Is it better to buy a house or keep the money in the bank?

Let’s not fool ourselves: thereal estate has always been one of the “dots” of us Italians when it comes to investments. In that regard, it is better to buy a house or keep the money in the bank?

L’first home purchase in fact it is often one of the steps that you have to face in life when you “gets big” and perhaps after the purchase of the car it is one of the major investments that one has to face in the course of life.

The other side of the coin instead is represented by theinvestment in real estatewhich as I told you is always present in the minds of Italians.

However, some people get discouraged or feel they don’t have enough capital, and so they opt to keep the money in the bank rather than buying a property or investing in real estate.

Who is right? In short, Should you invest in real estate or in the bank?

Today we will try to answer this question.

Let’s start!

Buying your first home

As I mentioned to you before, thefirst home purchase it is one of the most important moments, given that it also represents a life choice.

If you think about it, when you buy a house you do it because you have decided to settle permanently (ok, there is nothing definitive in life except one thing, but we can say that it is an important choice) in a specific city or in a particular place and that you have somehow chosen to put down your roots there.

Undoubtedly, given theimportance of choice and its impact on your present and your future, buying a first home is a very important decision that should only be taken after having made careful assessments of very many aspects.

There are in fact many questions that will come to your mind when you think about this solution.

First of all, you will ask yourself in which area of ​​the city that you have decided to live in, you will be able to look for your home, based on a whole series of dynamics and characteristics that you will have to analyze in detail.

Then of course you will have to decide whether to opt for a condominium, or perhaps if you are looking for a small detached house or one of those semi-detached houses that are able to offer greater tranquility.

If you think about it, they really are lots of questions that you will have to bring before looking for your home, and for this very reason I want to leave you this guide to buying your first property which I wrote some time ago and which will surely clarify your ideas more.

Investing in real estate: Rent

The other solution relating to real estate is instead that ofinvestment in real estate. There are so many possibilities here too.

Since the question we have to answer refers to two possibilities, i.e. buying a house or leaving the money in the bank, first of all I must warn you: if you opt for an investment in brick you should already know by now that your account will most likely be almost completely “drained”.

In this case everything that “comes out” from your pockets will have the purpose of “returning” in the form of a monthly income (just think of buying a house to rent it).

After having chosen and bought the house, however, some problems will arise, first of all that of finding a tenant reliable and possibly punctual in payment, and then secondly you will have to take into account all the money for the maintenance and possible renovation of the apartment, and not forgetting the various taxes that you will have to pay on the property.

You easily understand that if you opt for buy a house to rent it you will have to factor in various expenses.

Investing in real estate: Short term rentals

Il brick it is often seen as a safe investment, perhaps because it is perceived as a sort of safe haven in which it is possible to invest one’s savings and above all because it is a tangible asset, i.e. it can be seen and “perceived” also through ties and feelings, unlike perhaps of what can be an investment in the Stock Exchange and in the financial markets, which is perhaps perceived as a more aseptic investment.

A second possibility regarding the investment in real estate is represented by short-term rentals, i.e. those that refer to holiday resort.

In fact, this type of rental could be cheaper than the first, since as a question you should be enough “covered“, since people will always go on vacation and you can count on a greater turnover.

In fact, you could decide to buy a nice little apartment near the sea, somewhere tourist location, and make it available for short periods. In this way you could use it both during the summer holidays and maybe even during the weekends or at various times of the year when people choose to take refuge by the sea.

Living in Turin, I’ll give you the example closest to me: if I want to reach the sea quickly, Liguria is the closest region.

In fact, many people from Turin or Milan for a weekend by the sea in the summer months or even for a week’s holiday often opt for Liguria: it is close, it can be reached easily, there are some places with a very beautiful sea, and it also offers an interesting hinterland.

In this case you could buy an apartment and rent it for a short timeto Italian and also foreign tourists.

Said like this it seems simple, but take into account that you will have to take care of the search and the rent, unless you choose to put everything in the hands of an agency but here then you will have to consider the various costs.

It also counts that you will always have to find the apartment clean and tidy at each change of “guest”, therefore other expenses and other work for you.

If you are interested in this investment, or if you want to buy a house by the sea for yourself or your children, you can read this guide.

Of course the same goes if you want buy a house in the mountains and put it for rent and available to tourists during the various periods of the year.

Why invest in real estate

Since we have seen some investment possibilities let us analyze the pro of this choice.

In addition to the modalities we have just seen, it is worth mentioning that there are others options to invest in properties, which are a little different from the tangible one of having a property to rent, but which are simpler to implement.

First of all the real estate crowdfunding: it is a real investment, in which an investor is called to finance a private real estate project through a loan. With this loan, therefore, the investor will activate a fundraiser and the return he will be entitled to will be the amount lent plus interest.

There are now so many online platforms which have the very purpose of putting investors in contact with real estate projects, therefore bringing together supply and demand.

It could be a investment interesting that unlike renting it does not oblige you to take care of the house personally, but which simplifies your life a lot, since you will only have to operate through a platform as happens with a classic stock market investment.

Choose to buy a property and put it to income it is a fascinating and complicated road, which in my opinion should be included more under the word “work” than “investment”, given that as you have been able to see there are so many unknowns and many problems to face, as well as a lot of capital to invest.

Real estate crowdfunding, on the other hand, could represent a valid alternative, a sort of “hybrid” between a real estate investment and an investment in the financial markets.

Why not invest in real estate

Now let’s see i against of investing in real estate, although we have more or less already addressed them.

No doubt we must consider i costs that you will have to argue that, as we have seen, they can be really high.

Second you will have to compare alternatives and understand the real convenience of your investment. This is sometimes not easy, given that there are so many variables that can escape our control: just think of the devaluation of the property or the ups and downs of the real estate market prices that have characterized the context for years now.

Is it better to invest in real estate or keep the money in the bank?

We have reached the end of our reasoning and now we have the most difficult part, that is answer the fateful question.

How did you understand theinvestment in real estate it takes time, money, and dedication.

It is precisely for this reason that I often like to say that buying a house to make it income and to enhance the assets sometimes seems to be a job rather than an investment.

It is also good to understand that thereal estate it’s a asset just like everyone else, and should be treated as such, trying to disregard various affections and/or particular emotions that you could tie to the houses.

Invest in real estate in fact it is only one of the many ways you can follow to invest your savings.

The main problem that I often point out to people who interface with me is that of liquid assets: real estate investment is in fact not very liquid, since if one day you want to sell your home you will need a lot of time and you will have to consider the various intermediation costs.

If you chose to invest in the financial markets, the liquidity problem would not arise, since selling a share or an ETF is much easier than selling a property.

Furthermore, another problem that I would like to bring to your attention is that of the diversification: if you already own a house, then you are already exposed to the real estate market, and buying another house to generate income could expose you too much to this sector. Being exposed too much to just one sector is a risk, because if there is one sector crisis you may find yourself in a difficult situation.

Precisely for this reason I always insist on diversification when I talk about investments, and I believe that having a diversified portfolio is always the best choice to make.

So now you’re going to ask me, what is the answer to the original question? Depends.

It all depends on your starting personal situation, your assets and how much you want to risk.

So my advice is to to analyze your situation, your objectives and your assets well, and only after careful reflection choose whether to opt for real estate investment, or for different instruments that are part of the financial market.

Additional helpful resources

I hope this guide is helpful to you and I hope I have been exhaustive enough, given that the topic is really vast and has many aspects to take into consideration.

Here are some resources that you might find useful:

Enjoy the reading!