Renting to Grow Wealth

by San Antonio Attorney

Cornerstone Wealth Management CEO Rich Arzaga is an owner of a high end home in San Ramon, California.  He bought it for $1.8 million in 2005 and spent about $500,000 more in developing it.  Arzaga thinks the residential property is a great place for his family, but he does not consider it as a financial investment.

He believes that the person who said it is the American Dream to buy a home did perform an analysis on it.  His stance is based on an examination of 250 properties around the United States, and reviewing about 40 client files to calculate the financial consequence of owning real estate property versus selling it.  Arzaga, a personal finance adjunct professor at the University of California, Berkeley, saw that in all the cases he studied, it was better to rent as opposed to own a home.

The reason is simple, according to Arzaga.  Though a home is the main wealth for many people, it includes a lot of big expenses.  The expense associated with a real estate investment range from home insurance and property taxes to improvements and maintenance.  On the other hand, renters do not have to be burdened with such costs because the landlord covers those expenses, allowing the occupant to have more freedom to invest earnings in other areas.

But Greg McBride, a chief financial analyst at Bankrate.com, says home ownership promises that in the long run, it can pay back many or possibly all of your expenses, contrary to rent, which does not rebate a penny.

Many people want so badly to realize the American Dream of owning a home that they forget about other ways to build wealth and establish financial security.

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