What is great about buying a home is that is a forced savings plan.  It is a long term savings plan that you contribute monthly to and it grows.  As a fairly general rule, homes appreciate about three to five percent a year.  Some years will be more, some less.  The figure will vary from area to area and neighborhood to neighborhood.  Three to Five percent may not seem like much at first.  If you are looking for just the best investment then stocks would probably be the best investment.  Stocks (at times) appreciate much more and you could earn over six percent with stocks.  But home are a great investment.

 

Think about this...                                        

 

If you bought a $150.000 house, you probably got a mortgage for it.  Suppose you put twenty percent down - that would be an investment of $30,000.  At an appreciation rate of five percent annually, a $150,000 home would increase in value $7,500 during the first year.  That means you earned $7,500 with an investment of $30,000.  Your annual "return on investment" would be a whopping twenty-five percent!!  This is called "leveraging" and it is what makes real estate investment unique.  You can use other people's money to make money!!

 

Plus you will be getting a deduction on your income taxes for mortgage interest that you paid.  And for the property taxes you paid.  These are all added bonus on why you should buy.  It is an investment in your future that you can't afford not to make.  

 

Russ Ravary is a licensed real estate agent in the State of Michigan and a Realtor.

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