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Real estate has always been considered a solid investment. Entrepreneur Corey Shader says that investing in real estate is even more important during uncertain economic times, such as periods of rising inflation that we’re experiencing today.
There is a solid and proven link between financial security and homeownership that is often overlooked. In fact, many people may not even realize just how much owning a home contributes to one’s overall net worth.
Corey Shader examines this in more detail below.
Your Home is Your Biggest Asset
For many people, their home is their biggest asset. True, it’s also likely their biggest liability, but there’s no denying the power home ownership holds for people.
While your home isn’t considered your asset completely until it’s paid off, you do have significant value in it with each passing day. The equity you have in your home — the difference between what you owe on your mortgage and how much the home is valued at — is likely to be more valuable than many of your other assets.
What’s more, this equity is much more likely to grow in time than some of your other assets might.
Homes Appreciate in Value
Many physical assets actually depreciate in value. A car, for example, loses value every day that goes by and every mile that’s driven. Homes, meanwhile, work in the opposite way.
Over time, most homes appreciate in value, assuming they are maintained well and in a desirable neighborhood. Since 1991, the Federal Housing Finance Agency has reported that homes have appreciated, on average, 3.6% on an annual basis.
That may not sound like a lot, but a home that in 1991 was valued at $100,000 could be valued at roughly $250,000 today.
Homes Force Savings
Every month that you make a mortgage payment, you are paying off a portion of what you owe — and increasing your equity in the process. Another way to look at this is that you’re investing money into savings every time you pay your mortgage.
Even if your home never increases in value — which is highly unlikely — you are increasing the value of your asset by paying down the principal of your mortgage.
Homes Reduce Tax Liability
One of the biggest ways to increase your wealth over time is to reduce your tax liability as much as possible. Home ownership provides a great way to do that, in a few different ways.
First, you can deduct the amount of interest you pay on some mortgages, as well as how much you pay in property taxes each month — up to a certain amount. In addition, when you sell a home, you typically won’t be subject to taxes on the profit you realize, unlike when you sell a stock, for instance, and have to pay capital gains taxes.
Homes Provide Financial Stability
Owning a home can seem much more expensive than renting at first. But, Corey Shader says it actually provides much more financial stability over the long term.
Renters are subject to fluctuations in the rental market. If prices go up in their area, landlords are likely to increase rent on their tenants — even if they haven’t made any improvements to the property.
On the other hand, if you have a fixed-rate mortgage, your monthly payment will remain the same for the life of your loan. So, even if your home value skyrockets due to an improved housing market or improvements you’ve made to it, your payment will never increase.
This financial stability gives home owners the opportunity to make more impactful financial moves in other parts of their lives.
About Corey ShaderCorey Shader is a self-made entrepreneur, consultant, investor, real estate developer, and founder of several companies, notably Insurance Pipeline. Operating primarily out of Ft. Lauderdale, Corey’s endeavors span across the nation, consulting for start-ups, and sitting on the board of digital media and senior healthcare agencies. As a consultant, Corey helps young businesses develop sales funnels and maximize profitability. Shader takes pride in challenging others to push themselves to be their very best — he believes in constant self-improvement, inspiring others through sharing his own life experiences.
