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Fresh Thinking on Investment Real Estate, Rent, Home Ownership July 24, 2008

Posted by shaferfinancial in Uncategorized.
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Recently had an interesting conversation with a young man.  He was wondering if he should buy a house in his area to live in.  I asked him some basic questions like why he wants a house.  He answered, for an investment!  Further he said he was happy with renting the place he lived in because it was ideally located for him and relatively cheap.  He couldn’t afford to buy into the same area he lived in, so he was looking into some less desireable neighborhoods to buy.

So I suggested he treat this transaction as what it is, an investment.  I explained to him that the decision matrix for investment real estate was very different that for a personal residence.  It was like a light bulb went off in his head.  He had been struggling because he was approaching this decision from the wrong direction.  He really didn’t want to move.  I sent him off to do some research and gave him a couple of names of trustworthy folks that understand investment real estate. 

This is, of course, anathema to my real estate agent friends, but renting can make sense for people.  And since people aren’t trained to think like a real estate investor, they are unprepared to make good decisions about real estate.  Like my client who was paying $600/month for a place he was comfortable in and finding a similiar place to own would have cost him $2000/month.  Now he is free to look all over the US to find a investment property since he is not limited to being close to work.  He can still bike to work and own an investment that will give him double digit returns putting him in good stead for his future!

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Comments»

1. nancyarora2020 - July 25, 2008

The dream of having one’s own roof over one’s head is a universal one. India is no different. Almost all of us – including me – have a dream of owning our own houses. But in the present real estate boom coupled with inflation, how many among us are actually making our dream come true? In my last blog, there were a few comments on how the rich are getting richer and the common man is left out of this phenomenal real estate growth of the country.On a recently conducted online survey carried out by a property site, it was revealed that more than half of those surveyed are looking for a 2-bedroom home within 5-10 lakhs. It will be logical to say this largely reflects the dreams and aspirations of the common man – you, me and other people like us including the service class, businessmen, lawyers, professors, house wives and young professionals.However, going by the present trend, the Rs 5-10 lakh bracket of affordable houses are confined to the extreme suburbs or peripheries of large and small cities. Majority of the sample in the survey are from metros, where a 2 bedroom house is at least three to five times more than the affordable range! Tier II and Tier III cities too are fast catching up – making it even more difficult for the common man.It was on news that the Ministry of Housing and Urban Poverty Alleviation has commissioned the Reserve Bank of India team to find out more about affordable housing. I sincerely hope that they realize the folly of skewed growth and make the necessary correction.For more view- realtydigest.blogspot.com

2. Kusadasi Real Estate - July 27, 2008
3. Your Phoenix Home Is Not An Investment | Phoenix Market Trends - Phoenix Market Trends - March 20, 2011

[…] Home ownership is a great thing.  There is nothing like having your own patch and a deed to go with it, but a home you occupy should not be considered an investment.  This is exactly the point David is making in his article. […]


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