When you have enough money set aside to buy property, should you purchase a home for yourself or invest in one? Both options have certain advantages and disadvantages to be aware of before making your decision.
Here are some of the pros and cons of buying an investment property vs. purchasing your own home:
- Expenses: You’ll be paying a considerable amount of money for expenses when buying your own home. With an investment property, your tenant covers most expenses.
- Appreciation: You won’t necessarily see significant appreciation if you buy a home, even with the housing market recovering. If you invest, appreciation isn't as important. It’s a nice bonus if it happens, but you won’t lose out if it doesn't.
- Inflation: Inflation is beneficial whether you buy your own home or invest, since it causes home values to go up. Keep in mind that you’ll likely be paying more for a home if you buy one after inflation happens.
- Refinancing: Refinancing can pay off whether you’re purchasing a home or buying an investment property, as long as you use the equity to invest in more property. Using it for another purpose isn't worth it.
- Buying the most expensive home you can afford: This isn't a good idea either way. If you’re buying your own home, look for a good deal instead. If you’re investing, it’s still a better idea to negotiate a more affordable price rather than buying a house that’s at the top of the market.
- Retirement support: You can’t always rely on your own home to support you throughout retirement, especially when expenses are factored in. Investing in homes can support your retirement.
Need help buying an investment property? Contact Donna Hatch and let's get started!
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