The decision to buy a home is one of the most significant financial choices we can make. It marks a pivotal moment of transition, a significant life milestone, and holds the potential for stability, security, and long-term prosperity. While renting may be right for certain points of your life, owning a home brings benefits that go far beyond having a place to live. In this blog post, we’ll explore my friend Kendal’s home buying journey, which shows the numerous benefits of buying a home and why it can be a wise investment for your future.
Benefits to Owning a Home #1: Sense of Stability and Control
Owning a home provides a sense of stability and control that renting can’t match. When you rent, you’re at the mercy of the decision and policies of the property owner. Lease agreements can be renewed or terminated at the landlord’s discretion, potentially leading to frequent moves and unsettling disruptions. Homeownership gives you the freedom to establish roots and create a stable living environment for you and your family.
We all experience unpredictable life changes. After a difficult divorce two years before she bought her home, Kendal thought she’d never become a homeowner. It seemed out of reach on a single income, even though she’s a successful entrepreneur with multiple thriving businesses.
It wasn’t until she met a real estate agent who started encouraging her to think about this differently that she began to form a plan. She decided that buying a home might not only be possible, but a way to give her daughter, Amai, even more stability. She wouldn’t have to worry about rent increases or a landlord deciding to sell her apartment anymore. On top of that, she’d be able to make updates and renovations to her home freely, without prior approval. She’d also be able to reflect her personal style and preferences for her home.
Benefits to Owning a Home #2: Long-Term Financial Security
Homeownership offers long-term financial security. You have control over your living situation and don’t have to deal with rent increases or being forced to move if a landlord’s plans change. Unlike renting, owning a home means your monthly mortgage payments contribute to an investment that can appreciate over time. While short-term fluctuations are common and normal, homeownership often proves to be a lucrative investment in the future. As your property value increases, your home becomes a valuable asset. You can sell or borrow against it to fund other goals or emergencies. Eventually, you can leverage the equity you’ve built to finance other goals, such as education, retirement, or purchasing additional properties. You can also generate significant profits if you choose to sell it later.
Kendal thought a lot about this benefit before she decided to buy a home. She considered the realities of buying a property in a high-cost area like Los Angeles. She approached the idea with a long-term strategy in mind. Kendal knew tha, she’d have to downsize from a 2 bedroom/2 bathroom 1,200 square foot apartment to a 3 bedroom/1 bathroom 1,100 square foot one. This meant trading her spacious closets for smaller, 1951 closets. As Kendal puts it, “What are you willing to lose now to gain in the long run?” She prepared to purge some of her belongings to fit comfortably into a smaller space. But, she’s focused on the appreciation of her home over the long term and says, “It’s my retirement if I ever need to sell.”
Benefit #3: Building Wealth and Generational Legacy
Homeownership offers a unique opportunity to build wealth and create a lasting legacy for future generations. As you pay off your mortgage, the equity in your home grows. This equity can be used to finance other investments, start a business, or fund educational expenses.
Homeownership often serves as a foundation for intergenerational wealth transfer. By owning a home, you can provide a secure, stable environment for your children and grandchildren, offering them a head start in life. The property can be passed down through generations, ensuring your family’s well-being and establishing a lasting legacy.
As a mom, Kendal always thinks about her daughter Amai and the legacy she’ll be able to provide for her. After surviving a life-threatening health condition three months before she bought her home, she realized that she didn’t have enough assets to support Amai if anything ever happened to her. She started to think about alternative investments to help create this legacy, and homeownership really appealed to her. After she bought her home, she worked with a lawyer to put the house into a trust and now feels extremely confident about how this will benefit Amai and her future family as well. Kendal even created a beautiful ritual to commemorate the occasion and what it meant for her and Amai when she presented Amai with the keys to their new home – and a secure future.
Benefit #4: Potential Rental Income
If you have extra space in your home or an additional unit on your property, homeownership allows you to generate rental income. Your home can be an asset through rental models such as AirBnB, location rentals, renting out a room or even storage space etc. There are a dozen creative ways to turn your home into an income generator.
Kendal knew that she wanted to look for a home that had enough space on the property to build an ADU (Accessory Dwelling Unit) in the future. She’s excited to explore her options once she’s built up some more equity down the road.
Benefit to Owning a Home #5: Tax Benefits
Homeownership comes with various tax advantages that can help reduce your overall tax burden. Mortgage interest and property taxes are generally tax-deductible, which can help you save during tax season. Additionally, if you sell your primary residence after living in it for at least two of the last five years, you could be eligible for capital gains tax exclusions.
Benefits to Owning a Home #6: Pride of Homeownership and Community
Homeownership fosters a sense of pride and belonging that extends beyond the physical property. When you own a home, you become a part of a community. This feeling of belonging is essential for social connections, forming relationships with neighbors, and establishing a supportive network.
Homeowners often take a more active role in their communities. They contribute to local projects and initiatives, and participate in neighborhood events. They engage in the decision-making processes that shape their surroundings. This level of involvement not only enhances personal well-being, but also strengthens the social fabric of the community as a whole.
Kendal grew up in South Central Los Angeles and is proud of where she’s from. She always knew she wanted Amai to grow up where there was a diverse community of people and a real sense of pride in who you are and where you’re from. She’s excited to build up her community in her neighborhood. She’s also looking forward to Amai feeling the same sense of pride and belonging that she’s always felt.
Bottom Line:
The benefits of buying a home are vast and wide-ranging. From the financial advantages of building equity and potential appreciation to the emotional rewards of stability and pride of ownership, home ownership offers a path to long-term prosperity and fulfillment. By investing in a home, you have the opportunity to secure your financial future, establish a sense of stability, create intergenerational wealth, and become an integral part of a vibrant community.
As Kendal says, “ Homeownership ain’t for punks. It feels like a marriage. It’s a mix of beautiful, great moments and setbacks. But even now [two years later] I still wake up with the reality that I have a home. That I deserve it and that I won’t lose it.”
That feeling is priceless.
If you want to start your homeownership journey, get my free resource, Map Out Your Dream Home. You’ll learn:
- The four steps you can take to develop a detailed description of the home you’re looking for
- How to break down what home features are most important to you and define what your top priorities are
- An exercise that will help you create a clear vision of your dream home and keep you motivated
- How to define your short and long term goals for your new home
- And more!