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Rental Property Is A Great Investment

Rental Is An Investment

Rental/investment property is great. Home ownership is mostly a bad investment. Renting is wiser for most people. Don’t buy a house unless:

  1. Mortgage is < 8%.
  2. You can pay cash.
  3. You plan to live in it for 10 years.
  4. You need the psychological comfort of home ownership.

The home you live in is your worst investment. For some of us, it’s not even an investment. Don’t buy the hype, do the math. Home purchase for living is a bad investment. Rental property is a great investment.

Rental Is An Investment

Do the math. An average property in Accra is 600,000ghc. Treasury bill rate is about 12%. Your 600,000ghc will yield 72,500ghc a year. You can rent a good home for 22,600ghc and still have 49,900ghc left over. Your house is costing you 49,900ghc per year. Do the math.

Psychological comfort, societal expectations, and cultural norms are valid reasons for home ownership. But when it comes down to the math: it just doesn’t work. I own a couple of homes for the reasons stated above. They’re not good investment. Investment is math, not emotions!

Buying a home to live in is a good option for SOME people. Especially if you:

  1. Can get cheap mortgage (< 8%)
  2. Can pay cash.
  3. Plan to live in it for 10 years.
  4. Need the psychological comfort of home ownership.

Otherwise home ownership is mostly a bad investment.

Sometimes people are so emotionally invested in a point of view that it clouds their judgment. You can’t make investment decisions emotionally. You’ll get into trouble every time you do that. Selah.

Rental Is An Investment

Investment = Maths + Logic

  1. Never invest because it feels good.
  2. Never invest because it sounds good.
  3. Never invest because you like the manager.

Maths: Do the numbers make sense? Logic: Do you understand how it works? Investment = Maths + Logic

“Renting is wiser for MOST people” = “Buying is a good option for SOME people” Review your options. Evaluate your emotional needs and make a choice. The math favors other forms of investment. Your psychological needs may favor buying a home. Just do the investment math first.

Read also;

1. Fool-proof: 5 Tips On How To Invest Wisely

2. Building A Second Income Stream Is No Longer Optional

3. The BIG 7 Important Questions To Answer About Your Finances

4. Who Are You? Financial Self-Assessment via the FI:RE Model

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