The costs of buying a home over 30 years
Zac Bissonnette writes about real estate and remodeling hype:
Your home is not an investment: Really, it isn’t. An investment is something that gives you money and an expense is something that costs you money. Therefore your primary residence is an expense. Real estate may well be a fantastic investment, but primary residences are only good investments to the extent that they’re cheaper than renting.
The most common type of residential property, a single family dwelling, does not produce a positive cash flow. In areas of transient population, par employment conditions and moderate to low population growth projections, this is particularly true over the long term.
Pouring money into your home is not an investment: There’s certainly something to be said for “investing” in your quality of life but in financial terms, it’s a much better idea to put money in a savings account or use it to acquire an investment property than it is to pump cash into your primary residence or vacation home.
The intangible benefits of owning a home are significant. However home ownership equation should include job stability and security, employment opportunities for self and family members, hospitable weather, recreational opportunities, personal lifestyle factors and Plan B.
The longer you plan to live in a home, the less financial sense it makes to pour money into it: If you are planning to stay in a house for five or 10 years, recognize that almost no home improvement projects qualify as investments. The reason is that projects like kitchen and bathroom remodels depreciate quickly. A 15-year old bathroom will likely be remodeled by the buyer, so it’s not a value-add.
Don’t fix something that is not broken. Make do with what you have. Keeping up with the joneses ain’t smart despite the debatable notion that we live in a image based society, its not parallel with American values.
Real estate agents are salespeople. Some are real estate experts. Most aren’t: Getting a real estate license requires a few hours of classroom instruction and a multiple-choice test, much of it covering legalese and ethics. It’s entirely possible to become a real estate agent without knowing anything about anything, and many agents are completely worthless.
Folks should look into having a real estate attorney represent them in the most expensive purchase of their lives. Good real estate agents are hard to find, they are not as easy as finding a needle in a haystack!. Finding a good real estate agent that will represent the principal’s interests well is harder. I don’t think the current real estate system is designed to totally protect the consumers, in some cases, it does just the opposite. Consumers have to be responsible.
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