# Is a house an investment?



## DZLife (May 14, 2008)

An interesting topic came up in my business class today.
I have a feeling that this may become a bit heated, but hey, a good debate is always fun 

I would like to ask people to back up their arguments with facts, and not just blatant opposition to another's point of view. Instead of saying, I agree, say "I agree because ______" or "I disagree because_____."

I do have an established opinion on the matter. I will wait to give others a chance before I state my point of view and back it up with a few paragraphs of facts 


I have already cast my vote, as you can see (click on "view results")


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## DZLife (May 14, 2008)

heh, I guess no one finds my topic a worthwhile discussion...

I thought it would be interesting to explore various points of view on the matter.


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## DZLife (May 14, 2008)

Hey, no one is backing up their argument :/

I stated no; although buying a house is a good idea, it does not produce profit unless you sell it after an amount of time. An investment refers to something that produces REGULAR yield. Instead of investing your 150,000 in a house and selling it at a later date when the market is better, you could get much more money back by investing it in a long term savings account with high interest rates. A savings account gives money back on a regular basis (the frequency and amount depends on if it is a compound interest savings account.)

I'm not saying that I believe you should rent your whole life and put all your money into a savings account; I believe that you should find a happy medium between the two.

I myself would rent for a period of time and putting a large investment into a savings account or another STEADY means of investment, and after a period of time, take the money out and either buy a house all at once or at least put a VERY large down payment into it to minimize the interest I have to pay on my home loan over time.

In addition to previous evidence that I have put forth supporting my point of view, I would like to ask you to take into consideration the fact that not only do you have to pay interest on a house (as opposed to a normal investment paying YOU interest), but you also have to take into consideration insurance, utility cost, improvements, etc.


MY POINT: A Home In And Of Itself Is Not An Investment. I am NOT saying don't by a house. I intend to state that it should not be relied upon as an investment in and of itself. If you want to buy a nice house, go for it, but don't rely upon it as an actual investment/source of income, because chances are, you will end up paying more in interest on loans and money on utilities etc by the time you sell the house....you would make more money if you put your money into a solid investment.


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## ApriliaRufo (May 14, 2008)

At the moment yes, purchasing a house is a WORTHY investment. A home is always an investment, that's not debateable, whether or not it's a good investment is definitely an arguement. At the moment, I think it's a good investment, our economy is royally fucked. Home prices (although still too high for most people) are dropping, and with the future hope of our economy stabilizing, will rise in value soon. That's my simple opinion.


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## DZLife (May 14, 2008)

ApriliaRufo said:


> At the moment yes, purchasing a house is a WORTHY investment. A home is always an investment, that's not debateable, whether or not it's a good investment is definitely an arguement. At the moment, I think it's a good investment, our economy is royally xxxxxx. Home prices (although still too high for most people) are dropping, and with the future hope of our economy stabilizing, will rise in value soon. That's my simple opinion.



I would like to further clarify my statement made earlier...in my mind, not in full agreement with my business math teacher, there are two types of investments. 
1: One that makes you money grow on a regular basis, and you have regular access to the money.
2: One that grows in value but isn't actual money unless you, let's say, sell it. 

I believe that even with a low economy, at least for those without much money to spare......


excuse me. When I started this topic, I meant more along the lines of if you were to put your investable money into ONE thing....

Argh, now my thoughts are all muddled.

I guess I meant aside from the sake of living in, a house....

if you had a certain amount of money...in other words, you couldn't put more and more into it.....


I guess I partially disagree with my teacher.

A house, even though it has constant fees that you must pay for it, is a type of investment....just not the type he was thinking of XD

I guess his point was not to buy a house simply as an investment, unless you are going to make a business out of it....


I FAIL



The funny thing is, when I typed this up, he read over it and said that it all made sense to him..


Anyway, I will leave it up so I can get other people's oppinions.


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## dorton (May 14, 2008)

If you go just based on % return it is not, but if you figure rent to be $1000/month or buy a new house for $1000/month at the end of a 20year period, you will have nothing to cash in on your rental, but you will have colladeral built up in the house.


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## ApriliaRufo (May 14, 2008)

this is a fairly interesting subject. renting is on the whole not the greatest decision as it is essentially paying to use something with no guarantee of getting something in return. we are property managers for 15 duplexes and 30 apartments and it really shorts the renter. they pay 1100$ a month on medium duplexes, 1500$ on larges, and 800 on apartments. when the mortgage is broken up, our boss still pulls about 6k a month over our wage, all the maintenance, and insurance. if you were to mortgage a house at 5.5% on 150k over 30 years, you'd be paying around 900 a month. the other 100 goes to utilities, another 100 on insurance, and ur paying the same to own. now, I have to disagree with the idea that an investment is a spendature that yields monetary return. purchasing an xbox is an investment as the return is an acrued entertainment value. if u go to the movies every night, then a netflix membership is an investment. the return being the amount of money spent on the theatre over the amount of the membership.


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## DZLife (May 14, 2008)

ApriliaRufo said:


> this is a fairly interesting subject. renting is on the whole not the greatest decision as it is essentially paying to use something with no guarantee of getting something in return. we are property managers for 15 duplexes and 30 apartments and it really shorts the renter. they pay 1100$ a month on medium duplexes, 1500$ on larges, and 800 on apartments. when the mortgage is broken up, our boss still pulls about 6k a month over our wage, all the maintenance, and insurance. if you were to mortgage a house at 5.5% on 150k over 30 years, you'd be paying around 900 a month. the other 100 goes to utilities, another 100 on insurance, and ur paying the same to own. now, I have to disagree with the idea that an investment is a spendature that yields monetary return. purchasing an xbox is an investment as the return is an acrued entertainment value. if u go to the movies every night, then a netflix membership is an investment. the return being the amount of money spent on the theatre over the amount of the membership.



the term investment can be used in two ways: 
a: putting your money in something that you feel has benefits that outweight the money you pay.

b: something you put your money in that produces regular yield

I was referring to the second definition.


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## Toby_H (May 15, 2008)

From the perspective that I have a pile of money to invest all at onceÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦

Buying a house is a wise investment because:

- You can rent/lease the house out to make a regular and immediate incomeÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦

- Since the house was purchased all at once there is no mortgage payment and interest is therefore avoided. Taxes, Home Owners Assoc Fees, insurance, etc will have to be maintained but will total a small fraction of the rentÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦

- The value of the home is also increasing over time, IÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¾Ã?â??Ã?Â¢ve read the Ã?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Â¹Ã?â?¦Ã¢â?¬Å?national averageÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¾Ã?â??Ã?Â¢ is the value of a house is expected to double every 10 years...

Therefore the house NOT ONLY brings in a strong, regular monthly incomeÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ it generates a large return when the investment is terminated (house is sold), well beyond the initial investment. 

For quick round numbers to sever as an exampleÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦

If I purchased a home in full for 200,000... I should easily be able to get $1,000 rentÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ which is 12,000 per yearÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ if I kept it for 16 Ã?Æ?Ã?â??Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â½ years I would generate 200,000 in rentÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ plus the home itself would not be worth an estimated $500,000...

Now stop and visit a local banker and see if they can offer such returnsÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦


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## DZLife (May 15, 2008)

Toby_H said:


> From the perspective that I have a pile of money to invest all at onceÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦
> 
> Buying a house is a wise investment because:
> 
> ...




That goes a lot more along with my beliefs; I believe that one should try to save for a long time and buy a house at a full upfront price to avoid a home loan...you usually end up paying more in interest than you do on the actual home XD


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## ApriliaRufo (May 15, 2008)

DZLife said:


> Toby_H said:
> 
> 
> > From the perspective that I have a pile of money to invest all at onceÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦
> ...



You must have some seriously bad credit if you're paying over the home value.


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## Toby_H (May 15, 2008)

> You must have some seriously bad credit if you're paying over the home value.



I donÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¾Ã?â??Ã?Â¢t understand what this comment was in reference toÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ IÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¾Ã?â??Ã?Â¢d imagine you misread somethingÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ In todayÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¾Ã?â??Ã?Â¢s market everyone pays less than the home is actually worth, thatÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¾Ã?â??Ã?Â¢s what a recession means 

________________________________________________________

DZ you created the limitation of the house being a lump sum investment and not a home the buyer plans to live inÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ 



> excuse me. When I started this topic, I meant more along the lines of if you were to put your investable money into ONE thing....



Ã?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦andÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦



> I guess I meant aside from the sake of living in, a house....
> 
> if you had a certain amount of money...in other words, you couldn't put more and more into it..Ã?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦



If we take the situation most people find themselves inÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ renting for a time and considering buying their own homeÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ then a couple things changeÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦

- For one we will be taking out a mortgageÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ not buying it out rightÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ and therefore paying interestÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦

- We will not be receiving a rent payment monthly, but we will be relieved of paying rent to someone elseÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦

At the end of a 30 year mortgage we basically end up paying in twice the initial value of the home (including interest, insurance, HOA, etc)Ã?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ This obviously is a big hit to the Ã?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Â¦Ã?Â¢Ã¢â??Â¬Ã?â??profitÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡


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## Toby_H (May 15, 2008)

I goofed the cut and paste...

If I were to take out a mortgage to purchase a $200,000 homeÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ I would pay an estimated $1,200 per monthÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ totaling $432,000 after 30 yearsÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡Ã?â??Ã?Â¦ and the estimated value of the home after the same 30 years would be $500,000... 

The final profit wound NOT ONLY be $68,000 but a Ã?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Â¦Ã?Â¢Ã¢â??Â¬Ã?â??freeÃ?Æ?Ã?â??Ã?â??Ã?Â¢Ã?Æ?Ã?Â¢Ã?Â¢Ã¢â??Â¬Ã?Â¡Ã?â??Ã?Â¬Ã?Æ?Ã¢â?¬Å¡


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