If you follow personal finance at all you have no doubt heard of David Bach. David is the author of the the “Finish Rich” books on personal finance and his latest is The Automatic Millionaire Homeowner.
One of Bach’s main strategies for becoming a millionaire homeowner is to keep your first home and rent it out when you buy your second. To be honest, that’s not something I see many people in my circles doing but it is a strategy that my “millionaire next door” type in-laws used so I’m intrigued by the idea.
He also outlines strategies for using the equity in your house to:
- buy your next property.
- downsize to the right size house.
- cash out and invest elsewhere.
- buy up to the next neighborhood.
One comment I was glad to see him make:
“My recommendation is that you only use the your equity to buy more assets, not to pay for daily living expenses, vacations, or credit card debt.”
While some will not be comfortable using thier home equity for any of the things he suggests, I think the trend of using home equity to pay off credit cards or buy depreciating assests has been a bad one.