Josh Sanders, Founder of Shiloh Street
Taking the leap to buying a home isn’t the right choice for everyone but it can be a fantastic alternative to renting a house, if you’re financially prepared.
First-time home buyers can reap tons of benefits from home ownership compared to renting a house (a.k.a. ‘flushing money down the drain’).
I’ll breakdown 5 reasons why you may want to think seriously about buying a home in the near future if you’re currently throwing rent money down the toilet and making your landlord rich. 
Reason #1 – Real Estate Appreciation
While real estate prices have dropped since the crash of 2007, historically, real estate does indeed appreciate over time. Each local real estate market is different and some areas may appreciate for a period of time while others will depreciate.
That’s why it’s wise to plan on owning your home for at least 5-10 years to ride out any market downturns. For example, if you purchase a $200,000 home and own it for 10 years while it appreciates at an average of 5% per year (even though some years may have zero or negative appreciation rates), it’ll be worth over $325,778 when you go to sell your home.
Compare that scenario to paying rent for the next 10 years when all you’ll see is an increase in the gas prices to drive your U-Haul truck to your next rental house. Your rent payment is going towards building your landlord’s appreciation and equity; both of which you should be benefiting from, right?
Reason #2 – Equity Build-Up
‘Equity’ is simply the amount of profit you have in your home. For example, if your home is worth $250,000 and you owe $200,000 on your mortgage, you have $50,000 in equity. Whooo Hooo!
When you’re paying rent, you’re paying down your landlord’s mortgage and increasing his/her equity in the property. So what are you getting out of it? Nothing, except a place to watch ‘Dancing with the Stars’ on Monday nights. Your landlord is the one raking in all the financial gains.
As a first-time home buyer, buying a home can give you a gigantic financial boost because you can build up equity in your own home rather than giving it away to your landlord.
When you own your home, you can use your equity as collateral to borrow money against your house in the form of a ‘home equity loan’, if a financial hardship pops up.
When you eventually sell your home, any equity built up in your house will turn into cash in your pocket to use as a down payment on another home or for whatever you want. It’s your cash!
Reason #3 – Pride of Homeownership
Buying a home is part of the American dream, right? (at least that’s what I’ve always heard ). There’s just a sense of pride when you own your home compared to renting it.
When my wife and I were first-time home buyers and bought our first home at the age of 20, it was a great feeling to own our home and reap all the rewards that came along with it. It’s kind of like when you finally get your car loan paid off. It just feels better when you’re driving it because you own it 100%.
When you own your home, you tend to take better care of it (just ask any landlord who’s had renters trash their property!). And when you take better care of your property, it increases in value.
Reason #4 – Benefit from Mowing the Lawn
Ok, you might not actually get any reward from mowing the lawn other than a nice looking yard. But when was the last time you got something for painting a room in your rental house or installing that new shower head in the bathroom? Probably never.
When you fix up and improve a house you own, you increase its value, which means more equity. Unless you make some kind of deal with your landlord, you almost never see any benefits from improving the home you’re renting. Only your landlord reaps those rewards!
Reason #5 – Pay Less Taxes
Unless the tax laws change, one of the super cool things about buying a home is that you can deduct the mortgage interest you pay from your income taxes. The government is big on incentivizing potential home buyers to own real estate, which could save you a pant-load of cash each year.
Plus, did you know you can deduct your local property tax premiums too? Yup, you sure can! Just be sure to talk with a tax professional to help you deduct the maximum amount.
As an aspiring first-time home buyer, how much did you save on your taxes last year as a result of all that rent money you paid? Exactly…. Zilch. Nada. Well that’s all about to change once you buy a home.
Can you now see how buying a home is more than just a notch in your belt on your way to living the American dream? You can enjoy all kinds of financial benefits and have a little more control in your life, which is something I’m sure we’d all like.
Buying a house isn’t the right choice for everyone though. Sometimes renting a home or buying real estate on a land contract can be a better option, depending on your situation. But if you’re financially prepared and don’t plan on moving around constantly like a military family, buying a house can be like steroids to your long-term financial health (without the nasty side effects).
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I just love the ownership part. Once you finishing paying, you’re DONE. DONE! Then you can use that money for something else.