Making Your Home Your Gold Mine

Best-Selling Author: How To Become An Automatic Millionaire Homeowner

(CBS) 

Qualify for a second mortgage

"Go see if you have equity in your home you can use to buy another piece of property. That means going into the bank and saying, 'Can I get a second mortgage or refinance and do what's called a cash-out?' Pull a little equity out of your first piece of property. Use it as a down payment on a second piece of property. The equity you have in your home is your equity," not the bank's.

"The key is to use your equity, though, to build wealth. What many Americans are doing is living on their credit cards; they're pulling equity out to pay off their credit cards," says Bach. "You want to use your equity to build wealth. The rich get richer by leveraging the wealth they already have."

Find property with positive cash flow

"The name of the game in real estate is cash flow, cash flow, cash flow. What I mean by that is, don't buy a piece of property hoping you're going to buy it and flip it. That's how people get busted in these booms," says Bach. "When the market slows down, you'll get crushed. The key to real estate is cash flow. That means that you can rent your property and the renter will cover your mortgage, your insurance, your taxes and your maintenance."

Bach points out that it's critical to know before you buy the property, "Can you get rental income in that area that will cover all those things. If the answer is no, you should not be buying," he says.

Create a rental emergency fund

It's "critical that you have enough money in an emergency account set aside to cover yourself in case the renter doesn't come right along," according to Bach.

Check out David Bach's Web site for information about the author and to see whether he will be speaking in a city near you.

To read an excerpt from "The Automatic Millionaire Homeowner," click here.