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Self-made millionaire: "Not buying a home is the single biggest millennial mistake"

Lee Ritchie

Meet Lee Ritchie, your trusted ally in the vibrant Columbus Metro Area real estate market...

Meet Lee Ritchie, your trusted ally in the vibrant Columbus Metro Area real estate market...

Jan 24 4 minutes read

Millennials represent the largest share of home buyers, according to an analysis by the National Association of Realtors. Nearly one-third of all home buyers, and 68 percent of first-time buyers, were 34 or younger in 2015. (Tweet This) And those numbers are expected to grow.

While opponents of home ownership claim it's an "American nightmare"  self-made millionaire David Bach is doubling down on his faith in real estate. He thinks that not prioritizing home ownership is "the single biggest mistake millennials are making."

Buying a home is "an escalator to wealth," he tells CNBC.

Young adults in particular aren't hopping on this escalator, and it's a costly mistake, Bach warns: "If millennials don't buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter."

The self-made millionaire is quick to say that the smartest investments he's ever made have been the three homes he's purchased. He tells CNBC: "I first bought a home in San Francisco. It skyrocketed in price. I moved to New York and bought another home. It skyrocketed in price. My net worth has gone up millions and millions of dollars, simply because I've lived."

"As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!"

Bach argues that you have to live somewhere for the rest of your life, so you might as well invest in a home that you could own permanently.

If you want to get in the game of home ownership, start by crunching the numbers, Bach says: "Actually do the math. Look and see what things costs, starting with the smallest optionsThis way, you're really clear on your goals and you won't just say to yourself, 'I'll never afford this.'"

Check out this interactive Rent vs. Buy Calculator

A good rule of thumb is to make sure your total monthly housing payment doesn't consume more than 30 % of your take-home pay. He also recommends having a down payment of at least 10 %, though more is always better. Finally, recognize that "oftentimes, buying your first home means you're not buying your dream home," Bach tells CNBC. "You're just getting into the market."

A lucrative market, that is. "The fact is, you aren't really in the game of building wealth until you own some real estate," Bach writes.

And what about buying in Columbus, Ohio?  Money magazine says that Columbus is one of the TOP 5 cities in the nation for Millennials to live!

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