The Benefits of Home Ownership
/The decision to purchase a home is exciting and a major investment in your future. Real estate is the top choice for many investors, whether first time or experienced, mainly because it can generate passive income, but real estate values have the potential to rise over time, creating equity in your investment. This article is designed to highlight some of the many benefits of homeownership, and how buying a home can often turn the “American Dream” into a reality.
Income
One of the most profitable markets in real estate is the rental market, or Residential Income Properties. For many people, renting a home is necessary, for all others the money spent on rent could instead be used to pay down a mortgage. In fact, in most areas (particularly Glendale, Pasadena, & Los Angeles in general) monthly rents often exceed that of a typical mortgage payment. One of the first benefits of home ownership is putting money into something that you can call your own, and knowing that each payment is going towards your home’s equity. This is what I refer to as putting money from your Left pocket, into your Right pocket — the money doesn’t disappear into your landlords bank account — it accumulates as equity over time in one of your largest assets.
Equity
Most properties in a healthy real estate market experience growth in value as more development moves into the area or the economy surrounding it strengthens over time. When this happens, home values soar and owners can bask in the glory of their newfound profit (equity). Case in point, my local real estate market in the City of Glendale, has seen a 27.2% increase in avg. prices of homes sold between 2013-2016…thats almost 30% in just three years!!!** Few investments in life can offer a return above and beyond your original purchase price the way real estate does. And the sooner your invest, the sooner you start building equity.
Improvements
When you own a home, you can enjoy the freedom of decorating, remodeling and making any changes needed without the permission of a landlord or the worry that you’ll never see the return on investment. Owning a home changes that. You can upgrade a kitchen or bathroom, add hardwood flooring or even expand with an additional bedroom…changes that can result in added value to your investment. In some cases, you may even be able to use your homes equity to finance the needed improvements or repairs.
Tax Benefits
Another advantage of home ownership is the tax benefits that are available. The interest paid on a home mortgage, as well as most property taxes, are tax deductible. In some instances, you can even deduct/expense improvements and repairs on the property. Since everyone’s financial situation is different, consult the IRS or a tax professional for more information on deductions and real estate tax benefits.
In addition to the financial benefits, don’t forget that home ownership also brings a feeling of stability to you and your family; no more surprise rent increases or waiting for the property owner to call a repair guy, everything is in your hands. So there you have it, these are just a few of the many benefits to consider when you find yourself in the common “buy vs. rent” dilemma.
**Data represents Average Price of Single Family Homes Sold between Nov. 2013 - Nov. 2016. Information courtesy of I-Tech MLS & Trendgraphix, deemed reliable but not guaranteed.** Alain Babaian is a real estate agent with a Brokers license based in Glendale, CA. He's personally invested in the Glendale, Pasadena & surrounding areas...the same areas where he helps sellers, buyers and investors with their real estate needs. Alain Babaian is frequently ranked amongst the top agents in his community, and is the recipient of multiple awards & accolades from Americana Real Estate, the Glendale Real Estate Firm he's partnered with for over 7 years.