Business

The Real Value of Home Ownership

Robert Reffkin

Lesson time 06:38 min

Robert shares his own experience as a case study in the benefits of buying a house. He explains how to build wealth and equity and offers guidelines for how to think about the return on your investment.

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Topics include: Real Estate Builds Wealth (Personal Case Study) · It’s About More Than Money · Other Benefits to Owning a Home · Understanding Home Equity

Preview

[MUSIC PLAYING] - Six years before I was born, my mom bought the house that I ultimately was raised in in Berkeley, California, and she bought it with three other people. Her boyfriend, her ex-husband, and her ex-husband's girlfriend. This was 1970s, hippie. They were definitely hippies. They were the kind of people that sold jewelry, like the handmade beads on Telegraph Avenue, and owning a home for her was always stability. She's so, so, so much wanted to have that feeling that she owned something that was always going to be there. That was stable, and so she had to convince them. They didn't have much money at all, but one of them had some family money, and she convinced them, let's buy this home, and I promise you, if you ever want to sell your stake in it, I'll buy it off you. So she bought it for $27,000. And then they owned it, they lived in there. One by one, people moved out-- --until it just me and my mom, and she bought out their stakes over time. Ultimately, she sold the house for a little over $1 million, and her only regret is that she didn't hold onto it longer, because it would be worth more now. [MUSIC PLAYING] Over time, the value of homes have consistently increased, and so it's a great way to build wealth. More millionaires were created in the United States from real estate than any other activity. But I don't think you should be buying a home just to make money. The home is where you're going to live, presumably for a meaningful part of your life. And so the primary driver of the ride home should be, is this a place that will improve my quality of life? Will this be a place that'll make my family happy? Will this be a place that I'll have wonderful memories in that my kids will remember when I am old and gray? Is the place I'd want to pass on to my family? Is this a place that has great schools around it? Is this a place that has great parks and great community centers? Those are the things that really matter. [MUSIC PLAYING] Real estate's a great investment for a few reasons. One, because you're going to pay a mortgage one way or another, whether you're renting or buying. If you're renting, you're going to pay down someone else's mortgage. If you're buying, you're going to pay down your mortgage and build equity in the process. The second is that this is a financial investment that is more than just a financial investment. It also improve the quality of life. When you buy a stock, it doesn't improve your quality of life. But when you own a home, you actually can live in it, and it makes your life better. Another reason why it's great to own a home is you have the potential of adding rental income. So let's say you buy a home and you're single but then you get married and you want to move or you have a new job in a different city you want to move, you can then rent out that home and build rental income for the rest of your life. [MUSIC PLAYING...

About the Instructor

As the CEO and founder of Compass, Robert Reffkin has used modern technology to revolutionize the real estate industry in the U.S. Now he’s demystifying the ins and outs of the American home-buying process and sharing tools that will help you buy or sell a home with confidence. Learn how to approach your search, choose an agent, make an offer, and more. Your future home is waiting—let Robert help you find it.

Featured Masterclass Instructor

Robert Reffkin

Robert Reffkin, the founder and CEO of Compass, helps you get closer to finding your dream home by simplifying and demystifying real estate.

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