It is a myth that investing in real estate is always a good decision. It depends on your goal.
Last year I made my first real estate purchase. In the process, I read a lot about it, made a ton of calculations, and asked many friends and acquaintances for advice. While there was a ton of advice and content out there about all kinds of aspects of real estate investment, there needed to be more advice or content about investment and life goals. There are many reasons why one would make a real estate purchase; here are some I’ve heard:
- I want to make my significant other happy.
- All my friends are purchasing real estate. They must know something.
- I have been fortunate to have cash around and want to allocate capital in a high-inflation environment.
- I want to purchase real estate where I would happily live for the next 20 years.
One might say that some of these goals are bad. I disagree. I believe that all of these goals are good if it’s goals one cares about. Nevertheless, often I hear people talking about their goals, while their actions say something else. What you do, speaks louder than what you say.
This indicates the power of goal setting. It is hard to ask yourself the question what is my goal? and stay honest when answering it because sometimes you need to dive deep. In our case, my wife and I had long and constructive discussions about why we wanted to purchase real estate, and we landed on our goal: we wanted to invest in an apartment where we could live for the next 5-7 years but be in a position to rent it out at a price higher than our monthly installment (or sell it with a margin of minimum 10%) should we want to move to another country so that we keep our life options open.
Through this experience, we learned much about what we want. Setting goals is hard, sometimes messy, and powerful. I try to ask myself often: what is your goal in X?
