Is real estate a good investment for first time home buyers?

Is real estate a good investment for first time home buyers?
If you’re a first time home buyer and asking yourself that question, it’s almost impossible to get an answer that means anything to you and your family.

The disconnected national media (on-line and offline) is no help. Their view from 30,000 feet confuses the issues for first time home buyers who are looking at it from ground level.

How does a first time home buyer evaluate the investment side of buying their first home?

First, let’s define “real estate investment”

A real estate ownership interest, whether a personal residence or rental property, that increases one’s net wealth by a fair rate of return on their invested cash equity; for the corresponding amount of risk they are taking by owning a relatively high risk asset.
What that means is that if you are going to put your invested cash equity into real estate, your net worth should improve by a greater amount than if you invested in a similarly risky asset.

And “invested cash equity” isn’t the property price; it is how much cash you took from your bank account to acquire the property minus down payment, plus closing costs, plus rehabilitation costs.

You have to live somewhere (unless it’s your parent’s guest room) and pay someone for the privilege. So if you’re renting now, you’re investing in real estate, it’s just not yours.

So a good real estate investment is really one that will increase your net worth over time. The longer you own it, the better the chances for that appreciation in value and wealth building.

For more information about real estate investment for first time home buyers, click here

Thanks to Leonard Baron, for the for some of the content. You can see more at Professor Baron.com