I can’t really wrap my head around it, you can have a tenant in there that maybe covers the mortgage, but it’s not really a good investment if you’re not getting a return?
Even if you use 500k to buy a property cash, wouldn’t that money be better off in the market?
In: Economics
ELI5 answer:
First, it’s an investment you can live in. You need to live someplace, right? So a house is an investment you can live in, so in a way it saves you money that you would otherwise spend on rent.
The nicer the house, the more luxurious your living experience will be. Even if you don’t live in it yourself, you can let someone else live in it, who will pay you rent, making you income.
Second, real estate often goes up in value pretty reliably and holds its value, although there have been crashes, etc., for the most part it is far less volatile than the market. You would not see homes losing half their value.
Third, if you have a mortgage, and you pay income taxes from a job, the mortgage will save you money by reducing your taxes.
There are a few downsides to home ownership, such as property taxes, insurance and upkeep, things you don’t need to pay for if you invest in the market.
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