Updated: Sep 1, 2020
Many people consider the home where they live as an investment, which I believe this is a mistake!
Let me explain to you why…
First of all, your home is not providing you with passive income and cash-flow which every rental property should provide.
Yes, you’re not paying rent while living in your own premises but it’s very likely that you’re paying mortgage which is not a bad thing...However in many places around the world and the country it’s much cheaper to lease then making the mortgage payments, property taxes, insurance and regular maintenance.
Let’s take for example cities like New York and San Francisco, and let’s assume you could find a decent home for a Million Dollars. To lease a home like that it’d cost you about $4,000 a month but if you put 10% down and assume $900,000 mortgage loan at 3.5% for 30 years period then your monthly payment would be about $4,000 a month before taxes, insurance and maintenance.
Now, if you take this Million Dollars (whether it’s cash or leveraged) and invest in 4-5 brand new homes in areas like Houston, Phoenix, Las Vegas and others then your rent income per home would be at least $1500 a month which could end up between $6,000-7,500 a month.
Not only that, you are very likely to enjoy appreciation and of course all the tax benefits allowed by the law.
All of that not to say you shouldn’t own your own home, my intention here is to focus on the mindset that most people have which says “I’m already invested in rear estate, I own a home”. This mindset could be very deceiving and lead to misunderstanding the benefits of investing in real estate.
When the focus is on investing properly you have the potential of enjoying steady passive income, appreciation and tax benefits which ends up securing your financial future and freedom.