I think what we confused for success is the “American Dream”. Think of how stupid the banks must think we are.. They want us to “buy a home” and keep it for 30 years so that we can buy twice the amount the house is worth over the course of 30 years. Most of my posts have been about advocating ya’ll to buy homes, which I’m all for– however, keeping a house for 30 years makes no sense…. Here’s why
For a $300,000 house, you will pay $620,000 over 30 years….
You will be a slave to the bank for years for to come
By the time you pay it off, you are most likely old and life has passed away
Thats right folks, but they disguise it in the form of well.. its cheaper than rent. It is.. So whats the solution?
Well, the trick is somewhere in between. You should purchase a home when the markets are cheap and inventory is high. You should look to rent it out and generate that income for 5-10 years. Once that house appreciates about 25% percent in value. SELL IT! You not only got to generate income during those precious 10 years, but you made a killing just by selling it back. You can then buy your NEXT house with far more capital or even in cash!
If you are running an incredibly profitable rental business , then there is an exception. But selling a house every 5-10 years once the market is right can prove to be golden. For individuals who have multiple rental homes, a 30 year loan may not be too bad for you considering the mortgage is always paid by the renters…