It is hard to break a habit. Coffee drinkers can’t kick caffeine, and junk food lovers can’t lose weight. (I’m an emergency medicine physician. I know.)
But there is a bigger, far more profound habit that America needs to break: Buying a home believing it is the key to financial fulfillment in this nation.
Not. If you own a home, when is the last time it wrote you a check? Has it ever sent you a birthday gift or a Christmas present? Of course not. And it never will. All most folks expect from buying a single-family home is a windfall at the end of the line. Or they see it as a savings account, from which they take out equity with a bank loan.
There are many better uses for your hard-earned money. And scrimping and saving just to buy a home may deprive you of events, pleasures and investments that are far more necessary for your success.
Get Paid for Buying Real Estate
Is it so bad living in an apartment? Does it hurt your pride? Some landlords may be unresponsive, but anyone who thinks freedom comes in the form of a 30-year mortgage on a family home is in for a surprise.
Think about real estate ownership in a new way. What if you lived in one home, but everyone on your block sent you a nice check each month? Why would they do that? Because they are renting those homes, and you own them. You are being paid for taking an investment risk. You are expanding your wealth.
But you can barely afford the home you live in, how are you supposed to buy every house on the block?
Excellent point. You can’t do that, and you don’t need to do that. But you could buy shares in a multifamily complex of 20 or more units and each month make money. And the money doesn’t stop unless you decide to sell those shares. The monthly checks are called passive income. They arrive even though you may be busy raising children, or building a medical, law or consultation practice.
Breaking the “dumb” Single-Family Home Habit
Keep drinking your coffee and snacking on those Cheetos and Ding-Dongs (though, as a physician, I do not recommend it) and choose another bad habit to change.
FIRST NEW HABIT: “I invest in me.” If you’re stashing away money to buy a home, rethink that impulse. A home is a major liability. It will drain your savings and make you a slave to a mortgage.
Instead, use your savings to invest in multifamily real estate (or another passive income vehicle, such as a storage business or light industrial commercial real estate) that pays you each month. That first investment will not make you rich, or allow you to quit your day job. Rather, it will re-set your mindfulness about money. You’ll like that monthly check because it keeps coming—even while you sleep.
But now the goal is to maintain that new habit. Beat back thoughts of “it would be so great to own a home.” Then take a little more money and find another investment that pays you something each month.
SECOND NEW HABIT: “My mind grows my income.” We all want more money. Yet too often we complain about lack and dream of being rich. Let’s change that.
Most everyone knows the title “Think and Grow Rich” by Napoleon Hill. It’s a classic. In a nutshell, here is the theme: men and women make money in their minds first. In short, they change their thinking. If saving coupons and decreasing your food bill helps free up some cash, do it. But bigger gains are possible if you will hold in mind want you really want.
That takes discipline. Most of us let our minds run wild, and therefore they repeat hurtful mantras, such as “A third Frappuccino won’t hurt.” “Cherry pie is good for me.” “I want my own house, no matter what.”
THIRD NEW HABIT: “Passive income transforms lives.” You are a doctor or professional in another field. You make a high annual income. But you are not rich. If you stopped going to the office every day, how many months could you live on your savings?
Passive income makes you truly wealthy and, if it keeps growing, one day you’ll decide to take a long vacation with no worries about paying bills.
It won’t happen, though, unless you assess your cash flow and assets. Do you own anything that pays on a reliable basis? Or are your investments—a new car, that fishing boat, or pool table in the family room—losing value every day?
Forget Washington, Fix Yourself
Let’s hope our representatives in this nation’s capital can fix the larger problems we face as a nation. But let’s not hold our breath and wait. There is much we can do as individuals, right now, that can vastly improve our personal and financial lives.
The existing laws in real estate favor doctors, lawyers, white collar professionals and blue collar trades people. The laws all but scream, “Invest in yourself, and we’ll help you grow rich.”
Freedom in the Black is all about helping you make better use of your well-earned income. Grab my free guidebook for some basic information about making your cash flow grow. Then let’s have a talk. You don’t need millions to get involved in multifamily or commercial real estate.
Here is what you do need: A new habit. The habit that allows you to grow rich, even if you don’t home your own home.