Is your home just another property?

Question

I just started looking for my second property which got me thinking about the role of my home. Is it important to separate your home when thinking about real estate investing? I'm curious if anyone has an approach/philosophy on how to think about your own home relative to investment property.

• Do you think about your home differently in different market conditions?
• Do you separate it out entirely?
• How do you think about selling/renting your existing home when you're ready to move on?

James DeRoest · Answer

My home is my home. It doesn't get counted when people ask how many houses we own, it doesn't get mortgaged for the business or anything. It's where my wife and my dogs live, and it's untouchable. It is their home. No matter what problems I face outside, when I come home, there are no problems.

We do have a new house we're moving to, that will become home, and the previous place becomes a unit. Simple as that. But the same rules apply. Absolutely nothing gets attached to the new house.

I have never understood investors who put their homes on the line, as ultimately, you are risking the roof over your family. Never understood that.

Rosston Smith · Answer

I will always consider my residence an investment property, as i plan to rent/sell for profit in the future.

I won't waste any capital.

George P. · Answer

My home is just another property.  I started thinking this way around my 10th rental.  I started looking at my house as just another place to stay from 5pm to 8am and weekends.  Nothing more.  I also evaluated to see if it would cash flow when and if we move to another house.. And am happy that it would cash flow around 400 bucks per month even though it's over updated.

Our 25th house was going to be our permanent house so we had plans to start updating after the closing.  The night before they were going to start the demo, I had an idea... Move current tenants into that new house and increase their rent since it was a bigger house. U can look up the thread..

In the mean time, their old property was updated and rented at a higher rent...

As for us... We stayed at our current house.

So, even after 32 properties, we still live in a 1k Sq ft house and I love my mortgage payment of 685 per month.

John Thedford · Answer

One of the most successful investors I know stated at one of his classes: never use your home as a piggy bank to obtain money to invest. This was right after I told a friend of mine to use her house as a source of funds:)

As to my current residence...it is our HOME..not an investment, etc. It is paid off. We have homesteads filed. I have considered using it for a source for funds but ..so far have not moved in that direction. We may downsize in the near future and if so the extra cash WILL be used to obtain more investment properties.

Arnie Guida · Answer

I've occasionally thought that my house is another one of my units...

I just live in the nicest, biggest one.

John Ford · Answer

My homes have been part of my investment strategy although not really an active part. I bought and lived for 11 years in a rough but up-and-coming part of town. But based on the location, surrounding neighborhoods, and developments I knew were coming, i knew I'd gain a lot of equity with time. Because the physical location was awesome, I absolutely loved living there. I treated it like "my house", not an investment property, but I knew it would be a rental someday. 11 years later, the surrounding development is finished, I've gained $200k in equity based on solid comps. I'm trying to decide whether to refi to pull cash out, or refi while leaving the equity in and let it cashflow more than $1000k/mo. (Actually, going somewhat against the BP grain, I've pretty much decided on leaving the equity in, for now, and going with the CF.)

Meanwhile, I recently bought another "my home" house across town in a neighborhood with not quite as bright a future as the first but still with lots of potential appreciation and planned nearby development that is going to change the neighborhood in a major way. It's another rough but up-and-coming neighborhood and the location is good. For now this is my home...but I know some day it'll be just another of my rental houses with great cashflow.

Thomas S. · Answer

A personal home is a life style choice nothing more. Mine is a liability that during my life time, as with the majority of personal homes with the costs of interest, taxes, insurance, repairs, upgrades etc. will probably cost twice what it will ever be worth.

My choice of a personal home is not a purpose build rental and would never cash flow as a rental.

Mark H. · Answer

I always view my current home as a future rental. I intend to move to another house in a few years, and I will make sure the future house will also have the right features to become a rental eventually. At some point I don't want to work for the house, I want the house to work for me.

In addition, I live far below my means and stay away from giant fancy houses. I essentially live the same living standard as my tenants

If I ever need to move for job relocation or whatever reason, I know I can easily rent out my house no problem. Less risk, less worries.

Max T. · Answer

Every house I have bought to live in also served the dual purpose of being a cash-flowing rental upon moving out AND/OR appreciate enough to sell for a profit.

I also do not leverage a property for investment purposes until after I have moved out.

Is your home just another property?

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