Tower Homes would like to share some thoughts from self-made millionaire and best-selling author David Bach, originally posted on CNBC.
While there are a few opponents to homeownership, self-made millionaire David Bach is doubling down on his faith in real estate. He thinks that not buying a home is “the single biggest mistake millennials are making.” Bach believes that buying a home is an escalator to wealth and young adults, in particular, that aren’t hopping on this escalator, are making a costly mistake towards the future.
Homeownership Delivers
Bach warns: “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.” According to Bach, the smartest investments he’s ever made have been the three homes he’s purchased. He first bought a home in San Francisco. It skyrocketed in price, then he moved to New York and bought another home. It skyrocketed in price again. He claims that his net worth has gone up millions and millions of dollars, simply because he lived in a home instead of renting.
Invest in a Home You Can Own
Bach argues that you have to live somewhere for the rest of your life, (we recommend metro Birmingham) so you might as well invest in a home that you could own permanently. As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and wind up just where you started – owning nothing. Or you can buy a home and spend the same amount paying down a mortgage, and in the end, wind up owning your own home and that’s exciting.
Where to start?
If you want to get in the game of homeownership, start by crunching the numbers. Do your homework it’s not that hard. Look and see what things costs, starting with the smallest options. This way, you’re really clear on your goals and you won’t just say to yourself, I’ll never afford this. A good rule of thumb is to make sure your total monthly housing payment doesn’t consume more than 30 percent of your take-home pay. He also recommends having a down payment of at least 10 percent, though more is always better.
Getting There
Finally, recognize that “oftentimes, buying your first home means you’re not buying your dream home,” Bach tells CNBC. “You’re just getting into the market.” A lucrative market, that is. “The fact is, you aren’t really in the game of building wealth until you own some real estate,” Bach says. The original article by Kathleen Elkins and a video recap can be found here.
