Making Your Home Your Gold Mine
Best-Selling Author: How To Become An Automatic Millionaire Homeowner
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Play CBS Video Video Million Dollar Home David Bach, author of "The Automatic Millionaire Homeowner: A Powerful Plan to Finish Rich in Real Estate," concludes his series on becoming a millionaire on "The Early Show."
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Video Getting Rich Off Real Estate David Bach explains on "The Early Show" why it's important for homeowners to pay their mortgages bi-weekly, instead of monthly. These tips are in his book, "The Automatic Millionaire Homeowner."
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Video Bach's 'Millionaire Homeowner' David Bach, author of "The Automatic Millionaire Homeowner: A Powerful Plan to Finish Rich in Real Estate," explains why real estate is the surest route to becoming a millionaire.
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Author David Bach, "The Automatic Millionaire Homeowner" (CBS/The Early Show)
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In part one of the series, Bach offered advice to renters on how and why to become homeowners. The second part focused on how to pay off a mortgage more quickly and increase equity in your home.
In part three, Bach lays out the game plan (video) for turning your home into a cash cow by becoming a landlord.
"As long as you are alive, you have to live somewhere. The secret is to own where you live first and then own a couple other homes that people rent from you. If one home is good, two is better, three is great," he told co-anchor Rene Syler.
Bach says people need to get into the automatic millionaire mindset by breaking away from traditional patterns. "Here's what most people do. They buy a home. As their family gets larger, as they make more money, they go from one home to a more expensive home," he said. "What I suggest people do is this. Buy a home and start paying it down early. Then look and see if your home will rent and if the rent will cover your mortgage payments. If the answer is yes, pull some equity out of your first home, rent the home you're living in now, buy another home."
Bach points out that although becoming a landlord makes obvious financial sense, it can be difficult to handle tenants, and he suggests a few steps for making the job easier, such as hiring a property management company. "For about 5 percent of what your rent is, you can get somebody else to deal with all the headaches."
He also recommends setting up an automatic system for collecting rent. "When you have a tenant, you can insist in the contract that they deposit their checks automatically every month into your paycheck. So you can actually pull out of their checking account your rent and it goes right into your account," he told Syler. "That's why we call it the automatic millionaire homeowner mindset."
In fact, Bach says one out of every four homes purchased in 2004 were for investment properties. And for those who want to join this trend, Bach lays out the steps.
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