One of the biggest shams that’s been pulled over the public is the American Dream of owning a home. Home ownership has been lauded as the ultimate symbol of financial freedom. It’s been brainwashed into the American psyche that buying your own home should be your primary goal, to be undertaken soon after marriage. Dwelling in your own home symbolizes freedom of your domain; the liberty to do what you want where you want on your own property. In reality, the idea of the American Dream is a fabrication of the banking system for the sole intent of making money selling mortgage products.

 

Why the American Dream is a Nightmare For Many

 

As we so candidly witnessed a decade ago, the American Dream turned into a nightmare for hundreds of thousands of homeowners. Families were turned out of their homes, had their credit ruined and their personal lives turned upside down. The subprime mortgage crisis was more than a collection of bad judgments; it was a window into the indifferent machinations that drive the mortgage industry. And those same machinations are still turning the wheels today.

 

For a large majority, buying a home at any cost is still the primary goal. Single professionals, young families and even older folks scrimp and save every penny for the privilege of handing it over as a down payment for a primary residence. They go into debt for hundreds of thousands of dollars—often for much more than they can afford—so they can say they’re living the American Dream. And lending institutions are more than happy to encourage and facilitate this belief. After all, mortgages keep the banking industry wheels turning.

 

Your Home is Not an Asset

 

The smartest financial advisors will tell you – your home is not an asset. Real estate is an asset, yes. But not your primary residence. Robert Kiyosaki of Rich Dad, Poor Dad said it, “Repeat after me: Your house is not an asset.” Why isn’t your home an asset? Because it’s a liability. It costs you money to own; it doesn’t pay you money. Think about all the money and work that goes into home ownership; the sweat equity, the repairs, the maintenance. It all detracts from your bottom line.

 

Rental Properties Are Assets

 

Now, some kinds of real estate are an asset. When you can make real estate work for you, it becomes an asset. Rental properties are an asset because they pay you money through rent. If you look at your balance sheet, you’ll be ahead when you own a cash flowing turnkey rental property.

 

Your Home as a Benefit

 

By now, you may be thinking, “but owning a home offers other benefits besides money. Home ownership equals stability and security, right?” Again, that’s part of the sham. That stability and security is only so good as your last on-time mortgage payment. Miss a few too many mortgage payments and the bank will foreclose on you just like they did during the subprime mortgage crisis. When that happens, you lose your home, your dignity, your peace of mind and worse. A foreclosure is ruinous for your credit. Good luck trying to get a loan for anything as long as that foreclosure is on your record. It’s basically a death knell for your future financial situation. Does this scenario sound like stability and security to you?

 

The Difference Between Borrowing For Homeownership Vs. Borrowing for Investment

 

When people borrow for a primary residence, they tend to borrow as much as they can get approved for so they can get into as nice a home as possible. After all, this is the home where their kids will grow up. And, nice homes today in good neighborhoods with good schools usually cost in the hundreds of thousands of dollars. Better homes equal higher prices. So right away, people are borrowing as much as they can qualify for, which depletes their cash savings, maxes out their debt tolerance and condemns them to 15, 20 or 30 years of mortgage payments—for a liability. For many people, they’ll never be able to save money after that to make a real estate investment because they have little to no money left over after paying the hefty mortgage.

 

On the flip side, when people borrow for a turnkey rental property, the price of the property itself is much more reasonable – hopefully less than one hundred thousand. The payments are so reasonable that even with all the costs associated with the rental property – the property manager, repairs, maintenance, insurance – the property still cash flows. It’s an asset that pays them money every month. Doesn’t that sound more like stability and security – to own an asset that brings income every month?

 

Now, we’re not suggesting that you never buy yourself your own home to live in. What we’re saying is that it’s smart to set yourself up for real financial freedom first – before you buy a home to live in. Take that first lump sum that you’ve been saving for a down payment and buy yourself a real asset – a turnkey rental. Once you have one or two rental properties in your portfolio, you’ll be in a better position financially to buy a primary residence some day; one that won’t max out your finances and destabilize your future.

 

The true American Dream shouldn’t be about owning a home. It should be about owning your finances; creating financial freedom that will last for generations. Take a look at some of our affordable, cash flowing turnkey rentals right now. If you have any questions or would like to make a purchase, please contact MartelTurnkey.