Product Description

David Bach’s Simple System for Building Wealth Through Homeownership Will Help You Finish Rich in Any Market—Automatically

Updated with a new chapter of success stories

Owning a home has always been the American Dream, and in The Automatic Millionaire Homeowner, David Bach shows that buying a home and investment properties is not only possible, it is still the surest way to reach your seven-figure dreams on an ordinary income. Whether you are a renter or already own a home, Bach’s book offers a lifelong strategy for real estate based on timeless wisdom that is tried and true—in any market. He includes everything you need to know, with step-by-step instructions, including phone numbers and web sites, so you can get started right away. As long as you’re alive, you have to live somewhere. Why not let where you live make you financially secure and ultimately rich? David Bach will show you how.

Product Details

• Amazon Sales Rank: #48924 in Books
• Published on: 2008-03-04
• Released on: 2008-03-04
• Original language: English
• Number of items: 1
• Binding: Paperback
• 288 pages

Features

• ISBN13: 9780767921213
• Condition: NEW
• Notes: Brand New from Publisher. No Remainder Mark.
• Click here to view our Condition Guide and Shipping Prices

Review
#1 Wall Street Journal and USA Today bestseller

Over 1 Million Copies in Print!


Praise for The Automatic Millionaire Homeowner
“[Bach’s] cheery, can-do message…cuts through the intimidating challenge of buying a house for the first-timer… for a newcomer, it’s fundamental reading.” — USA Today

“A great book that first-time homeowners and anyone toying with the notion of investing in real estate will find immensely practical… Bach offers universally good advice on how to begin saving and building wealth through homeownership… wildly motivational. — Publishers Weekly (starred review)


“If you read only one real estate book this year, it should be The Automatic Millionaire Homeowner...This is one of the few real estate books that cannot be recommended too highly for both beginners and experienced homeowners.” — Robert J. Bruss, The Miami Herald


 

About the Author

David Bach is the author of seven consecutive national bestsellers, including the #1 New York Times bestsellers Start Late, Finish Rich and The Automatic Millionaire, as well as Smart Women Finish Rich, Smart Couples Finish Rich, The Finish Rich Workbook and The Automatic Millionaire Workbook. They have been translated into fifteen languages and have five million copies in print worldwide. David Bach has appeared over a half dozen times on The Oprah Winfrey Show to share his strategies for living and finishing rich, and he is a featured columnist of Yahoo! Finance. His FinishRich® seminars have been taught in more than 2,000 cities throughout North America by thousands of financial advisors and have reached more than half a million people. To read excerpts of any of David Bach’s books, please visit his web site at www.finishrich.com.

Excerpt. © Reprinted by permission. All rights reserved.

CONTENTS

Introduction 1

Chapter One
Meeting the Automatic Millionaire Homeowner 19

Chapter Two
Why Smart Homeowners Finish Rich 37

Chapter Three
The Automatic Down Payment Solution 59

Chapter Four
How to Find a Mortgage Advisor You Can Trust 85

Chapter Five
The Automatic Millionaire Homeowner Right-Fit Mortgage Plan 101

Chapter Six
How to Get the Best Deal on Your Mortgage 129

Chapter Seven
Find Yourself a Home the Smart Way 147

Chapter Eight
How to Hire a Great Real Estate Coach 177

Chapter Nine
Make Your Mortgage Automatic and Save $106,000 on Your Home 191

Chapter Ten
From Ordinary Homeowner to Automatic Millionaire Homeowner 201

Chapter Eleven
How to “Bubble-Proof” Your Real Estate Plan–and Survive a Downturn 221

Chapter Twelve
Make a Difference–Help Someone Else Become a Homeowner 233

A Final Word: Your Journey Home Begins Today! 243

Acknowledgements 245

Index 248


CHAPTER ONE

MEETING THE AUTOMATIC MILLIONAIRE HOMEOWNER

I’ll never forget when I met my first Automatic Millionaire Homeowner. I was in my late twenties and was on one of my first book tours, giving a talk at a bookstore in San Jose, California.

After a long down period, the real estate market in California was starting to take off, and many of the people who had come to see me had questions about whether now was a good time to buy property. In the middle of discussing the benefits of homeownership, I called on a young woman named Karen, who seemed particularly excited. “David,” she asked, “what do you think about the idea of setting up an LLC for real estate? I’m trying to decide if I should put my property investments into an LLC or a Nevada corporation.”

An LLC, by the way, is a Limited Liability Corporation. Don’t worry if you don’t know what this is. Neither did Karen when she asked the question.

I told Karen there was no simple answer to her question. “It depends,” I said. “What type of real estate do you own?”

Karen blushed a little, then said, “Actually, I don’t own any yet, but I just read a book on real estate that said I should put my real estate in an LLC or Nevada corporation, because then my assets would be protected against frivolous lawsuits.” She shrugged helplessly. “It all sounded so complicated. I’m not sure where to start.”

“Well, let me ask you something else,” I replied. “Do you have a lot of assets right now?”

Karen shook her head. “Not really.”

I smiled at her. “You just read a book on real estate,” I said.

“Why? Is it owning real estate that matters to you or the financial freedom you’re hoping to get from it?”

“The financial freedom,” Karen said firmly. “I want to get out of debt, stop renting, and finally get ahead. I’m tired of living paycheck to paycheck.”

“That’s great. Congratulations on knowing what you want and making a decision to get there. You’ve already done the hard part–something that most people never do. Now, how about we focus on it one step at a time? Instead of worrying about whether or not you need a complicated LLC structure for your assets, let’s look at how you would go from renting to homeownership. That’s really your first step in building assets.”

Karen nodded enthusiastically. “I know,” she said. “My parents told me that I should focus on buying a home. The book I read said I should look at foreclosures and buy real estate with no money down. But the book didn’t really explain how to do it. It just said rich people do this all the time.”

LEARNING FROM THE REAL WORLD OF REAL PEOPLE

I knew the book Karen was talking about. At the time, it was very popular and I had read it myself. It contained some valuable ideas and information, so I didn’t want to single it out. Instead, I looked around at the audience and asked, “How many of you have seen one of those ‘No Money Down’ real estate infomercials?”

There were more than 100 people in the room and pretty much all of them raised their hands.

“Great,” I said. “Now, how many of you have actually bought a property with no money down?”

Out of the 100 people there, two raised their hands.

“OK, so we know it’s not impossible to buy real estate with no money down. But we also know it’s not very common, nor is it necessarily easy. Now, how many of you own property and have it in an LLC or Nevada corporation?”

Not one hand went up.

“Interesting,” I said. “Here’s another question for you. How many of you own your own homes or condos?”

About half the audience raised their hands.
“For those of you who own a home or condo, keep your hand up if it’s the best investment you ever made.”

Nearly every hand that was already up stayed up.

“OK, keep your hands up and let me put a question to the rest of you who don’t own your own homes. How many of you have had your parents or grandparents tell you that their home was their best investment they ever made?”

Now, nearly EVERY single hand in the room was raised.

“Isn’t that interesting?” I said. “What we just did was conduct a real-life test on real people about what seems to work in the real world. And you know what we’ve learned? We’ve learned that there’s a lot of ‘razzle-dazzle’ out there in real estate. ‘Buy real estate with no money down.’ ‘Protect your assets with an LLC.’ It’s not that you can’t do these things. It’s that they’re not what you should be focusing on.

“What we’ve just seen is that there is one thing that is being done over and over again that works like a charm consistently–and that is buying a home and owning it for a while.”

I turned back to Karen, who smiled and laughed. “Okay, I get it,” she said. “Stop renting and buy a home! That seems to make a lot of sense. Now if you could just help me with the down payment, I’d be all set.”

The audience laughed.

“I’ve got a better idea,” I said, laughing along with them. “How about I teach you how to save up the money you’ll need for a down payment and how to get the financing you’ll need from the bank. The truth is that there are many special loan programs for first-time homebuyers that can help you buy a place faster than you’d think.”

Karen’s smile widened. “Sounds good to me!” she said.

THE MOST IMPORTANT INVESTMENT YOU WILL EVER MAKE IS YOUR HOME

As Karen sat down, I caught sight of an older couple I had spotted earlier in the back of the room. They were sitting there with their arms crossed. When you’re speaking to an audience, crossed arms are usually a bad sign, but these two folks were both nodding and smiling.

After the question-and-answer session ended, I spent twenty minutes or so signing copies of my book. To my surprise, I noticed the older couple patiently waiting for me to finish. When I finally did, they came up to me. “David,” said the man, “do you have a few minutes for us to share a story with you?”

“Absolutely,” I replied. “All my books are based on the stories of real people. I love to listen–and learn.”

“WE’RE MILLIONAIRES BECAUSE OF THE HOMES WE BOUGHT”

Their names were John and Lucy Martin. They looked to be in their early sixties, but young for their ages–fit and athletic–and excited about life.

“I hope you won’t take this wrong,” John began, “but we didn’t actually come to the bookstore to hear you speak. We were just browsing when we heard the commotion in the back and thought we’d check it out. You were really engaging, so we decided to stay and listen.”

“You were right with the advice you gave that young woman Karen,” Lucy piped in. “A house is the best investment you’ll ever make.”

“And renting never makes sense if you can avoid it,” John added.

John and Lucy looked at each other and smiled. “We know from personal experience,” said John. “In fact, we’re millionaires today because of the homes we bought over the years.”

“Really?” I said.

“Now don’t misunderstand,” John continued. “I don’t mean to boast. It’s just that I think it’s really frightening how many of these young kids seem to be making so much money in the stock market so quickly. They don’t realize that all those dot-com profits are just on paper–and that until they sell their stock and invest in something like a home, it’s nothing but pure speculation.” This was the 1990s, and John was wise to be skeptical.

“WHAT MADE US RICH WAS HOMEOWNERSHIP”

Lucy nodded vigorously. “We’ve invested in the stock market ourselves over the years, but we’ve always been well-diversi-fied and in it for the long haul,” she said.
I nodded in agreement.

“But here’s the thing,” Lucy went on, “what made us rich was being homeowners. When we were young, we never thought we’d be able to e...

Customer Reviews

Some Good Advice, and an Indirect Explanation of What Went Wrong.
David Bach is very much a traditional investment adviser. He believes that over the long haul one can make a fair amount of money by saving and holding on to your investments. In this book, he makes a strong case that, by buying homes to live in, buying up, and obtaining rental properties, you can do very well for yourself. Ultimately, you can become a millionaire.

Still, had you followed Bach's advice in 2005, when this book was written, you would likely be deeply in debt now with no chance to even refinance and take advantage of lower rates. That is because the real estate market was in serious straits in 2005 and Bach, despite his reservations about 0 down mortgages (30% of the market the previous year) and interest only loans (a similar percentage) was overly optimistic about real estate. As an investment, it had "never" experienced a year over year decline, he noted, citing national figures. (Nothing like 4 consecutive contrary years to suggest a problem with the initial stat!) Sure, if you are able to hold on through the current economic crisis, then in a decade or so, you will come out ahead, but in the meantime, it would help if your investment advisor could tell the difference between cycles in real estate and a bubble brought on by irresponsible government policies and banks that were more than eager to accommodate them. Indeed, Bach suggests that one of the reasons real estate will continue to go up is because subprime mortgages are so common now (2005). Talk about a serious misreading of the market!

But once you get past the hype, a fair amount of the advice in this book is valuable. Bach does give good suggestions for saving up a down payment, finding a good mortgage and a good real estate agent. The book is strong on negotiating favorable mortgage terms, weaker on negotiating a good closing price on the house you decide to buy. And he also is helpful when it comes to assessing the various purchase options you will face.

But even in this more reasonable part of the book, Bach is somewhat superficial when it comes to explaining how you can profit from homeownership. He correctly notes, for example, that you can deduct the interest you pay from your taxes. But he does not note that to do this you will need to itemize instead of taking a standard deduction. You will almost certainly come out ahead, but it should be noted that in foregoing the standard deduction you are, in effect, not getting to write off your full interest payment. Similarly, his description of real estate profits is a little superficial. Let us suppose, he suggests, that you buy a house for 200,000 with 40,000 down. If it appreciates 10%, to $220,000, you can sell the house for a "50%" profit minus your payments. But realistically, your payments will eat up most of the profit. Real estate historically appreciates at 6% per year. So figure about 20 months to get your 10% appreciation. Now, you have paid 20 months of payments, which at 5.5% comes to $1,134 a month. You have already spent the full appreciation (and then some) in payments, with only minimal progress on your principal. And you still owe your agent her commission.

So the question comes up, should you buy a house at all? The best answer is "maybe." If you are going to do so, now (2009) is probably a good time, if for no other reason than you face considerably less downside risk than you did in 2005 and the Obama administration is going to kick in a "free" $8,000 tax credit. Since you can expect other expenses to rise over the next few years, I strongly recommend getting what you can. But remember, rent buys you more than just a place to stay. It buys freedom to move at the drop of a hat which is something home owners definitely do not have, especially in this economy. So in the final analysis, don't expect homeownership to make you an automatic millionaire. But it may provide some security, especially if you lack the discipline to systematically save in other ways.

The bottom line, use this book to help you purchase a first home, IF that is what you want. But take the investment advice that is scattered throughout the book with a certain degree of skepticism. It is not so much "wrong" as it is incomplete, and the years since 2005 have highlighted the weaknesses of these arguments.

It has it's merits, but there are better books
This is a good "breadth" level book for people looking to buy a home and build wealth through real estate - it covers a lot of different topics related to building wealth in real estate, though it doesn't really dive as deeply as needed. In terms of the pros, I think David is clear that flipping or getting rich quick is not viable in the long run. He also recommends safer mortgages. I think, however, the right combination to get you to buy a home is to read 2 books:

1. The Total Money Makeover by Dave Ramsey - this will tell you how to get your life in order so you can maximize your savings and cut debt, based on the income you already make today. It is important to first correct your spending habits before people venture into buying a home, which for many, will be the largest financial purchase they will ever make.

2. Home buying for dummies - once you do get your finances in order, the dummies book, I felt, is a more useful guide to get you to buy a home.

This book has it's merits, but I wouldn't buy it. I would recommend borrowing it from the library and getting through it in about 4-5 hours.

Hope this helps.

The Automatic Millionaire Homeowner
This is a fantastic book whether you own or are purchasing a home. Mr. Bach has some great tips to help you out along the way. I would highly recommend this book to anyone and everyone who wants to "finish rich".