I recently read somewhere that the biggest asset that majority of people own is the house they live in. And indeed, looking around, you realize that the biggest aspiration for people who live in rented houses is to have their own houses one day. Such aspirations are valid. But it is also important to come to terms with the fact that there are pros and cons to owning a house. Those pros and cons associated with home ownership will be the focus of today’s blog post.
Let’s start with the pros. Firstly, when you invest in a house, you get peace of mind in return. You don’t have to worry about the issue of getting rent every month. Secondly, when you invest in a house, you get a valuable asset, against which you can borrow money in the future.
Let’s turn to the cons. It is important to appreciate, firstly, that when you buy a house somewhere, your mobility is reduced. You get stuck there. For instance, it becomes hard for you to consider moving to another state to look for a job. The idea of having to sell the house, or having to rent it out (and then ending up having to rent a house in the other state) is simply not very appealing. Secondly, you realize that the money that you spend buying a house is a money that you could have invested in other ways. For instance, using such money, you could easily have gone to www.sunbiz.org, and registered a new company there (using the Sunbiz.org corporation registration functionality). And chances are that the earnings from the company you register on the Sunbiz website would be more valuable than owning a house. After all, we are always being reminded that a house is not an asset that brings in money. On the contrary, a house is an asset that consumes money (think of the various house maintenance bills, property taxes and so on). As such, a house can easily change from being an asset, into being a liability.
This state of affairs explains why some people opt to live in rented houses, in spite of them having the ability to buy their own houses. It is, in many ways, akin to the phenomenon where majority of Americans opt to become employees, notwithstanding the fact that they have the option of becoming entrepreneurs.