3 Reasons I’ll Never Consider My Home an Investment

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Some people will tell you that your home is your greatest investment. Read on to see why I feel very differently. 

Many people will tell you that owning a home is more advantageous than renting because you get to build equity in a place of your own. And eventually, you might be able to cash out that equity and walk away with a nice profit.

The idea of homeownership being a more financially sound choice than renting is certainly arguable. I’ve often made the case that renting makes more financial sense because your costs are more fixed and you’re not grappling with rising property taxes, maintenance, and repairs.

In a recent survey by TD Bank, 85% of respondents said that buying a home is a good long-term investment. I’ll never think of my home as an investment, though. Here’s why.

1. It’s subject to wear and tear

Many homes ultimately gain value over time. But the more wear and tear yours has, the more it’ll detract from its value. That alone leads me to believe that my home is not an investment.

I need to be able to live in my home without worrying about wearing out the carpet or scratching up the hardwood floors. I need the option to be comfortable and not have to think about the financial consequences.

But to me, investments are all about financial upside. And since I’m not really expecting that from my home, it falls into a different category.

2. It costs money to hang onto

The stocks I own in my brokerage account don’t cost me money on a regular basis. Sure, I spent money to buy them. But it’s not like I’m charged a fee to maintain them. And my stocks won’t suddenly stop working like my air conditioning system has several times over.

When you own a home, you’re constantly spending money just to keep it. To me, that reads like an expense more so than an investment.

3. I may not make a profit when I sell — and that’s not even my goal

The whole reason I bought a bunch of stocks for my brokerage account is that I want to make money. I don’t gain any near-term benefit or enjoyment from holding those stocks. I simply want to keep them around so their value increases and then sell them at a profit at the right time.

But making money isn’t my goal in owning a home. My goal is to put a roof over my family’s head and enjoy a comfortable living space. That’s it.

If I happen to make money when the time comes to sell my home, wonderful. But that’s not my primary objective.

Plus, given what I spend on property taxes, maintenance, and repairs, it’s questionable whether I’ll even make a profit. Right now, my home is worth several hundred thousand dollars more than what I paid for it. But I’ve also spent that equivalent amount through the years on property taxes and other expenses. So that basically wipes out any financial gain.

There are plenty of good reasons to want to own a home. But if you’re going to buy one, don’t do so for the purpose of adding another investment to your portfolio. Instead, buy a home so you don’t have to follow a landlord’s rules and so you can enjoy a space you’re able to set up to meet your needs. There may be some financial upside down the line if you’re lucky, but that should really be secondary.

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