Most people purchase real estate for one of two reasons; either as an investment or as a primary or secondary home. When purchasing a house for investment purposes, you’re generally planning on either renting it out for a small monthly profit or selling it later on when (hopefully) the value has increased.

 

When buying a house to make it a “home”, you are more willing to spend money on upgrades and customizations because it will enhance your quality of life. A home is a place where you can store all your stuff, get comfortable, and enjoy living in a place all your own. With all the upgrades and personal touches you’ll likely put into your home over the years, it’s unlikely you’ll come out ahead of the investment curve if and when you decide to sell. In short, a home is not always about the investment potential but more about comfort and personal tastes.

Purchasing real estate as an investment involves a slightly different mindset. When your focus is to make money, you aren’t as concerned with added value and fancy curtains that match your personality. Generally you’ll only spend as much as it takes to get the house livable and up to code for future tenants or owners. Why spend money putting in a wet bar when the returns will surely be nonexistent? Instead, investment properties should only be fixed up to the point where you’ll be able to get a solid return on all money you’ve invested into fixing up the property.

 

To sum it up, decide before you buy whether you’re purchasing for the purpose of having a home or an investment. The two aren’t mutually exclusive, but if you plan on living in the home for a long time, expect diminished returns on your investment because you’ll want to put more money and upgrades into it than if you’re just going to rent it out.