Prepared by Staff

Q. Should my first home be an investment?

A. Young and single individuals age 21 to 25 are the fastest-growing portion of first-time buyers. Although some of these home buyers are purchasing homes they will live in, others are purchasing these homes as investments.

Why? It’s clear that the stock market, though a solid long-tern investment, isn’t the only way to make money.

When the stock market goes through a down period, as it did from 2000 to 2004, and real estate values shoot up, as they have for the last decade or more, intelligent people are going to wonder if there maybe isn’t a different investment to be made.

Real estate has long stood the test of time as an investment. It generally appreciates slowly, at just above the rate of inflation.

Portfolio managers have long used real estate to hedge their other investments, since it typically moves out of synch with stocks and bonds. For most of us, our biggest investment in real estate will be our own homes.

But what if you’re not quite ready to live in a big house? That’s where buying a first home as an investment property can make a lot of sense. In some ways, real estate is a rather flexible investment: You can buy a single-family house, a town house, or multifamily buildings that may have as few units are nice investments over the long run because you can live in one of the units and rent out the others. As rents rise, you can, and should, have the long-term goal of raising rents enough to cover the amount you pay to live-and more.

Published: Aug 20, 2005