The Automatic Millionaire Homeowner
A Powerful Plan To Finish Rich In Real Estate
By David Bach
The book was given to me so I read it more out of obligation. I started off skeptical because the back cover shows six books that look like repeats. I despise authors that claim to share the simple secrets to success and then decide to add to the secrets or explain them in different ways. Sure enough, he has a dozen books that all seem to share the secret of "automatically" gaining wealth:
1. The Automatic Millionaire
2. The Automatic Millionaire Workbook
3. The Automatic Millionaire Homeowner
4. The Automatic Millionaire Expanded and Updated
5. Smart Women Finish Rich
6. Smart Couples Finish Rich
7. Start Late, Finish Rich
8. Start Over, Finish Rich
Frankly, I'm surprised he didn't write a book for "Smart Men Finish Rich" or "Smart Lesbians Finish Rich" or "The Automatic Millionaire Millennial". UGH!
I won't go into detail but the basic idea is that you save some money and buy a home. Then you save up more money and buy another home while turning the first home into a rental. Rinse and repeat for the next 20 - 40 years and BAM! You're "automatically" a millionaire.
What he really means is you will have a net worth of a millionaire. The bad news is: you can't live off your net worth! What people really want is net income which is money coming into your bank account that can be spent on living expenses.
In my area, the average single-family home is worth $250,000. If I followed his plan and bought one home every five years, it would take me 20 years to own four homes. Let's assume I used all the income to pay off the mortgages. I would be 67 years old and own four homes with no mortgages. I would live in one home with no mortgage payment while the other three homes rent for $1,400 each. That's a monthly income of $4,200 or $50,400 a year. That's above the median income for my area so I can live like a millionaire, right? WRONG!
Smart investors know there are vacancies, repairs, insurance, taxes, etc. If the homes are in great shape I can plan on spending 20% on expenses which brings my annual income down to $40,320. A more likely number would be 30% - 50% depending on the condition of the homes, the economy, and other factors. Is this anyone's idea of wealth?
Could his plan work? It could if you are very patient and don't mind moving on a regular basis. Buying a house every five years would take you 50 years to purchase ten houses and pay off the mortgages. If you were wise, you could do it faster but it could still easily take you 30 years or more. Hardy automatic and certainly not easy.
My advice? Take your first step towards wealth by spending $10 on a different book.
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