don't buy house

Buying A House Isn’t Exactly A Great Investment

Dear Reader,

This may come as a surprise…

Especially if your greatest goal is to live out the American Dream we’ve all learned about since childhood.

I’m a big fan of the American Dream — the self-made man, pulling yourself up by your bootstraps, capitalizing on capitalism. I’m all for it.

But I don’t believe that “buying your own home” is necessary to fulfill that lifeplan. In fact, I think it’s foolish.

The ability to own your own home has been portrayed citizens of the world as a peak accomplishment. It’s a stepping stone to true success, in most people’s minds.

If you know me fairly well, you’re probably thinking, “Brian, you were a corporate banker… You’ve got all this money… You have London Real… And you probably have a mansion, to the likes of Dan Pena’s Scotland castle.”

For me — I think buying a house is one of the dumbest things I could do.

I’m not alone in thinking this way. Grant Cardone, Tim Ferris, and Robert Kiyosaki — share this idea. Robert’s most famous mantra is perhaps, “Your house is not an asset.” I agree: your house is a liability. And, an unnecessary one.

Getting past this idea a lot of people have that they must buy a single-family home can be pretty challenging. Especially in America, it’s almost drilled into people’s heads from birth that you’ve got to buy a house.

We’re Programmed to Buy Houses

First of all, money is everything in America.

  • You must earn money.
  • You must buy a house.
  • You must get stuff.

After 40 years of this type of programming, it took me at least 5 years to realize — no! It’s not all about those things.

I had the money. I had the house. And I was disconnected and depressed. Eventually, I came to hate the space and had no desire to be in it.

It wasn’t until I started creating money to make an impact in the world, to get connected to the world, that the money started to matter in a deeper way than just surface materialism.

So, let’s say I had $2 million to go buy a house. Any house I liked, anywhere.

It could just sit there, “invested” in the home I’m living in, wearing down, paying expenses to maintain. The numbers tell me that over time, my house would make about 4% return.

Around the globe, did you know that the average return on investment for single family homes is 3%? That’s much less even than the general stock market. Adding in inflation, that rate of return for home ownership drops to about 2%.

So, why would I buy a fancy house, put a ton of my capital into it, only to receive a minimal return?

… Especially when there are much better options for that investment capital.

Downsides to Buying + Upsides to Renting

Here are a few other disadvantages to buying a house as your personal residence:

It makes it harder to manage cash flow and consistently invest. Homes have unpredictable expenses, from leaky pipes to roof repairs. If you’re renting you’re not responsible for fixing the water heater, the owner is.

Even if you have a fixed mortgage, your property taxes, mortgage insurance, or home insurance can increase without notice. When is the last time you heard of property tax going down? It’s doesn’t happen.

Now, if you’re renting, at least for the term of your lease, your rent won’t change. And you can find bargains and make deals with landlords, whereas you can’t have a face-to-face with the state government regarding your property tax.

If you’re renting, you’re also less likely to fill up space with stuff you may not really need.

Think this through… If you’ve a cabinet full of china you use once a year, or once every five years, do you really need that stuff? Better to give it to a relative who really wants it, or sell it, or put it in storage.

Buying a house also ties you down to one location.

In my life, I’ve moved from San Diego to Boston to Chicago to London to New York to Los Angeles to New York again — and back to London. I’ve always been moving!

When you move you get new perspectives. When you’re tied down with a house, it restricts you from experiencing new places, taking big trips, or packing up and living somewhere entirely new for an extended period of time. And isn’t retirement exactly when you should have the freedom to go where you please?

Home ownership restricts you from getting contact with new people, places and things.

Above all, it’s a poor use of your money — it locks up your money for the next 30 years!

“Money Pits”

So if I’ve bought a house: I can’t move, I’m tied down, and if I add in costs like maintenance and renovations, this home starts looking more and more like a “money pit.”

Sometimes movies have a basis in reality. If you saw the 1980s movie “The Money Pit,” you might be interested to know that the original Long Island estate — which still needed a lot of work, but was nowhere near as big a disaster as the movie portrayed but — is on sale for $5.9 million. This is after the owners spent years and an undisclosed sum restoring it. They previously offered it for sale in 2014 for a cool $12.5 million — but no takers.

According to the couple that owned it, it was a labor of love.

If buying houses and fixing them up is what you want to do, great: just don’t get into it because you think “it’s what everyone’s doing” or because you’ve been programmed to think “I’ve got to buy a house.”

What Should You Do With the Money You’d Use to Buy a House?

I think you should take all of that money that you would put into a house —

And I think you should do one thing with it.

You should invest it in yourself.

Instead of putting your money into a house where you won’t get it back for 30 years — if at all — you can invest it in things that are really going to have a transformative effect on your life.

When I talk to a lot of high level entrepreneurs, they say the same thing.

When I think about the money I’m going to invest in London Real, it’s going to give me returns more than a thousand times over the next ten years.

We are going to create businesses, podcasts, movies —

It’s going to go 1000x!

There’s no way that buying any house can return a thousand times on the investment.

Buying a personal residence, and thinking you’re investing in a house… it’s really not a good idea. It’s a bad one.

It’s small thinking.

It’s based on a lot of programming that we’ve been fed over the years.

Best,

Brian Rose

Brian Rose
Editor, Brian Rose Uncensored

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Brian Rose

Brian Rose is an MIT graduate, with a degree in engineering. Upon finishing school, he immediately began working on Wall Street. An advanced technical trader, Brian was trading a book of $100 million at the age of 22. He spent years on Wall Street, working in New York, Chicago and London. He made millions, but...

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