There are Numerous Benefits to Owning a Home Compared to Renting
In my last month’s R/Eview – October Issue, I addressed the numerous benefits of buying a home in Northern Virginia compared to renting. I showed that it surprisingly takes 20% less income to buy a home than it does to rent the same home. The U.S. tax code favors home ownership. Owning a home has several qualitative benefits including stability, positive impacts on child development and school performance, and fulfillment of the American dream. Many renters are under the misconception that a mortgage loan is out of their reach and it requires a large down payment. I also showed buying a home can be done with little to no down payment and across a wide range of credit scores. Credit scores under 620 can even qualify.
Home Ownership is the Proven Escalator to Wealth in America
By far, buying a home is the strongest path to wealth creation. There are certainly a number of anecdotal quotes by successful real estate investors who address the subject. Like David Bach from AE Wealth Management who said, “If you’re not prioritizing home ownership, you are making a costly mistake. Buying a home is the escalator to wealth in America. Homeowners are worth forty times more than renters.” Then there’s Thomas Stanley, author of The Millionaire Next Door who said, “There are under accumulators of wealth, average accumulators of wealth, and prodigious accumulators of wealth. If you want to be a prodigious wealth accumulator, then own real estate.”Home Ownership Outperforms the Average Savings Rate by a Factor of 5X
Beyond the quotes, I try and open a person’s eyes with numbers. Numbers are an unambiguous arbiter and can often help people quickly understand exactly what’s important. The infographic below is the follow-up to my contribution last month. Last month, I showed it takes $417/mo. less to own as it does to rent the same $340,000 townhouse in Falls Church 22043. This cash benefit is primarily the result of federal and state tax benefits related to the mortgage interest and real estate tax deductions. I now take it a step further and estimate the level of wealth creation attributed by the same piece of real estate. In addition to the $417/mo. cash benefit that would otherwise be lost to a landlord by renting, the buyer grows equity through the amortized paydown of the loan principal. Each monthly mortgage payment reduces the loan amount by $394. However, the wealth accumulation effect does not end there. Since 1987, real estate has appreciated on average 3.75% per year. I assume a conservative estimate below of just 3% appreciation, which produces an additional $850/mo. in wealth. All told, the buyer of this home in Northern Virginia would amass nearly $100,000 in wealth in just five years, and nearly $200,000 in ten years.
“It is with much enthusiasm that we share with you our thoughts about Tim Trainum. He his the most knowledgeable and informed real estate agent with whom we have ever dealt. Over the last 45 years we have bought and sold a combination of 26 homes, condos, and multi-family apartment buildings in Fairfax, Arlington and other parts of the country. Tim is without a doubt the complete package. He did everything we asked him to do. He gave us great information and advice and kept us informed as to his progress day by day. We highly recommend him.” – Dean and Mary Simonds
I am a high-value agent who delivers demonstrably useful results to my clients. I operate my business with relationship-focused interaction that aligns client goals with beneficial outcomes. I have an unyielding commitment to being an open and honest advocate, ensuring my clients reach their desired outcome efficiently and with the most equity. My overarching passion in real estate is to join your buying and selling journey and help improve your quality of life.
I am a full-time, licensed Realtor® who has established deep roots and knows the region. I was born and raised in the Northern Virginia area, graduating from Chantilly High School and then James Madison University with degrees in Economics and Finance. I live in Fairfax with my wife Liz and our seven year old son Robby. I’m a homeowner myself and understand the important decisions my clients face when they’re buying or selling a home. In addition, I’m an owner of investment property, including a multi-family apartment buildings. I have a penchant for helping people having taught adult education courses in investing and personal finance, and helped numerous clients, friends and colleagues in creating a path to wealth creation. I also serve as the trustee for a private charitable memorial fund.
I have been working in the real estate industry helping clients for over 25 years. As a Listing Agent, the value I create for my sellers is to help them elevate and showcase home condition. I use multiple valuation techniques to pinpoint market value for my sellers. I use cutting-edge marketing strategies to promote widespread buyer awareness and produce the maximum selling price in the fewest days possible, while protecting my seller’s best interests throughout the complete selling and settlement process. As a Buyer’s Agent, I help my buyers locate the home that changes their life. I guide my buyers in structuring the most compelling offer that can win seller acceptance, while retaining the most value and equity possible for buyer benefit and in a manner that protects their best interests throughout the complete buying and settlement process. I have worked with clients in the purchase of investment property, helping them to prospect property as well as evaluate all the financial metrics important to making the investment. My real estate experience includes working in the development, construction and operation of real estate infrastructure projects, closing over $500 million, as well as supporting several commercial real estate clients in the pursuit of reaching their objectives. My experience spans across consulting with clients on remodeling and home improvement projects to negotiating land purchase agreements and easements, to negotiating residential and commercial leases. There are few areas of real estate that I haven’t touched and it continually has been with a mind-set of delivering exceptional outcomes.