CNN recently ran an article explaining why self-made millionaire David Bach has said,
“The fact is, you aren’t really in the game of building wealth until you own some real estate.”
In his book, “The Automatic Millionaire” Bach writes,
“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 in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!“
We have touched on this in the past. (see Buying Still Cheaper Than Renting, Renting vs Buying a Home and Accumulating Wealth, and Homeowner Average Net Worth 3,600% Higher Than Renter)
Bach has told CNBC that buying a home is “an escalator to wealth“.
“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.”
In regards to the idea of a starter home, Bach says,
“Oftentimes, buying your first home means you’re not buying your dream home. You’re just getting into the market.”
Following David Bach’s logic is simple. We all have to live somewhere. We have to pay either rent or a mortgage. Over time, a mortgage can increase your net wealth over renting.
While buying your dream home would be nice, Bach says that the key is to just get into the market, and admits that your first home may not be your last.
On average, family wealth of homeowners is dramatically higher than that of renters, and this divide has seen growth over time. David Bach, best-selling author and self-made millionaire, advises homeownership as the surest path to building wealth.