As I mentioned in a previous post, The Cobblestones, the purchase of our first home happened around the time Bill Clinton was President and Screech graduated high school on “Saved By The Bell”. While that was over 20 years ago and many things in society have changed, the reasons to purchase real estate have not. The main driver in our decision to purchase a home vs renting was my father.
We considered many options for a place to live as the wedding day grew closer. Apartment complexes were an option since they were conveniently located to our jobs and with nice amenities. As we debated which we liked best and tried to decide on a location, my father sat closely by and listened. He is a quiet man, only speaking with intention, happy to watch the circus that is my family from the corner of the room. He is very smart, one of the wisest people I know. He waited quietly for the opportunity to share his wealth of experience at the perfect moment. He asked, “Why would you rent? You’ll just be throwing your money away.” This reality was something we had never considered.
Let’s examine the math. For example, calculate a rental fee of $1,500/month. Imagine you stay in the rental for 10 years. $1500 X 12 X 10 = $180,000. That is money you will never see again.
Now, let’s look at a $250,000 home mortgage with 10% down which results in about the same monthly payment. In that same 10 years, if your property appreciates at 5% each year, the home value would be about $412,000 with a profit to you of about $237,000 at the sale after paying off the remaining loan balance. Another benefit is the tax write-off for the interest. That is money in the bank.
My dad was right. A home is an investment. We lived in our first house for several years and received a good return. I often imagine the results if we had never moved. Many of our current neighbors are moving as they retire after living in their home for 30 years. Most of them bought their houses for about $75,000 and many are selling now for more than $350,000. Think about that profit. A home is truly an investment in your future.
April Holtzclaw is a Real Estate Agent and 30 year resident of Metro Atlanta. When not working, she enjoys camping, traveling with her family and mountain biking with her husband on the trails in the Atlanta area. Her favorite way to finish the day is with an “al fresco” dinner at one of the many great restaurants in town.