Normally homes appreciate about three to eight percent a year. This figure will vary from state to state, and town to town. Even with stocks sometimes gaining more than ten percent in some years they also are in my opinion more risky and often do not average a steady three to eight percent appreciation with all of the tax benefits and forced savings the home purchase affords us. Traditionally, this makes home buying one of the absolute best investments a person or family can make.

Real estate has made more millionaires than anything else. Most wealthy individuals have a real estate portfolio. There is a reason people buy homes and count this as one piece of the American dream. It is not only a good living arrangement but a good investment over time. When you retire you do not have to pay rent if the house is paid off and often the money you have made can be cashed out and tax free up to a certain amount.

For purposes of discussion and simplicity of example, if you buy a $100,000 first house and you did not pay cash for the home but got a mortgage. Suppose you put as much as twenty percent down - that would be an investment of $20,000. We will forgo the closing cost just for this example to make it simple.

At an appreciation rate of 5% annually, a $100,000 home would on average increase in value approximately $5,000 during the year. That means you earned $5,000 with an investment of $20,000. Your annual "return on investment" or cash on cash spent would be a whopping twenty-five percent.

Of course, you are making mortgage payments and paying property taxes, along with a couple of other costs. However, since the interest on your mortgage and your property taxes are both tax deductible, the government is essentially subsidizing your home purchase.

Your rate of return when buying a home is normally higher than other investments you might make and better than a savings account and in my opinion less risky than the stock market or lottery tickets. You have to live somewhere it might as well be your own home.

Because of income tax deductions, the government is basically subsidizing your purchase of a home. All of the interest and property taxes you pay in a given year can also be deducted from your gross income to reduce your taxable income.

For example, assume your initial loan balance is $80,000 with an interest rate of eight percent. During the first year you would pay approximately $6800 in interest. If your first payment is at the end of January, and you pay your note each of the next twelve months, your taxable income would be reduced due to the interest deduction by the same amount or $6800 if you itemize at the end of the year when you pay your taxes. You can also have a deduction for the $1000 to $2000 property tax you pay for the home. You may get back more money than you think at tax time. You can usually also get a homestead exemption.

Another giant advantage is your payments on a thirty year fixed rate mortgage stay the same for the mortgage. When you rent, you expect your rent to increase each year. How high will your rent be in thirty years if you stay in the same place? Start to see why owning is beneficial?

Many young people have a hard time saving money, and a house is like a savings account. You accumulate savings in a number of ways. Every month, a portion of your payment goes to pay of the house and reduce the amount owed.

Over time the home you purchase usually appreciates. Average appreciation on a home historically is about five percent. Historically in Georgia owning a home has been a very good investment.

What happens if you want to paint your rental unit or get a waterbed or add a trampoline or get a swimming pool or put in a skylight so you don't get depressed after seeing all the rent money go to someone else? When you rent, you are normally limited on what you can do to improve your domicile. You have to get permission to make any improvements. Who pays for the improvements?

Most landlords I know, won't just fork out the dollars for improvements that cost them money. They already have a profit margin they are trying to make off of you. It does not make a lot of sense to spend a lot of dollars painting, putting in new carpet for the benefit of the landlord. If the landlord spends money your rent will probably go up soon. The landlord wants to keep his expenses down as we all do.

You can do whatever you want and spend what you want if you own the home. You also get all of the benefits of any improvements you make, plus you get to live in an environment you have created.

For our example, let us say you are currently in an apartment. With your own home you will probably have more space, both indoors and outdoors. Apartment complexes are more interested in creating the maximum number of income-producing units than they are interested in creating personal space and custom, living arrangements for each of the tenants. You usually do not have to cut the grass in an apartment but then how much grass is there in the yard anyway?

The fourth of five little know ways to get a home is called a lease with an option to purchase a home. Find an investor in your town (or I can do it in mine), that has a home with a good fixed monthly payment and tell him or her you want to Lease their home then buy the home in a couple of years. Most investors want to sell houses not rent houses.

Tell the investor you have some money for a down payment (or if he prefers an option) to buy the home at a price you agreed to buy the home for at some time in the future (maybe 12 to 24 months). The investor has purchased the home for less than the average person could get the house and will be willing in today's market to sell it for less than you can get if for if you go through a Realtor because he doesn't have the realtor fees or the marketing expense to add to the price. He understands the market and can find you a home in just about any price range if he knows he has a buyer and does not have to sit on an empty house making payments.

Another advantage of this method to acquire a home is you can usually go ahead and make the improvements you want because you and he both know you are going to buy the home. The investor may even finance the home for you. Another advantage is you do not have to worry about the price going up or the payment changing for a set period of time that you both agree to accept.

You also usually get most or all of the appreciation that the home has gained (the three to eight percent or more per year) when you eventually buy the home. This means when you get your credit cleaned up or maybe more money saved up, have the kids in school, are settled and are ready to get financing, you will have to come up with less out of pocket real dollars to purchase the home. You will have equity in the home or forced savings that are applied to your purchase ratio. You do not have to move again and pack up all your stuff. You do not have the major event of moving. You know where you are going to live and what you are going to pay to live there. You know the home and the neighbors and you have the American dream.  Mark Neighbor