs (personal security, employment, resources, health, and property ownership) on the pyramid.
This means that without the security of homeownership, people will not reach self-actualization. People’s well-being is an essential component of growing old. This is the kind of investment that’s not only financially rewarding but also emotionally satisfying.
Start of More Property Investments
People who start investing early in their first homes will have more time to invest in properties later on in their lives. They are the same people who will buy a second home to rent it out.
They are the same people who will purchase a vacation house and put that on Airbnb. People realize the importance of a home and how much money it can generate for them from the purchase.
That first home is not always a liability because you can even sell it a few years after. Once it doesn’t fit your lifestyle anymore, you can put it in the market and wait for your profit to come in.
Of course, economic downturns will affect your equity, but with enough knowledge, you can pull off a sale that will give you profit instead of put you on the losing end.
Safety From Recession
The government puts a lot of emphasis on covering for homeowners during a recession. During the height of the housing crisis, the government stepped in to allow people to continue owning their homes.
Sure, many of those who reneged on their loans that caused the whole banking system to blow up still lost their homes, but the effort to protect is going to be there. This goes way back to the emphasis on shelter and safety in a person’s path to self-actualization.
The point here, of course, is to know what you can afford. How safe is your plan to buy a home today? What do you see 10 or 15 years down the road? Will you still be able to afford it?
A first home is only a liability if you punching above your weight class. You need to know how much of your money you will be pouring into the mortgage and maintenance of your home.
Above that, you have to be ready for all the little expenses that come with owning a home. This is the biggest purchase of your life. It’s an investment that can and will grow depending on the calls you make.