Advice
American millionaire: Don't buy a house without asking yourself this question
19/11/2018 17:51 | Source: Vnexpress
Buying a house isn't always the best investment you can make, according to self-made millionaire and personal finance guru Ramit Sethi, who wrote the book "I will teach you to be rich".

Many first-time home buyers go into the process assuming that they can turn a tidy profit on any property purchase. However, Sethi said it's not always so simple. There are lots of barriers and costs that can prevent your real estate purchase from being profitable.

"Most people never factor in all the phantom costs, including taxes [and] maintenance," Sethi tells to CNBC. "They don't factor in inflation and how that erodes the value of money over time."

 Don't buy a house without asking yourself this question
Ramit Sethi- American self-made millionaire and personal finance guru 

According to the self-made millionaire, the most important thing you can do before buying a house is to "run the numbers." In addition, you need to ask yourself: What's the best investment for you?

He stresses: “If you run the numbers, like me, you might discover that for where you live it actually makes no financial sense to buy. Are there other reasons to buy? Of course, maybe you want to buy because you want to knock that wall down. Maybe you want to buy because you want your kids to go to a certain school. Fine, but run the numbers."

The financial guru suggests going online to find one of the many “buy or rent” caculators offered by real estate and personal finance websites. Those sites take into account factors such as where you want to live and how much you can afford to pay (both for a down payment and monthly expenses) to give you an idea of whether it makes more sense for you to buy or rent a real estate at present and in the future.

Before making such a big decision, you must do the math. "For the biggest purchase of your life, you should know all the math and how it plays out 20 years in the future," says Sethi.

While many people think they are wasting money to rent, rather than buying a house, but Sethi thinks this thought should end. He points out paying rent does not mean you're throwing your money away, but you're exchanging money for something important.