David Crook wrote an incredible book called the "Wall Street Journal Complete Real-Estate Investing Guidebook". If there is any real estate investment book everyone should read this is it. I'll be writing a few pieces inspired by his book.
A first really good point that he makes is that most people think of their personal home as an investment property but it actually isn't. This is because as Crook says, "[y]ou are more likely to spend far more money living in your home than you will make when you sell it." Investing is using your money to make more money. Anything else is spending.
To be an investment property it must cover all of its costs and produce a return on the money you invested (or cash flow). Quite often homes end up costing more than they produce even in appreciation.
Take Crook's example of someone who bought a home for $200,000 in 1990 and sold it in 2006 for $650,000. In this scenario they spent about $234,000 of after tax money on interest or half their gain. A kitchen remodel, which was supposed to increase the value of the property so much was actually a money loser especially since it was paid for with borrowed money. So don't repeat the mistakes of the last decade and think that you are "making" a lot of money on your personal home. With 5% interest rates and 5% annual appreciation you are breaking even at best.
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