Houses: Investments or Homes?

[all4money]

Do you view your house as an investment or as a home?

I thought of this question this weekend... a good friend of mine has always thought of their house as an investment. They move every 2-3 years upgrading to a larger house each time. This past Feb, they moved yet again selling their very nice $450k home and purchased a $620k home this time. Now, let me say that this friend is very knowledgeable about money, is a CPA, and has made very wise financial decisions... so that is why I now question the way I've looked at our houses that we have purchased. I always thought of our house as a home... something that we buy and plan to stay in until something happens and we need to sell. For example, the first 2 houses that we've bought/sold were only sold because of job relocations. When we look to buy a house, we buy to have a home, not necessarily to buy an investment that will appreciate X amount and can be sold after 2 years, etc... but again, after thinking about my friend and the successes that she has found with real estate... I just don't know. We've lived in our current home for just a year. We are very happy here... should we start to prepare ourselves for possibly selling it in a year - take the equity and move "up"? Even if we don't move "up", we could take the profits and invest in another similar size home, etc.... and with no other reason to sell, it's not like we'd have to sell or else, if you know what I mean which takes the pressure of "having" to sell the house if the market is like what it is now...

With my friend, she is able to afford the $620k house because of the equity she realizes after she sells --- she probably makes $50k-$70k each time...since I've known her, she's moved 5 times within the past 11 years. Do the math --- adds up to a lot of money. What do you guys think about your houses? Investments or homes?

[MonkeyMama]

I look at my house as a little bit of both. It's hard to completely discount the investment side of things when you live in an area that has appreciated 1000% the last 30 years (forget this last bubble - 1000% regardless).

For us we primarily look at our home as a home. I have no interest in constantly working on my home or moving every 2 years. However, like your friend our buying power is tenfold someone just looking to buy a house because we got in when we did. This particular house we got in as an affordable place to live - not an investment at all. The return it has made is certainly a nice perk though.

Our first home was an investment. We didn't really make much of a return at all but our mortgage was 1/3 what the rent would have been so paid off. I would have never wanted to live my entire life in a condo though, was just the only way we could see into the market. & for that reason it paid off.

We have been looking to move as well since we felt it was a good time to buy (land prices historically insane have been cheap around here lately - we could easily trade our 1/10 acre lot for a nice 1/3-1/2 acre with little more money in the economy today. IT just hasn't worked out but in a sense it would be an investment. We would like to move and would like more space so it is much more than just an investment though).

As with any investment there is always risk too. Your friend has done well but look at the market today. Now is not a good time to suddenly jump into real estate "investments." It will have a long ride down for the most part.

I guess if you are happy, why mess with it? What it comes down to me is when we are looking to buy a house we consider it somewhat an investment. If we have to pay $400k+ to buy a house out here we want to preserve that asset best we can. IF we lived somewhere where we could pay cash for a $80k house I think I could care less about the investment value. Just my perspective.

[disneysteve]

Do you view your house as an investment or as a home?

I look at my house as a home, not an investment. We bought our one and only home in 1994. We're still here and have no intention to move until we retire to Florida in about 20 years. We didn't buy it to make money. We bought it to have somewhere to live.

[Aleta]

Some finaacial people say that houses are really a liablity in the long run because the upkeep and expenses take money out of your income. I think of a house as a home. Maybe in the future, should I decide to sell, downsize; I might see a profit then.

There are those who buy homes to fix them up and resell them and that is a different ballgame because you are not planning to live there for a long time. I've even heard some say that a house is a liablity because you're not making money from it. It just depends on where you are and how you're looking at it.

[Broken Arrow]

I agree with all of you guys. I think actually think it's a mixture of all of the above. Like a yummy delicious sandwich, there are several indispensable elements that makes it what it is. The soft, pillowy bread... mmm... crisp lettuce and tomatoes... hhhhuhhhh... and juicy slices of honey ham.... oohhhhh baby!

But to focus in only on any of one of those elements is to miss the big, tasty picture. Know what I mean?

[Fern]

Well, both, but primarily a home. Moving oneself and the contents of one's house is a huge hassle. Not to mention all the closing costs. If i found a home and town i liked, i'd sit tight.

[jIM_Ohio]

if my house is an investment, it's the most expensive investment in my portfolio.

Consider it's 350k cost, yet I will pay around $650,000 to pay it off.
in the mean time I must also pay $5200 in yearly propery taxes just to keep it. Might go up 3% per year, but the only way I can tap that investment is by moving and incurring more costs.

A house builds NET WORTH
it is not an investment

in my opinion...

[TBH]

I think it's both, but whether you think of it as in investment or a home partly depends on the house.

My house? It's an investment. Sure, it feels like home. I walk in the door and think, ahhhh, I'm home. But I do not love my house.

Here's what I love about my house:
* We got it for a great price
* It's worth more now
* We have a great mortgage on it (20 year fixed at 5.25)
* Our payments are really low (less than $600/mo)
* Low payments mean we can save for retirement
* Low payments also mean I can work part time
* Low payments mean we could turn a profit by renting it if we decided to move

We have enough equity to put a pretty sizeable down payment on a different house, but I like our low payments and my honey hates moving, so we'll probably be here for several more years. I just hope I get a house with a bigger yard and more curb appeal some day.

[Ima saver]

I think mine is an investment. If i was smart, I would sell and move every two years, keeping the capital gains. I bought my first house for $13,000. I lived in it, paid it off in about 10 years and sold for a profit. After that, I have always owned my homes free and clear. Until last year, my taxes have been $1200 or less every year. (they went up to $2100 last year) My husband does all the maintenence, so i consider my house to be a money making proposition.
It is easily worth $500,000, more like $700,000.

[scfr]

Both. I can't see myself ever buying a house that I did not think would be both a comfortable place to live and one that I did not think of as a sensible "investment" ... By investment, I don't mean that I expect to make a killing on appreciation, but that I would expect the value of the home to keep pace with inflation long term.

[PrincessPerky]

I agree with all of you guys. I think actually think it's a mixture of all of the above. Like a yummy delicious sandwich, there are several indispensable elements that makes it what it is. The soft, pillowy bread... mmm... crisp lettuce and tomatoes... hhhhuhhhh... and juicy slices of honey ham.... oohhhhh baby!

But to focus in only on any of one of those elements is to miss the big, tasty picture. Know what I mean?

what he said..

though for me, the 'big tasty picture' needs to have no tomatoes..cause I hate moving! (and tomatoes...)

[LivingAlmostLarge]

Home no way it's an investment.

[kilcher]

I think of it as a home. The fact that I may "make" money from it is an added bonus.

[Joan.of.the.Arch]

Not an investment. We would not be able to live terribly long on what we could sell it for. Our mortage is only about $300/month and I don't think I can get even the worst apartment in the area for $300. Certainly could not get another house for that. But what we save on house payments we can put into reitrement and other things that make current living happy.

[Ima saver]

I think my home is more of an investment cause my husband invested long hours into building the house. He did not get paid to build the house, so we can easily get triple of what we have in the house.