Monday, 11 May 2009

Buying a home

Is a home an investment or a liability?
Its a question frequently discussed in the personal finance circles.
Some say that you should buy a home because you want to live in it and not because it is an investment. I don't necessarily disagree with this statement but isn't it based upon the assumption that all things stay the same?
But things don't stay the same do they? Nothing remains constant, does it? People change, people lose jobs, change jobs, circumstances change etc.
When DH and I bought our flat we bought it because we liked the building and we wanted to live in that specific location AT THAT TIME.
Now, six years later, I need to offload the property to downsize. I have no idea whether it has been a "good investment". I can look up sold prices on other properties in the building but that can only serve as a guide. The flats in my building vary in size and detail and more importantly price. The variations are quite significant, on line sold prices wont tell me any information about the property, ie square footage, bedrooms, bathrooms etc.
My circumstances have changed, I've changed, my life goals have changed. Perhaps in hindsight I should have thought about the property more in investment terms.
So whether my home has been an investment or a liability remains to be seen.


Jerry Critter said...

I say it is both. It is an investment because you own it. It may be a good investment (you make money when you sell it) or a bad investment (you lose money when you sell it). It is also an ongoing liability. It costs you money each month to maintain (including any mortgage costs).

But you are right. Property is a long term investment. Things and circumstances change. A desired investment six years ago may not have the same appeal now.

Unfortunately we cannot see into the future. We can only make the best decisions we can with what we know at the time. Hindsight may help, but it still cannot tell us what the future will bring.

Good luck on your journey!

hustler said...

yep. An investment can very well turn into a liability. I'm hoping when I buy my house that we can stay in it for a really long time. At least we would come out ahead than if we'd rented. But when you have to move and sell, well hopefully you'll at least recoup what you put in it.