The Best Real Estate Advice From The Millionaire Next Door

The Best Real Estate Advice From The Millionaire Next Door


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 video, do me a favor. Smash that like
button. Give it a thumbs up. It certainly tells YouTube to share it. And in
addition to that, subscribe and ring the 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.

16 thoughts on “The Best Real Estate Advice From The Millionaire Next Door

  1. Awesome video yet again. My question is, what if I continually rent but work on a subject to and sandwich lease option business?

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