There are many people who will tell you that owning a house is the ultimate investment. The tax benefits are amazing. The rental income potential is out of this world. Your property will practically pay for itself. However, “When something is too good to be true, it probably is,” as the old saying goes.
You might be tempted to jump in headfirst at the first buying opportunity to cash in on the benefits. But you need to think long and hard about the commitment you are about to make. Buying property isn’t something you can undo whenever you feel like it. It is a long-term binding commitment. So, if you are not ready to tie yourself down for the foreseeable future, you could be in for a rough, stressful ride.
Nobody tells you about the hidden costs of owning a house. They only say how empowered you will feel when you own some land. To most people, owning a house is a romantic idea. However, it can turn into a wallet burning nightmare if things decide to go south. You just don’t know what will happen in five or 10 years.
For example, you probably have no idea where your career will take you or what will happen to your neighborhood. Times have changed, and things change a lot quicker than they used to in the past. Here are some reasons to think long and hard before signing those mortgage papers.
1. It’s Not Always a Sound Investment
This is probably the biggest argument in favor of buying a house. Although there is some truth to the argument, there is also some fine print many people are not aware of. It is true that certain homes appreciate in value over a period of time. However, there are other assets that also appreciate.
If, for instance, you bought a house 20 years ago for $20,000, the house might be worth more than double that today. The gain seems impressive, but if you calculate how much interest you paid over that period, the gain becomes minimal. The only reason why homes appreciate in value is because of inflation. Just as your house gains value due to inflation, there are other assets that also gain value.
If you were to invest in your business or play around in the market, you are sure to make a pretty penny more than your house would garner. If you invest wisely, the returns on your house can look like peanuts in comparison to your market investments. For many people, playing around in the stock market is like gambling. But if you do your homework, your chances of losing out are minimal.
Speaking of losing out, your home could depreciate, as well. All your neighborhood has to do is hit a bad patch, and there goes your investment. You are never sure what is going to happen 10 to 20 years down the line.