Why do I not own a house?

A house is a liability until:
1. you collect rent that covers all expenses and some extra after tax.
2. you sold it

Owning a house does not make much of a financial sense if you can rent cheaper. Buying a house is more a lifestyle change rather than a financial investment. Bear in mind that you must not buy a house and automatically assume it would appreciate - that's not investment, but wishful thinking.

On average, American live in their houses for 3-5 years. This is a very short period of time to allow the house to appreciate - if it appreciates. In fact, house does not appreciate; it actually depreciates. The land/lot/location it sits on appreciates.


Strictly speaking - financially, owning a house means the following are money-down-the-drain:

1. property tax
2. HOA fee
3. interest payment
4. insurance
5. electricity
6. water and other utilities
7. general maintenance and upkeep - garden, lawn, housekeeping, fix-up
8. commute cost
9. lost interest due to money tied into house equity

Many often miss Point 9. Let's say you put $40,000 down and build equity through monthly payment. The $40,000+ could be generating interest just sitting in your bank - hassle free. On a 5% interest, that's $2000+ a year. If you have paid off your house, say, $400,000, that would cost you $20,000/year on lost interest.

If you add up 1-9 and it equals your rent, you are better off renting - financially speaking.

The biggest problem from owning a house is it's a liability that you cannot liquidize quickly. You often hear the term "house poor," meaning people get a house but cannot afford much of anything else. After you pay off your house, you still need to pay 1-9 above. When you need money-cash, you would be like sitting on a pile of cash that you cannot use.

It only makes sense that:
1. you go in at a market low
2. you can live there for a long time, 5-10 years minimum
3. you can rent it out
4. you wouldn't need the cash any time soon