According to World Bank reports, Kenya has house deficit of 200,000 units a year and an overall deficit of 2 million units due to the growing population and also Rural-Urban Migration. It further shows that 61% of urban households live in slums.
However according to American self made millionaire David Bach millennial’s are making a huge mistake by not prioritizing home ownership in their investments adding that buying a home is an escalator to wealth.
Bach who was speaking to CNBC warned young adults that if they don’t buy a home, their chances of actually having any wealth in this generation are little to none. “The average homeowner to this day is 38 times wealthier than a renter”, he reiterated.
The millionaire says the smartest investment he’s ever made is buying 3 homes, “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. ” he tells CNBC.
The award winning author adds that you need to invest in a home because at the of the day you have to live somewhere for the rest of your live.
He writes in his The Automatic Millionaire book that 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.
Never say to yourself “I can not afford this” instead do the math to identify the costs and the small options, this will make your goals clear and more realistic than you even thought.
Bach suggests that your monthly rent should not be over 30% of your take home salary and also do save for your first down payment when buying a home. Have at-least 10% of the total value.
Bach finishes with a punchline “The fact is, you aren’t really in the game of building wealth until you own some real estate”