“The pundits that say homeownership doesn’t work: They’re just wrong,” Bach says.
For many, buying a home marks the realization of the American dream. But experts are split on whether it’s really a worthwhile investment anymore.
According to author and blogger James Altucher, it’s financial suicide. He argues that purchasing a home is actually a bad investment because it ties up the majority of your money in one place, and the market is rarely favorable to sell — not to mention the slew of expenses for maintenance and repairs.
Altucher’s not the only one rallying against home ownership. Grant Cardone, bestselling author, speaker, and motivator, has called buying a home “a scam.” Cardone previously told Business Insider that the best investment you can make is in your freedom, and owning a house destroys that freedom by eliminating your choices and tying you to one place.
Bestselling author David Bach, who is releasing an updated version of his hit book “The Automatic Millionaire” this December, calls such views ‘ridiculous’ and argues that homeownership is a timeless principle of building wealth that, while boring, still works.
“The pundits that say homeownership doesn’t work: They’re just wrong,” Bach told Business Insider during a Facebook LIVE. “Homeowners in this country are worth 38 times what a renter is. If you want to guarantee yourself financial insecurity, rent for the rest of your life.”
Bach argues that choosing to buy instead of rent sets you up for a secure — and fruitful — financial future because paying off your mortgage eliminates your monthly housing expense while enabling you to continue growing your wealth in other ways.
“You have to live somewhere for the rest of your life. You’re either paying a landlord who’s going to build wealth, or you’re paying yourself,” he explains.
Bach gives the example of a couple who bought an average-sized home, worth around $250,000, to raise their kids in. They worked to pay down their mortgage early and owned it outright in 18 years. Instead of moving up into a bigger home once the mortgage was paid off, they moved into another similarly sized house and paid that off while renting out their original place. By 55, the couple was earning a steady rental income and living debt-free in a home they owned.
While this situation won’t work out for every family, Bach’s point still stands: Owning a home can help create avenues to build wealth, whether it’s from profiting off a rental property or saving the money that would otherwise be put toward rent.
“Ultimate financial security comes from buying the home that you live in, paying it down, and getting it debt-free,” he says.
This article original Appeared on Business Insider:
http://www.businessinsider.com/whey-renting-instead-of-buying-is-ridiculous-2016-12
