A millennial, borderline Generation Z colleague has challenged me to write a 600 word blog on Why Home Ownership for the younger generation. Given these times of pandemic, protests and pandemonium I will broaden this post to speak to first time home buyers.
The message is simple, you’re investing your rent in the purchase of a home or you’re investing in rent without a home of your own. Be mindful that every financial investment comes with risks and perhaps, major losses, so please receive this blog as general information and an invitation to seek counsel and advice with the proper professional for your specific or individual need.
As a big believer in property ownership, I am often asked “Is now the right time to buy a home and why? I will share 3 thoughts, one will sound familiar and the others, a bit unorthodox, but more relevant than ever given the current state of world affairs.
Let’s look at Timolin’s thoughts on why investing in home ownership is a better option and now is always the right time through the following lenses: wealth building, economic/ community building and legacy building. This blog will reference an article posed by The Guardian Newspaper years ago, but the ‘emotional me’ was afraid to share.
I believe home ownership is the most effective tool we working people worldwide can use to build wealth while fulfilling our basic need for shelter; we all need a place to live. While home ownership also comes with some risks, it can pay off big when one invests and practices what I call the “buy and hold” strategy. The challenge to first time home buyers, is to remember personal wealth is built over time and coupled, shall I say tripled with proper management, proper maintenance and proper care; all essential components to wealth building for generations.
In my book, Mind Over Money, How to Live like a Millionaire on any Budget I walk you through my first home buying process where I bought a property way below market value, for less than $40,000 in a great part of town, 10 minutes’ drive to Beverly Hills.
I will tell you what this investment alone is worth at another time. Suffice to say, I can’t think of any investment that yields a better return than real estate. The US Census Bureau states, “The Median net worth of homeowners is 80 times larger than renters.” (HSH Want to Build Wealth? Buy a Home, September 23, 2019)
However (unlike renting), savvy first time home buyers factor in maintenance and repairs, insurance, natural disasters and other unforeseen costs in addition to monthly mortgage payments, mindful that the biggest financial risk associated with home ownership is the risk of loan default. Some of us remember the Year 2008 when the housing market crashed. I can tell you that there can be ‘downs and ups’,’ ups and downs’ with all financial investments, but investments in real estate tend to almost always bounce back and bounce back strong.
Tax benefits, appreciation, home equity and soaring rents make home ownership one of the best (if not the best) investments we working people worldwide can make, hence my reason for the “buy and hold” approach.
Economic- Community Building
Secondly, the article in the Guardian newspaper titled “Median wealth of black Americans ‘will fall to zero by 2053’, warns a new report” supports my push for home ownership in distressed communities. This same article goes on to say “Latino-Americans wealth will hit $0 about 2 decades later.” Given where we are in our 2020 world, things appear to be shaping up accordingly.
Given where I sit and what I see here in the United States, Los Angeles included, home and business owners have never been more relevant and proven more crucial to the building and stabilization of under-resourced communities. I believe, if we are going to shift the current economics and social-politics for the better, it will have to start with local home and business ownership.
Though this problem is far more complex than anything I can say in 600 words, I think home ownership is the best place to start.
Lastly, let’s see how wealth and economic community building impact legacy from Timolin’s two fold perspective: an opportunity to pass on financial wealth and the chance to pass on the values that created financial wealth.
Legacy building speaks of leaving behind not just family wealth, but family values, family significance family memories ; the passing of family times and family ties. Regardless of your politics, you can see how these intrinsic treasures are also passed down from generation to generation in famous political families like the Clintons, the Bushes, the Kennedys, the Obamas and even the Royal Family.
Though we working people worldwide families are not as well-known, we still have an amazing opportunity through home ownership to leave an inheritance for our family, our friends and our community–as legacy is not just what we leave for them, but it is also what we leave in them.
Former President, Barack Obama spoke about presidential leadership in context of a relay race. I find his words fitting and applicable to our “building’ conversation. So today’s closing words come from none other than Mr.President Barack Obama:
“I saw myself as a relay runner. I would take the baton and I would run my leg of the race. And then I’d passed the baton to someone else. By the time you hand it off you’re a little further ahead, you’ve made a little progress…The best thing I can do is help the next generation.”
I hope I have helped someone today see wealth building as a having enough material resources to leave to your future heirs, but also a means of making your community and your world or sphere of influence a better place.
Thank you for joining me ….
I have been asked to teach some real estate invest and strategic money management classes and I will tell you more about that next week….in the meantime I will upload this livestream on to my Youtube channel….Mind Over Money with Timolin.
Financial success is not a gift; it is a habit!