Self-made millionaires around the country are advising millennials to buy a home in order to build their wealth. David Bach, millionaire and bestselling author, was quoted in a CNBC article as saying “the single biggest mistake millennials are making” is not buying a home because a home purchase is “an escalator to wealth.”
Similarly, billionaire Warren Buffet feels the same way. His advice is to buy! Recently, in a different CNBC article, Buffet is quoted as saying that a 30-year mortgage is “the best instrument in the world. Because if you’re wrong and rates go to 2 percent, which I don’t think they will, you pay it off. It’s a one-way renegotiation. It is an incredibly attractive instrument for the homeowner and you’ve got a one-way bet.”
Both men feel that buying a home, especially if you feel that you will be living in a given area, is the best option to accelerate your wealth. If you are renting, you dole out your monthly rent check and in the end you wind up right back where you started – owning nothing. However, if you purchase a home, you can spend the same amount (or less) as you would for rent on a mortgage, and wind up owning your home and building your wealth.
Buffet seems to have followed his own advice, purchasing a home in Laguna Beach in 1971 for $150,000 and has recently listed the property for sale for $11 million. He has said that the $30,000 mortgage he took out to purchase the home is the only mortgage he has ever had.
Generally speaking, it is usually a wise decision to take the wealth-building advice of well-respected multi-millionaires and billionaires. Simply put, if you are not living in your own home today, go buy one.