My issue is that I am a saver, I like my liquid cash reserve but I want to build some equity. Would it be best to buy RIETs or a home of my own and build equity? Don't mean to be vague but my credit score are in the 700's and I have money in the bank for a healthy down payment. Should I take the plunge or just rent and keep my liquid cash reserve for investments such as index funds, bonds, CDs and REITS . I don't want to end up "house poor"
You need to work out what the actual likely net results will be. I moved to owning once I found a property where the mortgage payment was lower than my current rent. That moves money that is essentially being lost, so that that is became money that is being invested. I also have REITs in my portfolio it's not an either/or scenario.Just make sure you get a low-maintenance property, not a money pit, and not a property that is depreciating in value.
We used to rent an apartment and later a house. After 7 years of renting, I was given the privilege of a home mortgage courtesy of our company. We grabbed the opportunity even if our expenses would jack up to more than double. Our rent was 5,000 per month but the installment on the mortgage was 12,000 (figures in pesos). My wife and I agreed that if would scrimp and save, we can have our own home and be freed from renting. After 15 years of dutifully paying the installments, we now own this house since July of 2016. It was hard work but it paid off. Now we are stress free from the worries of renting and rent increases.
I know many people who are employed and well paid often opt for buying a house than spending money on monthly rent. There is a two fold advantage - Firstly you can save money on rent and use it to pay the EMI of house loan. Secondly buying a house is a very good investment. It will give you good returns in the long term. If you move out of that city you can also give it on rent and earn money. So it all depends on your financial position and ability to cover EMIs. If the rent being paid by you is very lower than the possible EMI, then I think you can go for renting a house for the time being. Once your investment grows well may be you can buy a house without the help of bank loan.
I bought my house because I want something to leave my children when I go. The only problem with this is if I have to go into a home for old people I may have to sell my home to pay for my keep which would defeat the whole object of buying it. The other downside is the upkeep. House repairs can be costly. If you rent a place your repairs are paid for by the landlord but once you own it you are responsible for repairing anything that goes wrong.
It's entirely an area specific matter whether you invest in a house or go for cash investment plans! However if you are living in a place where rental value is high then it's best to go for long term house loan which attracts lesser interest than what you pay as rent. In case you find a place near your work place your benefit would be even better as you will save on transportation too. I suggest you to think twice if you do not have a stable job/business or planning to invest in investment property.
