Real Estate Investing - How is real estate (house) a good investment?

Author

How is real estate (house) a good investment?

Jake

2006-09-13, 3:25 am

Seems that the value increase of the house has to significantly outpace your
yearly property tax burden, and the inflation rate, and the maintenance
costs, and the insurance you've paid on it.

Do people who say they made a "profit" on their house account for all this?

I bought my house in 93' for 50k currently it's worth about 80k; I paid it
off in 2003. I still have to sit down and do all the math but right now it
looks like I may just break even after accounting for everthing I've paid
towards it. My maintenence costs have not been excessive.

John Mianowski

2006-09-13, 9:25 am

Jake wrote:
> Seems that the value increase of the house has to significantly outpace your
> yearly property tax burden, and the inflation rate, and the maintenance
> costs, and the insurance you've paid on it.
>
> Do people who say they made a "profit" on their house account for all this?
>
> I bought my house in 93' for 50k currently it's worth about 80k; I paid it
> off in 2003. I still have to sit down and do all the math but right now it
> looks like I may just break even after accounting for everthing I've paid
> towards it. My maintenence costs have not been excessive.

What would you have paid in rent, had you been renting that house since
'93, & where would that money have gone?

JM

Jake

2006-09-14, 9:25 am

"John Mianowski" <spamfree@skytex.net> wrote in message
news:1158154370.607640.64980@e3g2000cwe.googlegroups.com...
>
> Jake wrote:
>
> What would you have paid in rent, had you been renting that house since
> '93, & where would that money have gone?
>
> JM

Yes buying is better than renting, especially if you pay off early. So it's
just a case of being the lesser of all evils, not strictly a "good
investment". Then again, you can't live in the stock market, or a T-bill.

My situation was that I have this equity plus some savings, so should I sink
it into a big house that I can realize a 'profit' on in 10 years or so, or
should I buy a modest house with lower property tax and put the balance into
stocks or other investment. In that light it seems a poor choice to buy a
house and expect the money to grow.

John Mianowski

2006-09-14, 1:25 pm

Jake wrote:
> "John Mianowski" <spamfree@skytex.net> wrote in message
> news:1158154370.607640.64980@e3g2000cwe.googlegroups.com...
>
> Yes buying is better than renting, especially if you pay off early. So it's
> just a case of being the lesser of all evils, not strictly a "good
> investment". Then again, you can't live in the stock market, or a T-bill.
>
> My situation was that I have this equity plus some savings, so should I sink
> it into a big house that I can realize a 'profit' on in 10 years or so, or
> should I buy a modest house with lower property tax and put the balance into
> stocks or other investment. In that light it seems a poor choice to buy a
> house and expect the money to grow.

One choice vs. the other isn't necessarily "better". There are
situations where renting IS the better option than buying. My point
was that housing costs need to be considered when you do your math -
i.e. a short-term expense during the period in which it was paid. When
you factor in what your true housing expenses have been over 13 years,
you've managed to cover all of that plus gain about $30K for yourself.
That's looking like a little better investment.

It would be different if you weren't living there. Then the $30K, less
depreciation, cost of money, taxes, & other expenses would be all you'd
have to show for the past 13 years.

Anybody who claims that they know what's going to happen in 10 years is
lying to you. Any investment is a risk. I don't know enough about
your situation, & frankly - no offense intended - I don't want to know.
I'm not a financial advisor & perhaps you should consult one.

JM

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