David Bach, American writer, self-made millionaire and author of several bestsellers including “The Automatic Millionaire,” said in an interview to CNBC (Consumer News and Business Channel) that “not buying a home” is the biggest Millennials’ mistake today.
Prioritizing homeownership is vital to ensuring the financial future of anyone; it is in Bach’s words “an escalator to wealth”.
The primary interest of the millennials is not to settle down, much less buy a home at an early age. However, the self-made millionaire, who made his wealth by entering the world of real estate warned, “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.” Undoubtedly, we all need a place to live for the rest of our days, so, why not living in our own home? That is the message you should highlight, as a real estate agent, while advising your potential customers.
On the other hand, Bach considers that the smartest decision he could ever make was investing in the purchase of his houses. As he told CNBC: “I first bought a home in San Francisco. It skyrocketed in price. I moved to New York and bought another home. It skyrocketed in price. My net worth has gone up millions and millions of dollars, simply because I’ve lived.”
In his book, “The Automatic Millionaire Homeowner: A lifetime plan to finish rich in real estate”, David Bach affirm: “You don’t need a big down payment to buy a home. You don’t need great credit. You should buy even if you have credit card debt. You can buy a second home even if you’re still paying off the first. You can get started in any market-boom or bust. Renting your own house to another person is easier than you think”.
Bach also clarifies with a simple example, why it is better to invest in buying a home, even if you don’ have enough money, instead of just paying rent:
“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!”
The quote above is reason enough for millennials to consider being homeowners; however, we understand that “Generation Y” doesn’t share this idea. That is why your duty as a realtor is to raise awareness of the importance and benefits that will represent for a Millennial start investing in real estate.
It is no secret that anyone looking will be overwhelmed by the high price tag associated with a home purchase, so they prefer renting instead of buying. Help your customers see the pros of owning a home! The following are some tips any agent should consider when giving real estate advice to potential millennial:
- Highlight the benefits of buying a home, more than its features: An important thing to consider as a real estate agent is that customers never buy because of the product features. They buy if they perceive benefits in those features. Look for the real meaning in the action of home buying. There is a difference between saying “There is a backyard” and “This house provides your kids with a safe area to play”.
- Teach your customers about home appreciation: The biggest measurable financial benefit of buying a house is appreciation. A home is a safe and steady investment. Even with the market’s ups and downs, purchasing a home will always be a smart choice, because the investment becomes a hedge against inflation.
- Help them set realistic investment goals: Before getting your client into buying a home, show them the math. As Bach says, “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.”
Buying gets cheaper than renting. Maybe your real estate clients will not understand this at first, arguing than buying a home is obviously more expensive than paying a monthly rent but, this can be true just for a few years. The truth is that homeownership becomes cheaper as the years go by, subsequently the mortgage dues will decrease the interest gradually, which does not happen when renting.
Finally, make sure your real estate clients understand that buying the first home may not necessarily mean buying the “dream home”,, at least not at first. Thus, give them the opportunity to realize that they can reach their desire goals by making sound investment decisiones.
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