10 Benefits of Owning Your Own Home

Homeownership is a rite of passage many of us dream of. Owning a home means putting down roots and having a space that is truly yours. It’s a significant moment of your life when you finally own a home.

But owning a home can be daunting because of the responsibilities and obligations that come with it, combined with the initial process it takes to get there. When done properly, though, buying and owning a home is a process that limits your financial risk, increases your investment power, and saves you tons of money over the long term—and it can even save you money immediately.

Renting has little to no ROI. Renters don’t have to worry about maintaining a residence or paying the mortgage. But if you’ve been renting long term, chances are you’re already performing home maintenance on some level and you’re at your landlord’s mercy when it comes to major repairs. And when it comes to paying the mortgage, there are many advantages over rental payments, which don’t provide any return on investment beyond securing a place to live through the end of the month or lease.

How much is rent actually costing you? Consider the amount one pays over a 10-year period. A $1000/month rental payment adds up quickly to a whopping $120,000 over 10 years, when the same amount of money could have gone toward reducing 1/3 of the debt on a 30-year home mortgage by essentially making the payments to yourself instead of a landlord. Wow!

Here are 9 more benefits to owning your own home:

1. Homeownership is an investment. Unlike a car and many other purchases that decrease in value, a home is a purchase that appreciates over time. While each local market has its own unique factors, the national median home price goes up each year, even in times of recession. As you pay your mortgage each month, your debt amount goes down, while the value of your home continues to rise. This creates the buying and reinvestment power better known as equity.

2. Gain equity. When it comes to homeownership, investment and equity are directly related. As you make mortgage payments each month, part of the payment goes toward the interest, while the rest pays down the principal balance. Equity can be better defined as the part of the principal balance you’ve already paid, or the percentage of your home you already own. Paying the principal is like depositing money in the bank, because that money becomes available for reinvestment in the home itself or a new home.

3. Take advantage of tax benefits. The federal government encourages homeownership (which in turn encourages economic growth) by offering tax incentives for homeowners. The biggest one is the option to deduct interest from mortgage payments on your income tax return, especially at the start of a mortgage when most of the payment is applied to the interest. Payments on private mortgage insurance (PMI) and certain home-related purchases also qualify for tax benefits.

4. Stabilize your housing costs. A fixed-rate mortgage means you’ll have the same mortgage payment for the term of the loan (usually 30 years), while monthly rental payments will continue to climb. And even adjustable-rate mortgages (ARM) have a fixed cap on them. Homeownership also stabilizes other home-related expenses like utilities and gives you more control over your ability to make investments in your property that keep those expenses down.

5. Gain control over your living space. Renting doesn’t usually come with a lot of options for modifying your living space to better suit your needs. Renters with changing needs must also deal with changing residences. Homeownership means you can make improvements to your home, and home improvements usually lead to increased home value, both financially and in daily home life. The power of equity can give homeowners the extra financing they need to reinvest in their homes when cash funds aren’t an option.

6. Increase your own sustainability. Homeownership can help you create a sustainable future in many different ways. Long-term renters lack sustainability because a high percentage of their income usually goes toward housing expenses that are constantly increasing. Locking yourself into a mortgage payment helps level out living expenses, so when income goes up it can be budgeted elsewhere. Paying off a mortgage allows homeowners a long-term plan to significantly reduce their living expenses as they move toward a retirement budget.

7. Stop moving. Homeownership increases sustainability and stability. Moving from rental to rental is a major inconvenience and a financial and emotional burden. Renting can mean that you never really know where you’ll be living next or what your expenses will be. Staying in the same home allows a financial and emotional investment in both your living space and your community.

8. Social benefits. Staying put for longer periods of time also creates social benefits that range from friendships with neighbors to community involvement and consistent educational opportunities for children.

9. Use your investment to make another investment. The equity that comes from paying a mortgage is what allows many individuals and families to make future investments in the same home, a higher-valued home, or second home. A home equity line of credit helps homeowners use the part of their home that’s already paid off to obtain financing for investments apart from the home itself, such as purchasing a boat or RV.

Advantages and Disadvantages of Owning a Home

For many people, owning a home is the fulfillment of the American dream. For others, it is their worst nightmare. Purchasing a home is one of the biggest financial decisions you will make in your life. So, before you decide to buy, carefully consider the pros and cons of homeownership.

When you think about buying a home, many questions will come to mind. Do I really need to buy a home? Is my income going to grow? Will I stay in a home long enough to benefit from the purchase? Have I got enough money saved? Am I ready for the responsibility? Buying a home is a major financial move, so you’re wise to look carefully at the positive and negative aspects. Information in this chapter will help you examine the pros and cons of owning a home, based on your personal desires, future plans, and general financial position.

Advantages and Disadvantages of Owning a Home

Before buying a home, it’s important to consider how such a purchase will affect your finances and your lifestyle. It makes sense to review all of the advantages and disadvantages of becoming a homeowner before making this big commitment.

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What Are The Advantages Of Owning A Home?

  • Greater privacy.
  • Homes typically increase in value, build equity and provide a nest egg for the future.
  • Your costs are predictable and more stable than renting because they’re ideally based on a fixed-rate mortgage.
  • The interest and property tax portion of your mortgage payment is a tax deduction.
  • There’s pride in homeownership, which also closely ties you to your community.
  • Affordable options exist, like purchasing a lower cost manufactured home.

What Are The Disadvantages of Owning a Home?

  • Homeownership is a long-term financial commitment.
  • You’re responsible for all maintenance on your home. This can include inexpensive repairs like fixing a broken toilet to complex and costly repairs like replacing a furnace.
  • Owning a home ties you to your community, making it more difficult to suddenly pick up and leave a location.
  • Although mortgage payments are usually fixed, they’re generally higher than rent payments.
  • Buying a home requires a down payment, closing costs and moving expenses.
  • The value of your house may not increase – especially during the first few years.
  • Borrowing against your home equity, to help you with a debt consolidation, for example, can leave you ‘house poor’

Advantages and Disadvantages of Renting a Home

Depending on your financial situation and preferred style of living, there are many advantages to renting:

  • Renting a home can be cheaper than buying a home. Your payments tend to be lower than a comparable house payment. Also, your rent may cover utility costs (additional savings).
  • You have more flexibility when you rent. Most leases are for 12 months. So, if your job requires you to move frequently, renting can be a desirable alternative to owning.
  • Your landlord, not you, is responsible for performing nearly all maintenance and repair work on the property.

Financial Disadvantages of Renting

  • There is no tax break for renting. You won’t be able to claim any deduction for mortgage interest and property taxes when you file your tax returns.
  • Your housing costs aren’t fixed like they are with a fixed-rate mortgage. Your rent will most likely grow from year to year.

Owning vs. Renting

Own Or Rent Advantages Disadvantages
Homeownership Privacy Usually a good investment More stable housing costs from year to year Pride in ownership and strong community ties Tax incentives Equity buildup (savings) Long-term commitment Maintenance and repair costs Lack of flexibility Usually more expensive than renting High up-front costs Foreclosure
Renting Lower housing costs Shorter-term commitment No/minimal maintenance and repair costs No tax incentives No fixed housing costs No building of equity

Here are the factors to consider when comparing buying to renting a home:

  • Homeownership is not for everyone.
  • Homeownership requires you to have a stable or growing income.
  • Financial benefits of homeownership are long term. You should have a budget and savings plan in place before buying a home. Owning a home is a big responsibility.
  • Your credit score will impact how much you can borrow and at what terms. If you have substantial credit card debt, you may want to seek the help of a credit counseling agency and debt management program and pay your debt down, before applying for mortgage.

Next Steps

If you are interested in becoming a homeowner, you should consider taking an online homebuyer education course to learn how to prepare for homeownership and get a better understanding of the home purchase process. Learn about the home purchase process, including how to finance and afford a home for the long term.

Detroit Is Auctioning Off Incredible Old Homes For $1,000, But There’s A Big Catch

Want to buy an incredibly cheap house in Detroit? You’re in luck — just make sure you read the fine print first.

A new program introduced by Mayor Mike Duggan Monday addresses one of Detroit’s largest problems — thousands of vacant and blighted houses — by auctioning off some of the nicest ones to people who want to live in a Detroit neighborhood. (Scroll down to see a a slideshow of the properties.)

The Detroit Land Bank Authority’s Building Detroit auction site initially lists several city-owned homes in East English Village, a residential neighborhood on Detroit’s east side, with starting bids of $1,000 each. The auction for each property will last one day only, with staggered dates in May.

The catch? Unlike the thousands of properties in the county’s foreclosure auction each summer, a winning bidder in the Building Detroit auction must agree to bring the home up to code within six months, and then actually live in it.

Almost every listing in the auction looks like a steal for a grand, at least from the outside. But Building Detroit is up-front about possible costs new owners might incur, and some houses need extensive repairs. The new auction will also have open houses for the properties on April 27, unlike the summer auction, in which houses must be bought without knowing what’s inside (or what’s been stripped by scrappers).

Building Detroit is restricted to Michigan residents, companies and organizations who have not already lost a property due to back taxes in Wayne County in the last three years. These requirements seem aimed at eliminating out-of-state speculators who scoop up houses and then don’t take care of them, a problem that sometimes occurs with properties in the county’s annual tax auction. It also might dissuade less serious buyers — some have purchased homes in the tax auction, only to abandon them once they see the high costs for renovation or steep property tax bills.

“We are not looking for speculators,” Detroit Land Bank Chair Erica Ward Gerson said in a statement. “If you’re not going to act diligently to fix up the house, you’ll lose the house and your money.”

Realty listing site Zillow shows most homes for sale in East English Village have prices ranging from $15,000 to over $100,000.

Winning bidders won’t just hand over a check and walk away; the city requires new owners to sign contracts agreeing to bring properties up to code and occupy them within six months of purchase or risk forfeiting the property. The Land Bank may extend the six-month deadline on a case-by-case basis for owners who have made significant progress on renovations.

For his new neighborhood rebuilding program, which focuses on improving individual neighborhoods as a whole rather than a more scattered approach throughout the city, Duggan has also targeted Marygrove on Detroit’s west side. Last week, the city began legal action against 79 vacant homes in the 16-block neighborhood, giving owners until Monday to contact authorities about their properties. Owners of those properties will also be given six months to repair and occupy their homes — or potentially lose them.

According to CBS Detroit, Duggan said he would “sue the owner of every single abandoned house.”

“Starting today, it’s no longer acceptable to leave behind a vacant property in the city of Detroit,” the mayor said in a statement last week. “Either you can fix it up, or the city will seize the property and get it into the hands of someone who will.”

9 cities and towns where you can get a home for free — or buy one at a massive discount

The US housing market entered the new year on dismal footing. In January, the nation’s home sales reached a three-year low.

Even in the midst of a housing slowdown, there are still plenty of ways to find cheap real estate, both within and outside the US. You just have to know where to look.

Read more: Fascinating photos of abandoned movie palaces reveal the decline of movie-going in America

In areas where homes are old or unoccupied, governments occasionally offer subsidies to finance a renovation. In other cases, homeowners are willing to list their properties at little to no cost.

We’ve rounded up the locations where you can find a home for free or at a major discount.

The list includes small towns like Tulsa, Oklahoma, as well as major urban areas like Baltimore, Maryland, and Tokyo, Japan. Take a look.

Homeowners in Tokyo are listing their abandoned properties for free.

Tokyo has been building like crazy, but the city still struggles to get rid of its unoccupied and deserted homes. The Japan Times recently reported that more than one in 10 homes in Tokyo are empty.

Part of this has to do with the shrinking size of Japan’s population, which means fewer buyers. It’s also considered bad luck in Japan to purchase a home that has witnessed a murder, suicide, or “lonely death” (one that occurred in isolation).

For this reason, many properties are being given away for free ononline databases called “akiya banks,” a reference to the Japanese word for “empty home.” Others are being sold for as little as $4.

St. Louis, Missouri, is selling more than 500 homes for $1 apiece.

A dollar won’t buy a cup of coffee in most cities, but it will get you a home in St. Louis, Missouri. The city recently launched a programthat allows residents to purchase vacant properties for a dollar, provided they have a plan to fix it up.

Buyer can choose from more than 500 single-family homes that are less than 1,500 square feet. They’ll have 120 days to bring the exterior up to city code and 18 months to renovate the entire property.

They’ll also have to commit to occupying the home for at least three years — a policy that prevents people from flipping the properties.

New Haven, Connecticut, is giving away up to $42,500 in housing discounts to first-time homebuyers.

First-time homebuyers in New Haven are eligible to receive up to $10,000 to cover the closing costs or the down payments on their homes. The subsidy comes in the form of an interest-free loan, which is fully forgiven after five years.

City employees, teachers, police officers, firefighters, and members of the military receive an additional $2,500 off.

On top of that, the city is giving away $30,000 to those who renovate their homes using energy-saving upgrades.

Tulsa, Oklahoma, offers remote workers a 33% discount on a fully furnished apartment for three months.

The Tulsa Remote program is offering a small group of digital nomads — people with the freedom to work from anywhere — up to $10,000 to move to the city.

While the stipend doesn’t go directly toward housing, the program offers a 33% discount on fully furnished apartments in the Brady Arts District, with utilities thrown in for free.

Workers are expected to live in Tulsa for a full year, but the apartment discount expires at the end of three months. At that time, they’ll have to cover their own rent, which is still among thecheapest in the nation.

Read more: Tulsa, Oklahoma, is paying remote workers $10,000 to live there. They’ll even throw in a discounted apartment.

Buffalo, New York, is selling unwanted property for $1.

In Buffalo, a city-owned property without an interested buyer that doesn’t serve the public is eligible for the Urban Homestead Program. The program sells properties for just $1, plus closing costs, but there are a few additional requirements.

Buyers must stay in the home for at least three years and fix any building code violations within 18 months.

While the deal may seem inexpensive up front, renovating an abandoned home can be pricey.

There’s also a limited supply: In 2015, the city’s Division of Real Estate told CNN that only a handful of homes were still available through the program.

Buyers in Baltimore could be eligible for housing incentives of either $5,000 or $10,000.

The Baltimore Homeownership Incentive Program offers a number of discounts for local residents, including $5,000 for first-time homebuyers who earn at or below 80% of the area’s median income and a $5,000 incentive for city employees.

Twice a year, the city selects 30 people to receive $5,000 in housing incentives. For those who want to live near work, the city will also match an employer’s housing contributions for up to $2,500.

The program’s biggest subsidy comes in the form of $10,000 for residents who purchase a vacant home.

The small town of Harmony, Minnesota, is handing out cash rebates of up to $12,000.

Residents of Harmony can receive a cash rebate of up to $12,000 for building a new property in town.

Though Harmony already bills itself as the “Biggest Little Town in Southern Minnesota,” it’s making a concerted effort to grow its population, which hovers around 1,000 people.

People of all ages and income levels are invited to apply for the rebate, but applications are accepted on a first come, first serve basis.

Gary, Indiana, is selling a select number of homes for just $1.

In August, the city of Gary, Indiana, announced the sale of eight homes through its Dollar Home Program. Their website now lists twelve properties that, despite their ramshackle appearance, seem primed for renovation.

To purchase the $1 homes, applicants must agree to rehabilitate the property within one year of its purchase and stay there for at least five years. There’s also a minimum income requirement of $38,750.

A village in Italy is selling hundreds of abandoned properties for $1.25 each.

The Italian fishing village of Ollolai has witnessed a drastic population decline. Over the past half-century, the number of residents in the town has fallen from 2,250 to just 1,300.

The government has to now taken to selling hundreds of abandoned homes to attract new residents. In exchange for a $1.25 price tag, owners must agree to renovate their properties within three years.

Renovations are expected to cost up to $25,000, but it could be a small price to pay to keep the village from disappearing.

10 Smart Tips for Finding Cheap Houses (Yes, They Still Exist in This Country)

“Cheap.”

That’s what I told my agent when she asked me what kind of house I was interested in buying.

I was 21 years old and looking for my first home. I knew nothing about real estate, but I knew one thing: I wanted to buy a cheap house. At the time I was making barely over minimum wage so I wasn’t buying a cheap home because it fit into some master investment scheme. I wanted a cheap house because it fit in with my budget.

Can you identify with that?

I got lucky on my first deal and found a great, cheap home that I was able to fix up slightly and sell for substantially more money a year later. Since then, I’ve learned that whether you are shopping for your own personal home or for a house to flip or rent out, finding cheap houses for sale in your market is imperative to securing your financial future. However, depending on what part of the country you live in, this might be difficult with the increasing competition in the real estate space.

How you define “cheap” is obviously relative, but this guide should give you a starting point for finding the lowest-priced houses in your neck of the woods.

Let’s get started.

10 Tips to Find Cheap Houses for Sale

1. Sort by price.

This first one might be the most obvious on this list, but many people don’t know this. When searching an online real estate platform like Zillow.com, Realtor.com, or Trulia.com, the properties are often, by default, listed by “most expensive.” Get into the habit of instantly clicking to sort by “cheapest first,” and you’ll always see the cheapest houses for sale listed. Additionally, if you search over a large geographic area, you’ll be able to look for patterns to see where the lowest price neighborhoods generally are.


See the screenshot below for an example of the Seattle market from Realtor.com. While the median sale price for a home in the Seattle area is around $650,000 (source) these properties can be found for under $150,000. Obviously this is not taking into account the condition or neighborhood, but it’s a good place to start.

2. Look at a lot of houses.

By looking at a lot of houses, you will be able to better sort out the good from the bad and train your mind to find great deals. After all, “cheap is relative,” so get a good grasp on your local real estate market by attending as many open houses as possible. Set up appointments with your real estate agent to tour a dozen prospective homes in one day, and take note of what you like and what you don’t like. Or spend your weekends driving up and down streets while your spouse uses a smartphone app to check out local home prices. The more you look at, the better your odds of finding a great deal are.

3. Make a lot of offers.

Many real estate investors abide by the 100-10-1 rule, which says you should look at 100 houses, offer on 10, and get just one accepted. By submitting a lot of offers, assuming most of them will fall through, you increase your odds of getting a really great deal on a cheap house.

As one of my real estate agents is fond of saying, “If I don’t blush when making an offer, it’s too high.”

 4. Consider a fixer.

Sometimes cheap homes for sale are priced low because they require a lot of work. However, just because a property needs some TLC, it doesn’t mean you can’t pursue it and get a great deal. In fact, every single property I’ve ever bought was some sort of “fixer,” and that’s why I was able to get such cheap prices on them.

Fixers, however, carry with them a certain degree of risk and complications – and can be difficult to finance. If you decide to purchase a fixer, keep in mind the following tips:

  • Always get the property inspected by a professional home inspector so you know what you are getting into.
  • Always get estimates from licensed contractors so you can accurately estimate the potential repair costs (and be sure to check out The Book on Estimating Rehab Costs from J Scott and BiggerPockets.)
  • Look for “cosmetic fixers” that need simple fixes, like paint or carpet. Bad smells are also great because they are easy to remedy but drive away most of the competition.
  • Consider using a rehab loan, such as the 203k FHA insured loan, to wrap the rehab costs into the loan.

5. Look outside the city.

One of the best ways to find cheap houses for sale is by looking outside the busy cities and suburbs and focus more on the rural. I’m not talking about buying a farm in the middle of nowhere, but there are generally low-priced communities within an hour or two of every major U.S. market. Generally, the farther you get from major metropolitan areas, the lower prices you’ll find.

In this same line of thinking, consider buying real estate away from the U.S. coasts. The midwest and south generally have much cheaper prices on property than the east or west coast. Obviously there are exceptions, but if you don’t care where you buy, focus on the midwest and the southeast.

6. Set up automatic alerts.

Another way to snag a good deal is by being prepared with the first offer on a property.

Have your real estate agent set up automatic alerts for whatever property type you are interested in so you can jump at any great deals. If your agent doesn’t do automatic alerts, set them up with a real estate search portal like Zillow or Redfin.

7. Look for for sale by owners.

Oftentimes, in an effort to save money, people list their homes with a “For Sale By Owner” (FSBO) sign in the yard and hope for the best. However, many times these people have no idea what the true value of their home is and may consider selling much cheaper than other homes in the neighborhood. Also keep an eye on sites like Craigslist for FSBO sales and jump on them quickly.


8. Focus on real estate owned (REO) properties.

Almost every property I’ve ever purchased has been an REO (real estate owned). This means the property was foreclosed by the bank and is being resold. REOs are generally cosmetic fixers and may have been subject to vandalism or neglect for many years, though any title issues have been taken care of. I like purchasing REOs because I’m not dealing with an emotional bank—I’m dealing with a machine. I can offer much lower prices and get better deals on the properties I do purchase. For tips on buying a foreclosure, be sure to check out How to Buy a Foreclosure: The Comprehensive Guide to Buying a Foreclosed Home.

9. Negotiate strongly.

You get what you negotiate. Never assume the asking price needs to be the sale price.

Although this works better when there is less competition, negotiating with the seller is one of the best ways to lower the cost of your home purchase. Be OK with losing the deal—and you’ll be on top of the negotiations. For more advice on negotiating a real estate deal, check out the new edition of BiggerPockets’s The Book on Negotiating Real Estate.

10. Talk to a wholesaler.

Finally, one great way to find cheap houses to buy is through a real estate wholesaler. A wholesaler is someone who finds great deals and gives the right to sell that deal to another buyer for a slight markup. Wholesalers typically find deals through heavy marketing and good negotiation—and can pass on considerable savings to you, the buyer. However, keep in mind that most wholesalers only sell to cash buyers, so if you plan to use a loan, it might be difficult. (P.S. To find a wholesaler, check out the BiggerPockets Wholesaling Forum and look around for knowledgeable wholesalers in your area. You can also call the number on those “I’ll Buy Your House For Cash” bandit signs on the side of the road in your town!)

Conclusion: Finding Cheap Houses

You don’t need to settle for the most expensive home on the street to be happy. Whether it’s your primary residence or an investment property, you make your money when you buy, so go out there and buy a great deal.