The Difference Between Owning A Home And Being An Investor

Investing in real estate and being a homeowner are not the same thing. Many homeowners are taught by lenders and creditors that their home is an asset, an investment. It’s really not. An investment is something you hope to make a profit on. How will your home make you money?

Another way to think about this is to consider your home a liability. It’s an expense. Your mortgage payment is a monthly expense, not an income. You weigh that against your income. At the beginning of the month when you lay out your budget you consider all of your expenses and look at your income to see if you can cover them all. Let’s say your income is $5,000. You spend $1,000 of that on a mortgage payment. You have a $700 car payment. Grocery bills, utilities, children’s activities, etc. What’s left at the end of the month is your profit. Your house is not in that category, is it?

I’m not saying you shouldn’t own a home. I’m just pointing out that investing in real estate is different than being a homeowner. As an investor you are buying houses for the purpose of turning them into a profit. Either you will rent them out for a monthly residual income or you will fix them up and resell them for more than you purchased them for. Whatever your strategy is, at the end of the day you hope to make more than you spent. See the difference?

There’s nothing wrong with being a homeowner. And nothing wrong with being an investor. Your real estate agent should know the difference and cater to your needs.

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