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Book Review: The Automatic Millionaire Homeowner

By
Real Estate Broker/Owner with American West Realty and Management 12599

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.

 

 

Comments (14)

Caroline Gerardo
Licensed in 20 states - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Love your review perhaps we need to start writing a series too

Aug 01, 2017 01:30 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Thanks, Caroline. I probably shouldn't be so hard on some of these books but I hate wasting my time. ;)

Aug 01, 2017 02:26 PM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

Nathan I remember seeing some of this guys books. I never did pick one up because its seemed like the same ole same ole over and over. Guess I was right! Hey but I bet we could write this kind of books and make a ton of money!

Aug 01, 2017 03:59 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Anna, it seems there are two ways to make money with writing: create a successful book and then sell ten different versions of it or create a book but spread the information out over ten different books and call it a series.

If you read older books from 50+ years ago, they actually contained all the information in one book and it wasn't full of fluff. When did "quality" become unnecessary?

Aug 01, 2017 08:42 PM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

Lots of slick deals like that were popular years ago...yicks ..had hoped never to return !

Aug 02, 2017 02:49 AM
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

I'm with you on the one size fits all approach may sell books but doesn't make you the millionaire next door. Every investor I work with should have a plan tailored to not only what makes sense but also what fits their goals.

Aug 02, 2017 06:29 AM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Exactly, Joe. I regularly read blogs that claim there is only one way or they poo-poo methods used by others. There are many ways to success.

Aug 02, 2017 06:52 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

There are many ways to succeed and we have to be geniune and treat people fairly. 

Aug 04, 2017 08:02 PM
Larry Brewer - Benchmark Realty llc
Benchmark Realty LLc - Nashville, TN

Hi Nathan - It's good to have a second opinion. I did what he recommended when I moved last time, and he was right. The property has increased dramatically while the renter has been paying down the mortage.

We only paid 5% down to buy the house so on paper we have made about $140,000 on a $15,000 investment in 11 years. The house was new when we bought it, and we lived in it for 5 years,  so we really haven't spent much on maintenance, and a management company takes care of the billing and finding a good renter. It's never been vacant for more than a week.

Yes you will have to sell the house to get the total benefit, but the same would be said for stocks or mutual funds. I'm tempted to do it again, but my wife really likes our home. If I could find something she likes, I would do it again.

Aug 06, 2017 10:50 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

There are builders in my area that build, live in it a year or two and sell and do it over and over. They have been able to amass some wealth doing it too.

Aug 07, 2017 07:06 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Debbie Reynolds  that's a great technique if you can afford it but most buyers can't. Selling the home every 2-3 years would eat up any appreciation in REALTOR fees, closing costs, etc. And that assumes a growing market. In a stagnant market they could lose money. And there are other unforeseen expenses involved in selling a home and buying a new one.  It works for builders because they build the home for much less than market value.

Aug 07, 2017 08:13 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

Larry Brewer - Benchmark Realty llc it's a great technique for getting started but how many times would you have to do it before you are wealthy? Moving once every two years would require 20 years to gain ten houses. Who's willing to move that many times? Not your wife!

It's not a good strategy because it will take too long. If I were 40 years old, it would take ten moves and nearly 30 years to buy ten houses and pay them off. I would be wealthy, but I would also be 70 years old (or possibly dead).

Investors should educate themselves on multi-family and start investing there as quickly as possible. Net worth won't buy you a cup of coffee so cash-flow is more important. I just bought an 11-plex for the price of two single-family homes and it cash-flows 5x as much! After one year of improvements and rent increases, I'll be cash-flowing almost 8x what I would get if I had inveseted in single-family homes and I did it in one year, not in 6 - 10 years.

 

Aug 07, 2017 08:28 PM
Cheryl Dukes . . . . . Intown Atlanta
Guaranteed Offer for your Home - eXp realty - Atlanta, GA

Thanks for the book synopsis. I'll be sure not to buy it. I'm surprised he doesn't also print all 8 titles Mandarin. Now that would be a big market for him.

Aug 26, 2017 12:49 PM
Nathan Gesner
American West Realty and Management - Cody, WY
Broker / Property Manager

LOL! Cheryl Dukes . . . . . Intown Atlanta  I hadn't thought of foreign language versions. Money, money, money!

Aug 28, 2017 01:46 PM