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Let say I am going to buy a home today for 100K and going to sell this house after 30 years for 300K. I have few questions regarding this one.

  1. I might have paid 100K in mortgage, so after 30 years I might have paid 200K for this house. If I need to sell the house then I need to 6% to agent so 300K-200K-18K=82K Profit. Is it worth after 30 years?
  2. Is it worth to buy stocks then invest in home?
  3. 82K profit is worth after 30 years during that time 82K will be like 20K now?(money inflation)
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    It sounds like you're thinking of property as an investment. Property alone is not a particularly high-return investment—over the last 40 years, it's been about inflation+1%. (see here). Renting+leverage (mortgage) can build equity but it's a much more active investment than stocks, and if you over-leverage and the market crashes you can get into financial trouble. – Kevin Mar 11 at 17:50
  • @Kevin thanks for your comment. Can you explain me about renting + leverage mean. You mean to say rent the property and pay the mortgage using the rent. I am not clear in this one. – Jo......... Mar 11 at 18:38
  • You're making the assumption your property will be worth more after 30 years. You didn't factor in the $12,000 to replace the carpets to make the house presentable. Or the $20,000 the buyers take off because the roof needs replaced. Also, currently there is a web service that sells houses for 1%. If you want to profit from a house, learn how to flip them. – Kai Qing Mar 11 at 18:48
  • Yes, you get a mortgage on a property you can rent out for enough to cover the mortgage (+other costs, if you're lucky). Say you put $20k down on a $100k property with a 15-year mortgage. After about 4 years of rent+appreciation you have $40k equity; you get a HELOC or refinance to pull $20k of that out as the downpayment on another property. Now you've got twice as much coming in, though about twice as much going out. (cont) – Kevin Mar 11 at 20:21
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    (…) Still, you're building up equity twice as fast so after another 2–3 years you have another $20k and do it again (assuming you can find a bank willing to make the loan). You can build up a lot of gross assets that more-or-less pay for themselves, but also a lot of debt you'll still be on the hook for if the 💩 hits the fan. – Kevin Mar 11 at 20:21
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Is it worth to buy stocks then invest in home?

You can't live in stocks.

Buying a home is not necessarily an investment. It is a place to live. Yes, the home might go up in value, but that should not be the main driver. You pay an expense to live in that home in the form of interest. If you can rent an equivalent home for less than it costs you in mortgage interest (and taxes and other expenses that you don't get with renting), then renting might be a better option.

As far as your math goes, it is correct, and tripling in value over 30 years is only a 3.7% annual return, which is not much higher than US inflation over the last 30 years (somewhere between 2.5%-3.0%).

  • @D Stanley Thanks for your comment – Jo......... Mar 11 at 18:07
  • IOW: Investing in real estate may or may not be a good idea. Saving rent at the same time might make it worth it. Answering either question is impossible without predicting the future – xyious Mar 11 at 19:30
  • @xyious I'd say investing in real estate may be a good idea if it produces income like rental or commercial property. Significant capital appreciation generally only happens when you buy it at a low price. – D Stanley Mar 11 at 19:31
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Your math is basically correct if your plan is to buy a house, never touch it and then 30 years later sell it. You never use it as a place to live, you never use it as a source of income by renting it.

But that is not how people use houses. They live in them, or they rent them to others and make a profit until they sell them.

You have to include those benefits into your calculation.

You never know if the property you buy will go up in value, you also can't know the shape of the curve. I have seen markets where all the gains took place in a couple of years, and then hardly budged. I have seen markets where the growth was steady.

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