For many Americans, when asked to plot out the path of a successful adulthood, many will cite the purchase of a home as one of the great milestones along the way.  Since the birth of the suburbs, Americans have lusted after the sense of success and accomplishment that comes along with owning their own little piece of the American dream.  And while the successful acquisition of property is an admirable goal, there are quite a few misconceptions about homeownership that were present then, and remain today.  Even commonly accepted adages can still turn out to be myths, under closer examination

It’s My House and I can do Whatever I want

Be honest, how many times have you uttered the phrase, “When I have my own place, I’ll…”?  Whether you said it when you were a teenager, stifled under the tyranny of your parent’s rule, or in adulthood, when dealing with the decree of your landlord, odds are good that the phrase has left your lips on occasion.  Well, there is some good news, and there is some bad news.  While homeownership does allow you far more liberty than renting someone else’s house does, you are, sadly, not without limits.  Interior paint colors, flooring and other finishes inside your home are (for the most part) decisions that you can make on your own.  If you want to paint your bedroom bright green, have at it.  Want to cover those hardwood floors and instal shag carpeting (although we cannot see why), groovy.  However, decisions made about your home’s exterior or the surrounding property (yard, driveway, etc.), may be a different story.  

You will, of course, need to adhere to any local building codes when approaching  projects and acquire permits when necessary. If you live in a community with an HOA, as 73.9 million Americans do, then you will have to consult your governing documents to see if your proposed improvement is even a possibility.  Additionally, if you are allowed to move forward with your project, you will have to take all the proper channels and receive approval from your homeowners association before you can begin.  This process can be lengthy, and it is possible that you will still have your request denied, even if you ask very, very nicely.  However, most associations are reasonable in their judgements and the rules that they have in place are enforced with the goal of maintaining a desirable neighborhood.   While they may keep you from erecting a monument to yourself in your front yard (so sorry), they will also keep your neighbors from doing so, something that would almost certainly lower your home’s value a bit.  

Home improvement projects will add value to your home

If you fancy yourself a bit of a bibliophile and convert your second floor into a beautiful library, this transformation may fulfill your every desire, but potential buyers (whether right way or down the road) may not share the same sentiment.  If your goal, when planning improvements to your home is to increase the value (market value, that is), then you’ll want to be a bit more practical in your thinking.  Some renovations, such as kitchen and bathroom renovations typically see a rather healthy return on investment (see more on that here).  Other projects, such as installation of a pool, or converting a bedroom to a walk-in closet, may suit you and how you use your home currently, but won’t necessarily get you a higher payout when you go to sell your house.  Consider the mantra that “improvement is in the eye of the beholder,” or, in this case, the eye of the buyer.  If you plan on staying in your home forever, then by all means, completely tailor your home to your needs and desires.  If you plan on selling sometime in the future, then you may want to be a bit more mindful of your choices.  

A Home is Your Best Investment

Your home is an investment, true.  A major, huge, incredibly important investment…true, but it still should not be your biggest investment toward your future, at least not in the way that most people understand the term.  Let’s try to break this down.  The most prominent reason that homes are seen as investments is that, typically, home values rise as time marches on.  This means that if you bought your humble abode for a humble 250,000 dollars, thirty years from the day that you signed on the dotted line, the value of your home would have increased significantly.  Following this line of thinking, you could then sell your darling domicile for a pretty penny and walk away with a wad of cash in your pocket.  However, there are a number of problems with this scenario.  The most prominent problem being that, if you sell your home, you’re still going to need somewhere to live.  Paying for your subsequent home will certainly take a bite out of that chunk of change.  On the flip side, if you plan to never leave your home, you cannot consider it an investment (in the standard sense) because you will not actually see that money again.  

The fact remains that for many, making their monthly payment to the bank, for a property that they plan to (one day) own outright, feels a lot more financially satisfying than paying it to a landlord.  And, it is also true that purchasing a home does help you to add to your net worth, but you shouldn’t consider your home the golden goose that will allow you to comfortably ride out your retirement.