DAVID LALLY: Welcome to “The Brian Buffini Show,” where we explore the mindsets, motivation and methodologies of success. Here’s your host, Brian Buffini.
BRIAN BUFFINI: Well, the top of the morning to you, excited to be with you here today. We’re going to cover a topic that is in my sweet spot and something I’ve been wanting to talk about for quite some time. Today I’m going to be covering the magic of owning a home. For basically my entire adult life, since I was 19-years-of-age, real estate has been the making of me.
It was the making of me in my career as a realtor and a member of the National Association of REALTORS®. It’s been the making of me as a person who’s able to provide for his own family and our own home. It’s been the making me in regards to the primary source of my investment life has been in real estate. As the baseball player used to say, years ago, “Real estate been very, very good to me.”
I’m very excited to share just some principles here, some that you already know and some that you might need reminded of, they call it the “American Dream.” I’ve been all over the world and it’s a dream everywhere you go. Food, shelter and clothing are the three predominant needs of humanity and owning a home answers one of those. There’s just nothing like owning your own home.
Every time you close that door when you go into your home, that secure sound is how you feel. It’s your home. Sir Edward Coke in 1604, stated that, “The house of everyone is to him as his castle and fortress.” That became, “Every man is his castle,” is where that came from. Marvin Ashton said, “Home should be an anchor, a port in a storm, a refuge. A happy place in which to dwell. A place where we are all loved and where we can love.”
With the recent COVID19 quarantine stay at home orders, stay at home, people were asked, in fact, told to stay at home. Our home became our lifeboat, our refuge. In fact, some people figured out that not only is their home their castle, but many folks figured out after spending so much time at home that their home was their sandcastle and it was time to make a change. Many people realized I need to do a little project to upgrade my home, but above all everyone realized the value of the four walls they lived in and how important it was to them.
For me, for example, as an immigrant, I didn’t feel like I belonged in America until I owned a home. I didn’t know that until I actually owned a home. All of a sudden, owning a little piece of my own, a little piece of the rock, if you will, it created in me security or a connection that I didn’t know was missing. It’s a powerful thing.
We’re going to cover a whole bunch of good stuff here today. We’re going to cover the dream itself. We’re going to cover how it increases personal wealth. We’re going to cover how owning a home and the magic of it enhances personal well-being. We’re going to talk about how it promotes stronger families and neighborhoods. We’re going to talk about how it’s good for the overall economy, especially in the area of growth and development.
A lot of folks today, in fact, a lot of people in the podcast world make very strong statements about, “Anyone who owns a home today is kind of a moron. It’s kind of a loser investment.” There’s a lot of people they open their mouth and insert foot. The reason being is they just don’t understand the dynamics behind it. They don’t understand that the primal urge to own a piece of the rock.
They don’t understand the economic benefits and so you get caught up in looking for the latest cool thing to say and I’ve heard this in many different formats. I just want to say to you today, that’s a bunch of crap. The bottom line is, it is absolutely been for the last 150 years and it will be for the next 150 years, the best place to grow personal fortune, the best place as an investment to grow your own personal well-being.
When you invest in stocks, it can make you feel good when you look at this statement, but it doesn’t change how you live. It doesn’t change who you are, but owning a piece of real estate does. The science and the facts are there to bear it out. We’ll be covering all that stuff today.
A lot of people that are promoting today in this millennial world and Gen Z world, “Oh, yes, you’re better off renting.” Well, when you rent, you build your landlord’s wealth, when you own, you build your own wealth. When you rent your monthly payment is likely to increase. When you own, usually, your monthly payment’s locked in. When you rent, you may be limited in what you can customize in your home, you are limited because you’re living in my property.
You can’t do with it what you want. When you own the house, you have the freedom to customize your living space and personalize it. Turn it into that nest that reflects your own personality and style and flavor. Rent, you will likely pay rental fees and a security deposit. When you own, you likely owe down payment and some closing costs, which are moving towards something.
The fact of the matter is, this is a big deal. For millennials, for example, 45% on average of their income is spent on rent. Gen X, it’s 41%. Baby Boomers by the age of 30, it was 36% so that’s grown. The baby boomers at 30, it was 36% of their income. Gen X at 30, 41%. Millennials 45%. What do we know? Wages continue to grow, rents are growing at a faster pace.
Over 100 cities in the US and Canada, at the time of this recording, it is more expensive to rent a first-time buyer home than it is to own a first-time buyer home. And do we want to get into that today and really going to walk you through it. Again, lot of windbags out there, gasbags out there in the marketplace, talking about why you shouldn’t own a home today and they sound like people just without any experience or without wisdom or without owning a lot of a real estate.
I want to walk you through this today because if I’m an advocate for anything, I’m an advocate for this. First and foremost, owning a home. Let’s just walk through the emotional part of it. It’s the dream. It’s the dream. The American Dream is thrown around a lot and owning your own business or being a millionaire or whatever, but the American dream has always been classified as an aspiration to own your own piece of real estate.
The first part about the dream, it’s an aspiration of the heart. Ralph Waldo Emerson, 100 and some years ago said, “A house is made with walls and beams. A home is made with love and dreams.” You see, you buy a house, but it becomes a home. You buy a house, it becomes a home. The house is the physical asset that gets acquired. The home is the emotional connection that’s driven to it.
The most logical people in the world, I’d be walking through a house as a real estate agent. I’d be getting ready to put somebody’s house on the market and there’d be a hole in the wall or a bump in the wall and I go, “Yes, we need to patch that.” Then I realized, “Oh, no, that was where so and so bumped their head and they bumped their head and we went down to the emergency room. My best friend from high school was the nurse and we reconnected, we hadn’t seen each other in 20 years.”
Every time I walked by that bump in the wall, I think of Marion how we met back at Palomar Hospital. The transaction in me goes, “Man, we need to patch the wall.” The emotion and the person is there’s a story, there’s a connection. Do you want to know how people feel about a home? Just do this for yourself. Take an hour. Take an hour on a Saturday morning and sit in the parking lot about nine o’clock on a Saturday morning outside a Lowe’s or Home Depot. That’ll tell you what people think about their homes.
First of all, you’ll have a hard time finding a parking spot and people are pouring their spare money and their spare time into something, not just for economic benefit, not just for asset growth, but for something that makes them feel a certain way. It’s an aspiration of the heart.
The next thing it’s, it’s the goal of the mind. Franklin D. Roosevelt said, “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense paid for in full and managed with reasonable care, it is about the safest investment in the world.” By the way, wasn’t that the guy who was President when we had a thing called the Great Depression? Some wisdom there. It’s a goal of the mind.
A goal, by definition, is the end to which all effort is directed. I’m going to say this to you, having a home and buying real estate, even buying investment real estate, is a phenomenal goal to set your mind on and a great set of goals to have is the end to which all your efforts are directed. The last part of the dream is that it’s a physical achievement. It’s a badge of honor, you can take pride of ownership, without finding your identity in it but you have that pride of ownership.
That’s what’s going on on Saturday morning at that Home Depot. It’s a pride of ownership, it’s personalization. It’s very, very powerful. The dream, it’s an aspiration the heart. It’s a goal the mind but it’s this physical achievement. Kenny Glenn was a businessman who became an academician and then ultimately a politician. He said, “There’s something permanent and something extremely profound in owning a home.”
That permanency, that stability but it’s a huge part for us emotionally. It’s aspirational. That’s why people will fight so hard to get it. People will fight so hard to keep it because it’s more than just a number on a page. It’s more than just some technical asset transaction. It’s a big deal, but wait, there is more. The second major point I want to share with you but the magic of owning a home, it increases your personal wealth. It does so in three ways appreciation, debt reduction, and tax benefits.
My own journey, as an immigrant, I come here I start my journey off and I’m fighting, biting, scratching and clawing. I’m going to tell you the hardest thing in the world that exists is to find that initial down payment for a house. I was biting, fighting and scratching and claw. I actually had the seller took what’s called a second trustee. I put up 10% and the seller carried back 10% and that’s how I bought my first home. I bought my first home for $219,000, which by the way anybody listening to this presentation today is going, “Man, in San Diego you’re able to buy a place for $219,000?” Let me tell you, at $219,000 I thought my arms and legs were going to fall off. I thought I had made the most irrational decision of my life and that the pressure, and the weight of the debt and the mortgage was going to consume me actually for a year.
Anytime I ever talked to my parents and they asked me what I paid for the house, I’d find a way to avoid the question. My parents bought their home in Ireland for £1,800 fully furnished and it came with a motorbike. They bought it in 1957, and so they still live in the same house. If I told them I paid $219,000, they would have disowned me for being such an idiot. Well, guess what, three-and-a-half years later I sold that house for $330,000 and I bought a house for $900,000.
Now, if you thought my arms and legs were falling off at the previous one I literally thought I’d gone lost my own freak in mind on this one. Three years later a guy put a letter on my mailbox said, “If ever you’re selling this house let me know,” and Beverly kept the letter. When we started thinking about maybe making a move for schooling reasons and lifestyle reasons. We actually had the twins, we were running out of bedrooms, so we had six kids.
We called the guy that wrote the letter. That guy paid us $1.2 million. I bought the first one for $219,000 it turned into $330,000. I took the deposit and the down payment from the $330,000 to buy $900,000. The $900,000 turned into $1.2 million. What did I do? I bought a house for $1.8 million and I did some pretty good-sized remodels on that. Years later that house actually burnt down I got an insurance payment of $4 million dollars in my hand.
You tell me about real estate. I can tell you this. I’ve owned lots and lots and lots and lots of. This is just my personal residence. No one can ever look me in the eye and tell me and dissuade me that there is a better deal out there. Someone like myself as an immigrant got a chance to come here and in this one area from my home changed my financial status forever. It’s just a powerful, powerful transition.
Now, I’ll be doing future podcasts on investing in real estate. This one is focused primarily on the primary home, which is where most people are. Now, I will tell you I’ve made my fortune in buying investment real estate and I’ll be a future podcast, you’ll have to tune in again.
One of the great quotes, I think about real estate, one of the great philosophies about real estate because I’m telling you about how much I sold and how much I bought and it’s like everyone comes from the casino as a winner. Here is the truth about real estate. You buy good locations, you hold it and then this quote here, “Don’t wait to buy real estate, buy real estate and wait. Don’t wait to buy real estate, buy real estate and wait.” That is a winning formula for real estate.
It appreciates over time. That is something that in my last 30 years, I have seen significant amounts of appreciation. Simultaneously, there is something else we get a chance to do, which is reduce the debt. Now, the asset can grow in value and simultaneously the debt we owe can be reduced, which means we’re growing equity.
I actually recorded a podcast on debt reduction called, “Getting The Mortgage Monkey Off Your Back.” It’s episode 124. I would highly recommend listening to that. Obviously, we have total control over the ability to reduce the debt. A renter doesn’t have a chance to reduce the payment on the rent but a homeowner has a chance to reduce the ultimate debt that exists against their property.
Andrew Carnegie, one of the great American industrialists, at one stage was the richest man in America. He said, about 100 years ago, “90% of all millionaires become so through owning real estate.” It was true 100 years ago it’ll be true 100 years from now. Mark Twain said, “Buy real estate, they stopped making it.” It’s a good way to think about it, right? Supply and demand.
The last piece to this is the tax benefits. Now, this is an ever-changing world but this is where you need to kiss and thank your local realtor. The National Association of REALTORS® does an awful lot of things to help people with the integrity of real estate and make sure that real estate professionals work at high standards of ethics, and training, and education.
One of the biggest things they do- it’s one of the largest political lobbies in the world. One of the things they do with that is to make sure that those politicians allow the average everyday person to be able to write off, in the US, their mortgage interest. The mortgage write-off for many people is the difference between being a renter and being an owner.
When you take what somebody pays and rent and you look at the mortgage reduction benefits you get and the tax part of that, that’s usually the difference between being able to afford a home and not. It’s a big deal. You get the property tax write-offs, and again, certain states we live in, this has been reduced here recently. There is the mortgage deduction, you get home improvement write-offs.
And speaking of politics, politics makes for policies. And one of the dynamics we’re dealing with in our world today is there’s been massive amount of stimulus, massive amounts of infusion of trillions and trillions of dollars into the economy. So what’s going to happen with that? Where does that money come from? Can we just print money without impunity?
You know there’s a lot of uneducated people in the world of public money and how it works. It always has to get paid for some time. So, these trillions of dollars that have been released into the economy to try to stimulate the economy and support people through very trying times following for example, COVID19. Those trillions of dollars, at some point in time have to come back. They have to be paid for. What typically happens when you print a lot of money is your currency becomes devalued. Now, that’s not currently going to happen for the US dollar.
Winston Churchill said, “I hate the US dollar, it is just better than every other currency.” So, currencies and countries all over the world buy US dollars which will sustain its value for a while. But eventually, we are going to have a period of time called inflation. And what is the only single great hedge to protect yourself against inflation is an asset that appreciates.
So what asset is going to appreciate during inflation? A house. What can you do right now during a time of record low interest rates? Guarantee your price. So you maintain the low price, which is the guaranteed low interest rate, and then as the inflation hits and the property values increase, your property value increases, but your payment stays the same. A home, real estate, is the single strongest hedge against inflation. And three, four, five years from now, people who purchased homes in this time, or locked in an interest rate in this time, will be set for years and years and years to come. A home is the number one hedge against inflation.
Here’s, basically, the drop the mic on all the gasbags out there on podcast land and out there on social media saying why you should be a renter. The average homeowner has 44 times the net worth of a renter. Forty-four to one is a mic drop. What side of the equation do you want to be on? Fourty-four to one. In any sport that’s a big win. 44 to one. And so that’s the mic drop and everything else is just gasbaggery. It’s just talking, it’s flapping the jaws.
Owning a home it’s a dream. It’s an aspiration of the heart, it’s a goal for the mind, it’s a physical achievement. It absolutely increases personal wealth with appreciation, with debt reduction and with the tax benefits that come. But wait, there’s more. It also enhances personal well-being.
Now, I have been up to my elbows and looking at a lot of the research papers on this. I’ve always believed this, it’s always been anecdotal but today because we have so many universities and organizations out there in the marketplace that are looking to review statistics and dynamics, especially in the area of social well-being. Harvard has a group called the Joint Center for Housing Studies, who did a phenomenal study on many, many different areas on how ultimately home ownership impacts a person’s well-being.
One of the areas was that it impacts our self-esteem. They broke this down into three areas. First, how I’m viewed by others, secondly, how I view myself compared to others, and then thirdly a self-assessment of achieving a goal and confidence in my own competence because I set a goal and I achieved it and I’m physically reminded of it every day.
The Brookings Institute added on to this, they said, “In American society buying a home is a rite of passage symbolizing that a person has achieved a certain economic status. Those attaining this goal should increase an individual’s satisfaction with his or her life.” Now, it’s like saying, can money buy you happiness? No, it can’t. Can a home buy you happiness? No, it can’t. Can it contribute to your happiness? Absolutely.
Now, again I’m not getting down into the whole dynamic of whether you should find your identity in this. I don’t think that’s healthy thinking for anybody, what I think it’d be foolish to ignore it. It’s a good thing to set a goal that you want to own a home that you pursued, you worked hard, you saved your money, you sacrifice and then you were able to pull it off and that every time you close the door you feel that sense of satisfaction.
That you go and decorate it in style and taste and personality, and that you feel better about yourself and the quality of your life because the home you’ve provided for your family, daggone right that should impact your self-esteem. How I view myself compared to others. Well, that might not be so much as the comparison as I’m better than you but that I’m moving.
The only way you can find out that you’re really moving is that you have a fixed point to look at. If you’re on a train, you see the fixed point and you’re moving past it. You’re on an airplane, it looks like you’re not moving at all, the captain says you’re going 550 miles an hour, looks like you’re not moving until you pick a fixed point to look out the window and you go, “Man, I’m really cooking along here.” That’s where I think this can help you have a healthy self-esteem.
That last part is gaining confidence, “Hey, I did it before I can do it again. I set this goal to achieve this. Well, maybe I can set the goal to lose weight. Maybe I can set the goal to put my kids through college.” One of my favorite quotes about real estate- it’s anonymous, it says, “Owning your own home is one of the best feelings ever. It can’t be described in words, it can’t be quantified in money. Home ownership is a feeling that makes life’s daily grind worth facing. It reassures you that after all the ups and downs you have a place to go to, a place that will never judge you and always invite you with open arms.”
I say this I’ll come in here, I’ll bust out a very long day at Buffini Company. I have a home that really is– it was a number of homes it took me to get to where I’m at. It’s by the ocean, it’s in a private setting. I drive down the coast road, I’ve shared this many times. It’s the drive down and the drive up and the driveway, and going into the home and into our community, and I pull into the garage and it’s just it’s nice to come home to that.
Yes, it cost some bucks and yes, there were some striving involved and no I’m not thumping my chest, no one ever sees it. I’m a pretty private guy when it comes to my private life. I feel it and I also feel that sense I’ve taken care of my bride and I’ve taken care of my kids.
It was interesting recently, we were actually thinking about downsizing as our kids are going off to college and we actually bought another house and we’re fixing it up. The kids all came together and they said, “You know what, we want to be able to bring our kids to this home.” We got the basketball hoop and we got the putting greens, and we got the volleyball court and the pool, and jacuzzi and the yard and, “We want to be able to bring our kids to this house.” Our kids really implored us to keep the house for their sake, because they have such a connection to it. This is a place they bring their friends to. When we have the Super Bowl, they’re bringing their buddies from college there. The teams always hung out at our house, we always made it the place to come. Our kids have huge emotional connection, not just to the place they grew up in, but all the relationships they built through it.
Guess what? When I drive home at night, I’m not thinking of the price point. I’m not thinking of how much the house is worth. I’m not thinking of how much it’s appreciated, but I am thinking about my own just sense of satisfaction that I’ve done well for my family. Here’s the fourth thing. It promotes stronger families and neighborhoods. Home ownership provides emotional stability for members of the family to a place they feel they belong, and I just covered that in my own family.
Suze Orman says, “Owning a home is a keystone of wealth, both financial affluence and emotional security.” Now, again, some of you may have grown up in situations that were very fluid. Maybe you went through many situations where the family- there were divorces, or isolation, or single parenthood, whatever came about. Having to move and maybe you had to make a move and it wasn’t on your own choice.
Maybe your family experienced financial hardship and lost a house and had to make a move accordingly, so that can destabilize. Again, the fact that there was a home that was owned and maybe lost or something bad happened, it doesn’t mean you don’t set the goal to get back on that horse. To some degree, that sense of security you’re looking for, it can be found there.
Now, for some people, it’s such a big deal. I’ll cover this in this future podcast in investing in real estate. People always come to me and I’m going to say this, especially a lot of ladies, when they have extra money, they want to pay off the house. [00:24:30] The reason they want to pay off the house is because the way it would make them feel. I’m not going to say that’s a bad thing to do, I will just say in sequence, there’s other things I would do with my money first and then pay off the house.
We’ll cover that when I cover the investment real estate podcast. I would say this, the motivation behind that is people are strongly connected to this. Other studies have shown that children raised in a property their family owns, have higher academic scores, higher incomes and more of them go on to become homeowners themselves than the general population. Kids raised in a home where the family on the home, nine percent better at math, seven percent better at reading and three percent fewer behavior problems.
Now, you could say this is a socio-economic piece. This is unfair to people who are not of strong socio-economic background. Here’s the thing. I certainly started out my journey in America on the wrong side of the tracks getting run over by a car, owning huge amounts of medical debt. I was on the wrong side of the tracks and then the tracks got buried. The beautiful thing about home ownership, the beautiful thing about the free market system is you can change your status, and you can do real well.
One of the ways to do well is to do well in the area for yourself and your family in home ownership and providing that security. Empirical evidence to coordinate this Harvard study showed the relationship between home ownership and participation in voluntary organizations, charities, ministries and even local political activity. It’s extensive, it’s consistent, the results again and again and again. Home ownership does provide that emotional stability.
It is good for kids and it is good for communities. Oh by the way, when there have been riots and things in the past, what we always found is that the people who owned their homes or lived in neighborhoods where it was predominantly home ownership, no matter what the socioeconomic status, less likely to destroy property because they owned it.
Again, I know there’s all kinds of pitfalls we can get into and politics we can get into, I’m not trying to make any of those points.
I’m just trying to say real estate been very, very good to me and it’s very, very good for a lot of people. It’s also very good for the economy. It generates growth in the economy. That’s my fifth major point. Here, are you ready for this? Now, I know that with all the stuff going on in the media, a lot of people don’t realize that America is still by far the strongest economy in the world, it ain’t close.
If you were to look at the local news, you’d think, “The national news or social media, man, it’s all going sideways.” This is the most powerful economy in the history of mankind. The single largest segment of that is made up of 18% of the economy is housing, 13% on consumption spending, and five percent on construction and consumption spending is renting and owning homes and also doing a little bit of fix up and we’ll talk about that here in a second.
This is a long, long time ago, Confucius said, “The strength of a nation derives from the integrity of the home.” Nothing new here boys and girls. Just because we have social media podcasts and 24-hour news cycles with people looking to create content, it just doesn’t hold up. What I’m talking about is centuries and centuries of wisdom, where it always got back to the profoundness of home ownership, the magic of home ownership.
It’s such a big deal. Pride of ownership and home improvement, I’ve talked about it. Where do you see how big a part this is of the economy? Last year, that was almost $400 billion, billion with a b, for home improvement stuff. The forecast for Do-It-Yourself Home Improvement, by 2025 is $680 billion. There’s been a 5.5% growth of US home improvement industry in 2019 alone and 68% of all consumers visit home improvement store websites.
Here’s the deal, food, shelter, clothing. It’s that goal I want to have, it increases the net worth. It’s great for my family, it’s great for myself, enhances my own feelings about myself, that security for the family. By the way, then I want to fix it up and make it even better. When I do that, the whole economy keeps cooking. The last thing I want to say to you about the economy and it’s just my own little advice, which is buy real estate, hold and then buy some more, that’s the key.
Buy real estate, hold it and then buy some more. John Paulson, billionaire investor said, “If you don’t own a home, buy one. If you own a home, buy another one. If you own two homes, by a third and lend your relatives the money to buy a home.” Been there, done that on all fronts. I just want to say this to you, owning a home is a magical thing, and it’s the magic I hope that you currently are participating in.
Maybe you’re one of those magical people like myself who makes this dream come true for other people. If you’re a real estate agent listening to this today and a certain percentage of our audience is, remember, this is what you do for people every day. Maybe you want to share this podcast with all of your customers before they make a purchase, after they’ve made a purchase, and remind them what a great thing they’ve done for themselves and their family.
Remember this, it’s the dream and aspiration, the heart of gold, the mind, it’s a physical achievement. It increases the personal wealth with appreciation, reducing that debt and then those tax benefits. It enhances our personal well-being and it impacts our self-esteem, how I’m viewed by others, how I view myself compared to others. Then my own self-assessment of achieving a goal and knowing my own competence and getting it done.
It promotes stronger families and neighborhoods. It’s good for the family, it’s good for their kids. It’s even good for their math, it’s good for them to behave themselves and it’s good for people to participate. Then at the end of the day, it’s a big win for everybody because it’s generates such a massive, massive part of the whole economy.
Real estate been very, very good to me. It changed my whole world. It continues to change my whole world. In this next stage of my life, the real estate holdings I have and the income that they provide allow me to pursue things like this. I put $400,000 into building a podcast studio, we have no ads, we have no sponsors.
You know why I’m able to do something like this and share this message? Is because real estate has provided me with the income to go pursue the gifts God’s given me to go help as many people as I can. I owe that to real estate. That’s why I’m able to be with you today. That’s why when I speak about this stuff, it’s from a point of conviction, it’s from a point of experience. It’s changed my life, and it can change yours, too.
Well, thanks for joining me today. I hope you enjoyed today’s podcast. I’ll hand it over to Mr. David Lally, who’s our show producer and a homeowner himself. A veritable enthusiast for home improvement, who by the way, has gone through all of these five stages himself for him and his family. I’ll give it over to you Dave and you can tell the folks what you have up your sleeve for them.
DAVID LALLY: Thanks, Brian. I have to say I’m a proud member of the home-improvement brigade myself – I love nothing better than bringing my sons to the store on a Saturday morning to get materials for a weekend project. Then of course going back an hour later because I forgot some stuff.
To recap all the benefits Brian shared today about owning a home, our team put together a great resource you can download. Visit thebrianbuffinishow.com and check today’s show notes to grab your very own copy.
And as we sign off today, I’ll leave you with a little Irish Blessing from Brian’s mum, Therese.
THERESE BUFFINI: May the road rise up to me too and may the wind always be at your back. May the rain fall soft upon your fields and the sun shine warm upon your face. Until we meet again, may God hold you in the hallow of His hand. See you next time.