How to Invest in a Home

Home is where the heart is, but it is also a major financial investment.

Home is where the heart is, but it is also a major financial investment.

Your home is probably the single largest investment you will ever make. Money that you spend on home improvements today represents an investment in the future and in the value of the home. Unlike other investments, however, your home is also the place where you live and sleep, and the investment decisions you make will affect your daily life.

Buy the Worst House on the Best Block

Location, location, location. It's a tired, but true, real estate adage. Towns with low crime rates and top school systems that are also close to city centers or work hubs always command the highest price. You may think you can't afford a single family house in your preferred town, but maybe you can make do with a smaller condo. Perhaps there's a house at a reduced price because it hasn't been updated in decades. You'll never regret buying in a great location. The best block will always be a good place to live, and the worst house can usually be made better. Invest in such a house, and you'll get a great return on your investment plus a home you can make uniquely your own.

Watch Reality TV

Here's a chance for all the hours you fritter away watching reality television to actually pay off. Many programs on cable and regular broadcast channels are rich with advice on how to make home improvements that will increase the value of your home. Money and time spent now to renovate a kitchen, bath, other rooms or outdoor space is a long term investment. Home improvement show experts teach you money saving tips, creative ideas and show you which projects will bring the biggest bang for your buck.

Make Repairs and Improvements That Pay Off

Research will teach you which improvements are the best investment. You'll always want to properly maintain the critical house systems, such as heating and air conditioning, plumbing and electrical systems. Improper maintenance of such systems will also lead inevitably to costly repairs down the road, and if not fixed will reduce your home's value and make it hard to sell. You live in your home and want to do things you can enjoy, too, so don't make all your home improvements strictly financial decisions. Some of the most enjoyable projects, however, are also the ones that reap big pay offs, such as finishing a basement or attic. Another truism is that updating your kitchen and baths may be the best use of your renovation dollars.

Get a Home with Rental Potential

If you have the nerves of steel required to be a landlord, you can look for a home with a rental unit, such as a two-family house or one with a separate apartment. Keep in mind that owning rental property is a business, and you'll be mixing business with home life. It's tempting to become chummy with the tenants, especially when they are living underfoot, but keep the relationship professional, and they may help pay your mortgage. Homes with rental units do cost more up front, so it is critical that you calculate to see if the investment really is worth the extra initial costs. You will need liability insurance, too, so don't forget to add that into your costs. Also figure that you might have vacancies from time to time, so if the math shows that the additional costs will make you reliant on the steady rental income, it's not a wise investment.

About the Author

Annabella Gualdoni has written newsletters and reports for corporations and nonprofits since 1994. She is a real estate professional and also teaches subjects including international cooking and travel, dating/relationships and personal finance. Gualdoni has a Bachelor of Arts in international development from University of California, Berkeley, a Master of Arts in international relations from Boston University, and a Juris Doctor from Boston College Law School.

Photo Credits

  • beautiful bedroom image by Paul Hill from