A few years ago I was asked to speak to a group of young adults about the benefits of owning real estate and the process of purchasing. The average age in this audience ranged from 18–30 years old. As the evening progressed, I realized that most of them had no interest in purchasing real estate because they thought it unnecessary and out of their reach in their current life status. Some even had a very strong opinion that they should not buy real estate,..ever. By the end of the evening, I was able to convince all but the most hard core, that buying real estate was not only in their grasp, but was truly an advantage in terms of beginning the process of accumulating wealth.
I spoke with passion as I shared my testimonial regarding real estate as an investment vehicle, since I had lived a life investing and brokering real estate. Through the years I have watched many poor but entrepreneurial people, start from scratch and eventually accumulate a grand nest egg of assets because of their real estate dealings. Home ownership has been the financial springboard for most property owners who have invested in real estate at any level.
Most people who purchase a home soon find that they can create equity by doing improvements to the property by adding bedrooms in an attic or basement or by doing other repairs that enhance the value. Another way to gain equity is by adding more dollars to their payments, thereby reducing the principle they owe to the lender much more rapidly. Within a few short years young investors can accumulate enough equity to make a jump to the next level and an even better investment.
While it is possible in an inflated market to over pay, time usually heals that problem when inflation eventually becomes their ally instead of the enemy. For now, there are also some specific tax advantages of owning a home, including mortgage interest deduction, deducting property taxes, and capital gains exclusion.
It is proven that home equity provides the single largest source of savings and wealth building for Americans. Even in the current political environment when the American Dream is being threatened from every angle, smart people will continue to invest and property ownership will continue to provide the best vehicle for wealth building. If you are not feeling the vibes for home ownership, call a professional who can educate and guide you until the fear factor goes away!