Is this house a good investment?

blue house
small house

Is this house a good investment is a great question and the answer has more to do with the situation of the person buying the house than it does with the house.

First, let’s assume that the real estate buyer is smart and savvy and pays fair market value or less for the property. We don’t know for sure if the value of the home will go up or down. Historically Minnesota real estate has appreciated . . . except for that one time when it dropped like a rock.

Buying real estate is a long-term investment. When compared with renting long-term homeownership builds wealth and renting does not.

However, if a person has a choice between buying a home or using the money to start and build a business the business might be a better investment. Right now the tax breaks for businesses are bigger than tax breaks for homeowners too.

Owning a home for a short period of time can be more expensive than renting. Buying a home might not be a good investment for someone who needs to move often to take advantage of job opportunities.

For my family buying a house has been a great investment but we took a risk. We bought a house in an area that was experiencing some urban decay. Interest rates were sky high and people had trouble selling their homes.

The neighborhood has turned around and I guess we are on the way to gentrification. We bought low and yes it has been a very good investment. It wasn’t easy in the early days.

The question should be: Is this house a good investment for me at this time? Do I want to invest in a house or is there a better use of my hard earned money? Do I want to spend my money on stuff or on experiences or both?

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