andrew henderson menu

Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.


What we’re all about


Meet our 80+ global team


We’re here to serve you


Your questions answered


Read our testimonials


Get free email updates



Our flagship service for entrepreneurs and investors


Create your Action Plan directly with the Mr. Henderson himself


Claim a second passport based on familial connections


Click here to see all our products and services


Discover the world’s best passports to have in an ever-changing world


Explore the citizenship options using our interactive citizenship map


Explore the tax details for countries using our interactive tax map


Click here to see all of our research and interactive tools


Learn from a curated “Who’s Who” of business speakers from around the world, get our latest R&D updates, and rub shoulders with successful people from all corners of the world.


Andrew Henderson wrote the #1 best-selling book that redefines life as a diversified,
global citizen in the 21st century… and how you can join the movement.


Why buying a house is a bad investment

Fallback Image

Dateline: Dusheti, Georgia

As a lifelong workaholic, I’ve made the decision that on the rare times I decide to relax, I want to really relax.

Sometimes, that means a quiet weekend in the countryside in a place like here in Dusheti, where I can put my phone away and meditate alongside the peace of nature. Other times, it means mindless American TV shows.

Owing to my need to impart business inspiration even into my hobbies and relaxation time, one of my favorite mindless TV shows is Bravo’s Million Dollar Listing: Los Angeles.

There’s something intriguing (and a bit envy-inducing) about the agents so dramatically featured: the old money flair of Josh Flagg, the new money boiler room hustle of Josh Altman, or the international grandeur of two British guys who jumped across the pond to cash in.

There’s also something about the fact that Los Angeles real estate has become so ridiculously, mind-numbingly expensive, with developers paying anywhere from $3 million all the way up to $9 million to buy a teardown in the better parts of Beverly Hills or the Hollywood Hills.

In any major city, land prices in desirable areas trade at a premium, but the numbers bandied around on this show — and reflected in real life on real estate websites — smack of a total bubble.

The hills behind my homes in Georgia and Montenegro have vistas just as beautiful as the views people on this TV show were gawking over and justifying $5 million prices for a teardown, and $20 million for completed construction.

The other day my girlfriend and I sat around with my team and watched the show just to make fun of “the amazing views” where the ocean was barely on the edge of the horizon or you could see some nice palm trees on a hill. I recently walked up the street from my house and saw vistas and gorge views that would give those LA views a run for their money.

But the real issue at hand here is not whether the views and construction, etc. are better in the United States or overseas. The real issue is that people see such real estate purchases as investments.

REAL real estate investments

I love real estate. If you’ve read even a little bit of my blog, you know that I am a fan of real estate investing. But not every real estate purchase counts as a real estate investment. If you’re from the US, you are well aware of the belief that buying a home is one of the best investments you could make.

It’s not.

I wouldn’t even count it as an investment.

The US government gives so many special incentives to homebuyers to the point that people think a home purchase is a great idea. Even if that idea comes with a $25 million price tag.

To make matters worse, real estate agents go around spreading the erroneous belief that a home purchase is an investment. Unlike in the actual investment industry, real estate agents don’t have an obligation to hand out the facts. They also tend to make promises about a home’s investment potential without anything to back up their claim. They can say it’s a great investment when there’s no investment at all.

Homes can be a great place to establish roots (if that’s what you want), decorate to your hearts’ content and install cool sound systems in the ceiling, but they aren’t an investment. All the decor and unneeded installations are simply you paying for a certain type of lifestyle.

They’re not an investment.

Don’t make the mistake of thinking they are.

You can’t depend on the market to keep up with your profligate spending. If you really looked at a home purchase as an investment, you’d call it a house and rent it out. You don’t replace the tires on a rental car and you certainly don’t put the latest sound system in a rental property. Purchasing a rental property is purely a business decision and you treat it as such.

That’s an investment.

The worst investment

If you’re still not convinced that buying a house is a bad investment, let me do a little more explaining. If you actually do the math, homeownership is probably the worst investment you could make. Let’s take a look:

  • Average home price in the United States ≈ $355,000
  • Required 20% downpayment = $71,000
  • Loan balance = $284,000
  • Current interest rate for a 30-year fixed mortgage = 3.5%
  • Monthly payment ≈ $1,700
  • Total principal and interest paid by the end of the mortgage: $612,000 (or $257,000 more than the original amount)
  • Average property tax rate is 1.15% ≈ $122,500 over 30 years
  • Maintenance (for upkeep, maintenance, repairs, etc.) at 1% per year = $3,550 a year or $106,500 over 30 years

Total out-of-pocket costs over 30 years = $841,000

But the calculation doesn’t stop there. As Brian Lund points out, the real cost of owning a home is the opportunity cost. What would you do with the extra $257,000 you would be saving in interest payments? What would you do with the extra $3,500 per year saved in maintenance fees? And how about that $122,500 you’d save over the years by cutting out property tax?

Of course, you do need somewhere to live. So suppose you rent a similar home for 75% of your monthly mortgage payment. Paying $1,275 a month for 30 years would mean you’d pay $459,000 in housing over 30 years. That means you’ve saved yourself an extra $382,000, simply by NOT owning a home.

What if you took the money you were going to put into a downpayment and put it toward something that will actually give you a return? And what if you added all those savings (you know, the $382,000 you’re going to save over 30 years) to those investments?

Is owning a home with the hope of appreciation and tax benefits really worth what you could do with all that money?

If you want to put the calculation into more solid terms, you can follow James Altucher’s formulas:

OWN = down payment + size of mortgage, + all the interest payments, + all the taxes + all maintenance + opportunity cost of time.

RENT = All of your rental payments added up MINUS what you would make buying bonds with the money you would’ve used on a downpayment.

OR you can head on over to the New York Times interactive calculator where you can input more than 20 variables to see if you can get the math to add up in favor of buying a house.

What about the hybrid approach?

As I mentioned earlier, the only way you can really look at a home purchase as an investment is if you own someone else’s home. In other words, own rental properties.

But what about the hybrid option of buying a property that you both live in and rent?

For example, I live part-time in Tbilisi in a house that I basically built on speculation. I put some nicer touches in the property because I figured I’d be staying there for a time while I figured out what I wanted to do. I spent a bit more because I approached it as a hybrid.

However, as my girlfriend always says, hybrid is not the place you want to be. You want to be firmly in one camp or the other. You want to be clear and focused. And, I’ll admit,º I got a little out of focus.

Still, in my case, I’m not looking at my hybrid property as an investment. Rather, it’s an investment experiment. I wanted to design this home to confirm the market in Georgia for properties with an open floor plan and western decor and lighting, as opposed to Georgian decor. And I’ve been proven right on that hunch. In that regard, it was an experiment that worked out well and will be a good investment.

But here’s the key: I was realistic with my expectations from the moment I started. I knew exactly what I wanted out of the property and didn’t plan on the property being anything other than that. Yes, I was confident that the property value wouldn’t go down, but I wasn’t depending on it. I treat this property as a place to spend time and as a store of value. I don’t expect appreciation OR rent.

If you’re just beginning as an investor, I wouldn’t recommend that kind of approach. Thinking you’ll live there and then rent it out will make you overpay and under-focus on the business side.
And treating the place as your full-time residence completely removes the business aspect of the purchase.

Own a home because you enjoy the benefits that come with ownership, not because its’ an amazing investment.

How to find actual real estate investments

To be honest, some people may be better off buying real estate in the US for investment purposes. However, there are many benefits to owning foreign real estate. For example, I live in the spec house I built in Georgia. Consequently, it’s a non-reportable piece of real estate. It’s out of the banking system and safe. Someone can’t just push a button and take it away in the US.

In that sense, my hybrid spec house is also an investment in asset protection. I knew that the value of homes in the area that I’m in won’t go down, so essentially I’m treating my home like a bank account, with a potential for investment upside.

Still, to make sure you get all the benefits that come with owning foreign real estate, you do need to understand the tax consequences both where you are buying and back home. If you’re a US citizen or resident of a country that taxes on worldwide income, you won’t have as many advantages. Income earned from a foreign rental property will be taxed at home as well.

The other thing to look out for is emotional attachment. If you decide to own other people’s homes, you can’t get too emotionally attached, whether it’s a rental or a flip. This is why — as much as I’m working to create a new real estate category in countries like Georgia — I still have to be careful not to go overboard.

For instance, I recently had to choose whether or not to pay $270 extra for tiles in a house I am renovating and selling. I really wanted to make it look a bit nicer and the way I would want to live in it, but ultimately I had to remember that it’s an investment and I’d never see that money back from the kind of buyer I’ll be targeting.

In my own house, I’d spend the $270, but not because it’s an investment.

If you are interested in putting your money to work for you in real investments, don’t waste it on a home purchase just because you think it’s a smart move. Do the math first. I’m not saying owning a home is a bad idea, but I am saying it’s a bad investment.


Sign up for our Weekly Rundown packed with hand-picked insights on global citizenship, offshore tax planning, and new places to diversify.


How to Invest in CBDCs?

How to Invest in CBDCs?

The evidence that Central Bank Digital Currencies (CBDCs) could soon replace physical cash, topple...

Reduce Your Taxes And Diversify Your Wealth

Nomad Capitalist has helped 1,500+ high-net-worth clients grow and protect their wealth safe from high taxes and greedy governments. Learn how our legal, holistic approach can help you.

What do you want to accomplish?

Let us know your goal and we will tell you how we can help you based on your details.


We handle your data according to our Privacy Policy. By entering your email address you grant us permission to send you the report and follow up emails later.