Does it still make sense for people to buy a home in today's day and age? I mean,
we've got a lot of Gen Z, Millennials that are out there probably questioning
this more than anything. We're going to see a huge change in stats over the next
decade and having bought thousands of homes myself, I wanted to provide an
answer to this question which is "Should you actually focus on buying a house?" And
today, I'm going to be featuring some stats and information from Stanley
Thomas's book, The Millionaire Next Door. He presents some fascinating information
on whether a person should or shouldn't actually own a home.
Does it even make sense for people to own a home, right? I mean, look at
Millennials, look at Gen Z. They're so uninterested in homeownership these days.
In fact, 70% of America owns their own home versus rents. And yet, we're over the
next decade going to see that number dropped by more than 10%. It's
substantial. The world is changing right now. And a lot of people want to know is,
it's still valid. Like, what are really the benefits of owning a home? Wouldn't
it be better to stay mobile and just rent? There was a book that got written
that I want to highlight today. Stanley Thomas wrote this book, The Millionaire
Next Door. And what he did is he studied millionaires in America. The book came
out in the 90s. And basically, he came out with some startling facts of the
lifestyle choices people made to become millionaires. And I thought, you know what?
For today's video, if we're really going to explore "Should I buy a house or not?" I
think some of the information and stats that Stanley has in this book are going
to be really useful for you. Let's check them out. So, I've got up here on the
board some of the statistics that come from The Millionaire Next Door. I do
recommend this book. I think it's a fantastic read. I will tell you that it
airs on the side of conservatism. It's all about delaying gratification. It's
all about being a really good saver. In fact, he would probably be really good
friends with Dave Ramsey. He and Dave Ramsey. They're maybe twins separated at
birth that should be that we should like reunite. I'm sure they love each other's
books. Here's the first thing that Stanley says. He says, "Did you know that
half of millionaires lived in the same house for at least 20 or more years?"
Now, that was a different time and age. But I'm telling you right now, people
switch houses just as frequently as they're actually switching jobs. And this
is important to know for a couple of reasons. The first one is let me show you.
This is crazy. Look at what real estate has done. This is US Census Bureau. From
1963 to 2019. Is there a trend that you can see here on this graph? I mean other
than 2008, definitely looking like Great Depression if we went that far back. Real
estate goes up in value. So, people that get into homeownership, if you actually
normalize this since 1963, you're looking at an average growth. If you own a home
looking at a growth of 4.5%. Year over year, over year, over year.
Rounded up to 5% and it's like if I have a $200,000 house. And I'm
growing 5% this year, 5% next year. If I do that
for 5 years, that's 25%. That's going to compound to
probably 60 or 70 thousand dollars of increased value. So, my home just in 5
years went from a 200-thousand dollar value to let's call it a
260-thousand dollar value. Dude, you just like on your balance sheet
of life, you got 60-thousand dollars richer because you owned a home versus
rent. So, he's definitely making I think a really important point here. In the fact,
that millionaires what half of them share in common, dude, they bought
a home and they did it early enough to actually have lived in that same house
for 20 years. But we learned something else in the fact that they
haven't upgraded their lifestyle in 20 years. These people, these
millionaires, I call them the conservative millionaires. They are
content not keeping up with the Joneses. They're living a financially more
conservative lifestyle. And that's why they have money. My mother-in-law falls
in this category. Her favorite saying was "We have money because we don't spend
money." And I think that works here. Something else interesting from the book.
90% of millionaires live in homes valued below a million dollars.
Being a millionaire doesn't mean that you live in a million dollar crib. It
doesn't mean that you are like trying to afford a lifestyle that you can't yet
afford. But in fact, a third of them, 28% of them live in
homes valued at $300,000 or less. So, when that study was produced, it was basically
saying the millionaire is actually not trying to live this glitz and glamour
lifestyle. This is actually a little crazy. You know advance here. It says, "If
you really want to reduce your housing bill, join the 67,000 millionaires who
live in a mobile home park." Are you kidding me? Millionaires living in a
mobile home. Dude, that is how committed and dedicated
they are it's actually having money. And here's one of the reasons why they're
doing it. You retire with a million bucks. And if you're used to living on
$50,000 a year, that's 20 years of living. So, it's not a ton of money.
It's certainly not what it used to be in like the 70s and 80s. Technically, I was
born in 79. So, I don't remember the 70s. But I can tell you that a million
dollars today has like become a super, super small
figure. On average, millionaires have a mortgage that is less than one third of
the value of their home. So, that means that on average, like if they have a
$300,000 home, they only owe $100,000 on it. These people are good at paying off
their houses. These people are good at accelerating their mortgages or staying
long enough with them to actually keep them down. Fascinating habits. Last one,
the market value of the home you purchase should be less than 3 times
your households total annual realized income. That means that if I take home
$60,000 a year and I multiply that by 3, 180 grand... $180,000 he said is the
maximum you should be paying for a house. And the reason why he suggests that is
because with that income and if you buy that house, you should have enough money
left over to not only reliably play the mortgage. But accelerate it by paying it
off quicker and faster and having extra money to save. The bottom line from
Stanley's book... And I wanted to target real estate today. Because I feel like if
you don't have a good real estate strategy, you know, if you subscribe and I
remember this channel, I'm always giving you the ideas for how to become a
multimillionaire. Not to be rich, not to live some crazy lifestyle. But so that
you can actually live life free on your terms. Like what is the biggest benefit
that I have right now to being a Multi, multi, multi-millionaire increasing my
net worth millions of dollars every year? Is it the really fantastic house that I
live in? No, it's not. Is it the fact that I travel multiple times every month? This
last year I added several new countries to my bucket list. The fact that I'm
gearing up for the Summer Olympics in Japan and I'm paying 2, 3,
4 or 5 thousand dollars a ticket. We're doing several events and I'm
taking my whole family. Listen, this lifestyle, the cars, the fancy stuff, the
nice restaurants, the Wagyu beef. While those things are all really, really nice;
I think what really matters is what actually brings you joy and happiness.
And I'll tell you what brings me my joy. Its freedom. Like, just the fact that
today, I can make videos if I want. Or from when I shut this whole thing down
and literally go live as a monk on a mountain... Married monk? I could go and do
that, right? So, it's all about choices. That's all money is.
It's about choices. And it's weird, we have so many posers today on social
media. These influencers that are all about "Look at my lifestyle, look at my
nice car. And look at my nice stuff." And I'm like, "Yeah, I get that. But what is
really driving fulfillment and happiness is not what you own." It's the choices
that you can make. And money is to support choices. And if you don't have
the money to support the choices you want, then you're not really living free.
You know, this whole idea of should you own a home, owning a home produces more
freedom. And what I mean by more freedom, owning a home is probably one of the
best assets that you'll actually ever own. It increases in value. If you own
multiple homes, you can actually build a cash flow. And it certainly could be an
incredible tool for financial freedom. But let's just
transition for a moment. Because somebody you're like, "Okay, Kris. You convinced me.
I'm going to buy a house." Now, I'm going to reveal probably what your greatest
regret is going to be if you just buy one. Do you know what this is? You
remember when I was quoting the Census Bureau since 1963 to the day the fact that
real estate is increasing between 4 and 5 percent every single year on average? I
believe that when you get to your retirement age and you look at how much
money you have, there's like a 90 something percent chance that your
biggest asset will not be your stock portfolio. Will not be your 401K,
it'll be your house. Meaning you'll have accumulated more net worth by equity in
your home than anything else. And in that moment, you might find yourself saying
this: "Dude, if I could go back in time and just bought the house on the left and
the right and owned all 3 of them, then instead of just having a quarter
million dollars of assets, I would have 3-quarter million dollars of assets.
Most people wish they could go back to that house that they made all that money
on overtime." They wish they could go back and own more of them. Like 5, like 10.
And then you could actually be a multi-millionaire. I figured that out
when I was 23 years old. And I hate the idea of regret. It's the thing I fear the
most. I once had a professor tell me, "I don't have to stick my head in a garbage
can to find out if it stinks. Like I can know that right then." And so I said,
"You know, when I'm 23 and I had this information..." You know, I decided? I don't
want to own one home. I want to own 25. And by 26 years old, I owned 25 homes. And
guess what? They created a six-figure residual
income. I documented all of it in this book.
Straight Path To Real Estate Wealth. By the way, you can have a free copy of this
showing you exactly in a short period of time hi became financially free with the
principles that I'm sharing with you right now. You just got to pay the
shipping on this and then I give you the book for free. It's a gift. So, when you
click the link below, you can get that. And so, if you really want to get serious
about financial freedom, I would say don't just buy a home to live in. Go from
the consumer to the investor mindset. And the investor is thinking, "You know what?"
If I can control one asset producing 5% a year and growth, then why not 10? And
you should pick a number that's comfortable with you. But don't get to
the end of the road and regret. You're watching this video which means you now
possess knowledge that you didn't have before. Act on it, execute it. And if you
want to know the best action you can take right now, if you liked today's
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bell. Every day I've got new videos coming out that are designed to give you
this information. I wish you all the financial blessings and prosperity in
the world so that you can live a free life your dreams your way.