Is Real Estate a Good Investment?

I recently had an interesting conversation with my son about his home value. He actually said  he thought that if he sold his home and moved, that he would rent instead of buy. As a Real Estate professional and a Real Estate investor, I was surprised. Further discussion gave me insight into his thought process.


He bought his Tampa starter home in 2003. While most home
values in Tampa are now above 2003 values, his value has been held down by a large number of recent foreclosures and short sales in his community. Even without the distressed sales, he would have little equity in his home after paying closing costs and professional Real Estate fees. I think he is looking at only the value after the sale and not the long term benefits he had during ownership.

A few things are worth considering when looking at the big picture:

1) Little Change in Monthly Housing Cost - His monthly payment has changed some during ownership due to insurance and tax costs, but in general his payment has stayed the same, while rental rates in Tampa have increased since his purchase.

2) Reduction in Taxable Income - He has been able to write off his mortgage interest and property taxes on his income taxes which has reduced his taxable income. In his case 11 years of tax benefit.

3) Freedom - Freedom to paint and make improvements to his property to make it his own.

4) Recapture of his Down Payment and Potential to Walk-away with Money in his Pocket at Closing - When you rent you are lucky if you get your deposit back and to my knowledge you never have the opportunity to walk away with additional cash in your pocket. 

In my opinion there are many advantages to owning Real Estate and those mentioned above are just a few. Leverage is a key aspect because you control a high value asset while risking only a small percentage of it's value of your own money. Even if my son didn't make a dime on his property, he still didn't spend much of his own money to get into the property to begin with, so there is little if any financial loss.

Apparently I am not alone in my beliefs, according to the graph below most Americans still believe that Real Estate is a good investment. I love being a Real Estate owner and hope to help my son see the advantages! If I can help you or someone you know with your Real Estate needs, please give me a call at 813-230-5804.