Given the vicissitudes of the stock market (the boom and bust of the technology stocks, for example), conventional financial wisdom holds that a person’s home is his or her best investment. Barring exceptions, the real estate market does not typically go down, so that an investment once made provides for a steady increase in value. David Bach, the financial guru with a fanatical following, addressed the benefits of real estate investment in his The Automatic Millionaire. In this book, Bach takes the reader step-by-step through the process of identifying and buying a home.
Bach lays the case for home investment early on by using the example of an “aw, shucks” couple, John and Lucy Martin, who parlayed John’s salaried job into a million dollar real estate portfolio by using the singularly unglamorous method of steady savings and trading up from moderately priced homes to more expensive ones. The skeptical person, though, is likely to be on the fence because of the down payment required to own a home and the hundreds of tiny but important decisions to make in the home-buying process. This is where Bach’s reader-friendly writing style holds value. Bach seems to anticipate every possible question that a first-time buyer might have and provides straightforward answers with reference to websites for additional information.
By taking the mystique out of the home-buying process, Bach provides tremendous help for the novice investor. To his credit, he does not talk down to the reader. Rather, he understands the dilemmas faced by the beginner (“should I pay the private mortgage insurance [PMI] or put in additional equity to avoid it” and “what parts of the closing costs can be negotiated and what parts cannot”) and answers them with candor. While the experienced homeowner may find nothing new in the book, this is a book that every homeowner wannabe should own.