@JenniferW , for what it's worth, I think houses are an investment. And should be viewed that way (if you're trying to build wealth and smartly construct your investment portfolio) because you'll make better decisions when you think that way.
After I got my MBA in finance, yikes, four decades ago, I started my career as a CPA with what was then the world's largest CPA firm. But after a couple of years, I went out on my own and basically did one thing: investment analysis of real estate. Almost entirely commercial real estate. Two or three buildings you can still spot in the Seattle skyline.
The work pretty much goes like this. You calculate the cash flows a property generates. For example, with $6 million a year of rent and $2 million a year of expenses, you get $4 million a year of cash flow.
Then, you divide the rent by the price. If the building costs $100 million and the owner gets $4 million a year of cash flow, that means you're getting 4% cash-on-cash return on your investment. Real estate folks call this the income capitalization rate. But it is basically equivalent to the dividend rate a stock or stock fund pays.
BTW if you get appreciation the property--for example, if that $100 million office tower appreciates (inflates in value) by 2% a year, that means your overall return equals the 4% plus the 2% or 6%. That 6% is equivalent to the annual return a stock or index fund generates.
Small scale real estate investors often don't, in my experience, show this same level of financial sophistication. Most probably don't know how to do the analysis. (You'd use something like a spreadsheet.) But they should.
E.g., a small scale investor could have done with the property you live it. Rounding the numbers and guessing at the rents and expenses, someone could have bought the property for about $75K. Maybe they could have rented it to you for $6K a year, paid $3K a year in expenses, and then received a $3K cash-on-cash return. That equates to a 4% income capitalization rate. If the property appreciated by another 4% a year, the small scale investor earned a project annual return of 8%.
The basic math of the above analysis overwhelms most people. But it's the way that sophisticated investors and big companies make capital investment decisions. Active investors (as opposed to passive investors just throwing their money into an index fund) probably look at a bunch of different investments and then try to pick the best options. And much of that decision making revolves around picking the investments that deliver the highest return.
A couple of final comments...
First, borrowing money to make an investment amplifies your returns. Basically, you want to borrow money at, say, 4% and invest in something that generates 6% or 8%. But it also complicates your investment analysis. And it massively jacks your risks. You may borrow at 4% and invest in something that earns 3%. And then you get killed financially.
Second, my hunch is you earned a very good annual return. One would need to do the math everyone keeps talking about.
