3 Reasons You Should NOT Follow the American Dream and Buy Your Own Home

by | BiggerPockets.com

Those of you who have watched my previous vlogs will know that I am a big believer in working hard, saving as much money as you can, and using that capital for starting your real estate investment endeavors. I also don’t believe in a thing called the American Dream. I mean, I think America is the best country in the world, but I think that the American Dream is dead—or the perception of what the American Dream should look like is dead.

3 Reasons You Should NOT Buy Your Own Home

1. Buying a home ties up money that could be out making money.

That brings me to the first reason why you should never own your own home. Once you buy this half-a-million-dollar property, hypothetically, you are going to have to put down $100,000. Now, the $100,000 is going to be the deposit to purchase the property. You are going to tie up $100,000 of liquid capital that is not going to produce a return on investment.

Now, yes, you can talk as much as you want about capital appreciation and all that jibber jabber. But if you know how to make money in real estate, you should always stay liquid. You should use the $100,000 to buy, fix, and flip. Make a $20,000 profit, and now that money that you’ve got sitting there is not $100,000 anymore; it’s $120,000. Rinse and repeat. Keep buying, fixing, and flipping—or wholesale or wholetail the property. You don’t have to flip; there are a lot of ways to make money in real estate. Money makes money, so use the liquid capital to go out into the market to make more money with it.

Related: Forget the American Dream—Renting, Not Homeownership, is the Path to Financial Freedom

Personally, when less than 10 percent of my net wealth purchases my dream property, that is when I’ll pull the trigger on that home—with cash. I can tell you right now, my dream property is around $4-5 million, so I will have to have a net wealth of $50 million before I buy that house. I don’t want any debt; I actually want to buy it with cash. Until then,I am happy to rent. I rent a crappy little 2-bedroom, 1-bathroom apartment with my family right now. Every spare dollar I have is out making more money for me.

2. Buying a home reduces flexibility.

The second reason is when you purchase your own home, you will be stuck. You’re going to anchor yourself to the ground, and you’re going to have this big mortgage that forces you to get out of bed every day and go to work so you can pay it off. You will also probably be buying this property in a great little school district so your kids can go to school, get good grades, and go to college.

Guys, you are just falling for the stereotypical American Dream. You’ve got no mobility. What if there is a change in government, what if there is a third world war, what if you need to move quickly? I have literally moved like a gypsy, looking for other opportunities. I’m living in Toledo, Ohio right now, out of all places. There is not a ton to do here except invest in real estate and make a ton of money doing it, which I’m doing right now. I’ve got multiple companies here. This was a sacrifice I was willing to make. I mean, what if you get a better job opportunity?

In my opinion, the world is changing at a rapid pace. You do not want to throw that anchor. There is so much uncertainty going on in today’s day and age, You want to be flexible, mobile, and move to where the opportunities are available.

3. Buying a home introduces all kinds of expenses.

That leads me to reason number three, and that is the expenses. I think that a lot of you out there don’t understand how many expenses you will incur by owning your own home. Let’s just start with this thing called a mortgage. I’ve already mentioned before that after you get into a ton of debt with a mortgage, you will have to get out of bed every day to go to your 9-5 so you can afford those mortgage repayments. I don’t have to do that, as I already mentioned. All my liquid capital is out in investment properties, producing more money and cash flow for me, which is how I afford my rent.

Related: Why Following the American Dream Will Rob You of Financial Control

How about all the maintenance expenses—cleaning the gutters, mowing the lawn, the insurance costs? Time is money. I feel sorry for those people mowing their lawns an hour every single week. I would rather be making this video or on the phone. I would suggest you rather use your liquid capital and invest it in cash flowing investment properties or in buy, fix, and flip properties. Rent a crappy little home or a condo, whatever it may be, and use your liquid capital to invest it and make money. Let the tenants cover all of your expenses.

Look, I know that this vlog goes against popular belief. I’m happy to take whatever criticism you throw my way. So please make sure that you comment below. I would love to hear from a person who has successfully purchased their own home, hasn’t incurred that many expenses, and also has a large real estate portfolio on the side. I would love to hear how you have structured all of that.

We’re republishing this article to help out our newer readers.

Do you believe in owning your primary residence?

Weigh in with a comment!

About Author

Engelo Rumora

Engelo Rumora, a.k.a.”the Real Estate Dingo,” quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He runs runs Ohio Cashflow, a turnkey real estate investment company in the country (Inc 5000 2017 & 2018) and is currently in the process of launching a real estate brokerage called List’n Sell Realty. He is also known for giving houses away to people in need and his crazy videos on YouTube. His mission in life is to be remembered as someone that gave it his all and gave it all away.


  1. Isaac Agbolosoo

    Engelo, I agree with you on this post. I also think to achieve financial freedom is advisable to invest more in assets producing income(e.g rental property, etc) and less in an owner-occupied home. I used your technique to purchase my first 2 rental properties 🙂

  2. Isaac Agbolosoo

    Engelo, I agree with you on this post. I also think to achieve financial freedom is advisable to invest more in assets producing income(e.g rental property, etc) and less in an owner-occupied home. I used your technique to purchase my first 2 rental properties ?

  3. Isaac Agbolosoo

    Engelo, I agree with you on this post. I also think to achieve financial freedom is advisable to invest more in assets producing income(e.g rental property, etc) and less in an owner-occupied home. I used your technique to purchase my first 2 rental properties ?

    • Buying a house to live in is the only possible first step for most people. The entire system is set up for it. You get the best rates, the easiest qualification, the lowest down payment of any real estate transaction out there.

        • Why fight it if it works? If there was a better system I would be interested in it. But for most people getting their foot in the door with the purchase of a home is a great start. It doesn’t mean you have to live there for 30 years and hold bake sales every weekend. It DOES mean you will immediately stop paying rent which is the biggest expense by far most people have.

          Telling people they should start investing with the never ending boat anchor of rent tied around their ankle is bad financial advice.

        • Tyler Rowland

          I found Bigger Pockets about 9 months ago and I wish I would have found it just 3 month earlier. Because that is when my wife and I made the decision to move out of our rental into our own home. It sounds nice, but from an investing stand point, not so much. Our monthly payments doubled, and even though the USDA loan did not require any money down, there were things that needed to be done to make that “our dream home.”
          Pretty much everything you talked about in this article I can relate to. Maybe one day I will be able to use some of the equity in the home to refinance and invest, but there were definitely perks to renting.
          I really have tried to justify buying a home, but after reading Rich Dad Poor Dad, I know I have a liability and not an asset. Thanks for the Great article!

        • Engelo Rumora

          Thanks for your comment here Tyler,

          Not all is lost.

          Stick with it and see if you can increase the value of the property and maybe refinance in order to have some cash on hand.

          If you truly aren’t happy, then maybe look at selling at sometime in the future.

          Don’t forget tho that happy wife = happy life lol

          Much success and keep the dream alive

    • Engelo Rumora

      Thanks Tim,

      Life is beautiful when you have a tonne of cashflow coming in which enables you to purchase “holiday rentals” all over the world.

      If you classify “life” by having a pride of ownership and to be rooted to the same house for 30 years.

      By all means, do it.

      Much success

  4. Allan Smith

    I tell people #1 & 3 all the time. Especially 3. Buying a house is a money and time pit.

    However, #2 is quite silly. I have #2 ppl in my little and they are some of the most unstable people I’ve ever met. i don’t think that is a life we should strive for.

    • Engelo Rumora

      Thanks Allan but I disagree.

      People fight and die for freedom.

      Why would anyone want to be anchored to the same house forever?

      Seems like a cage to me and not life.

      I’d rather rent and be flexible to move around the world.

      Just my opinion

  5. Laurel Devine

    From a strictly financial perspective, I agree with everything you said, but from a personal perspective, that’s different. Homeownership brings a sense of pride and community that renting does not (I have done both). It also gives you a sense of personal independence that renting does not (ie; when renting if your daughter wants a pink princess room it’s probably a no go because you can’t paint, or if you want to put horseshoe pits in the yard for your family reunion, that would be a no go too).

    Financially speaking, in a good market (which we haven’t had in awhile…) owning a home builds equity and something you can pass on to your children (put it in a trust) once the mortgage is paid off.

    With that said, your point makes great sense if your goal is strictly financial and you want total mobility and are not ready to “settle down” somewhere yet.

    • Engelo Rumora

      Thanks Laurel,

      Without sacrifice there is no financial freedom.

      Off course we all want a sense of pride of ownership and a property we can call “our own”.

      That should come much later on in life tho in my opinion.

      Focus on investing and building capital/cashflow first before settling down.

      Just my opinion.


  6. Chris Soignier


    You make some good points, but as some have already mentioned, this decision isn’t just about finances especially if you have a family. DFW is a great area, with hundreds of people moving here from around the country and world every day.

    #1 is good. My house has appreciated by ~$100K since I bought it in ’13, but no doubt I could have earned more elsewhere on the down payment I made.
    #2 I’ve heard before from Grant Cardone, and it is a good reason for many folks, esp. highly/upwardly mobile professionals. I’m not moving for at least 10 years, so it’s not really applicable to me at this time.
    #3 is where I respectfully disagree. If you’re not paying your mortgage, prop taxes, maintenance expenses, etc., then you’re paying someone else’s! I haven’t owned a lawn mower in nearly 20 years, yet my yard is regularly mowed, edged, trimmed.

    My son goes to an exemplary school (rated 10 out of 10 by greatschools.org), and there are no apartments feeding into it, and we live right down the road from my aging parents, so mobility isn’t of value to us right now. However, if I was in my 20’s and single, it would be much more important to me!

  7. Engelo,

    Good post as usual! Of course, per all of the other good comments here, nothing is ever as simple as one-size-fits all. That said, your post speaks to several important “principles” of wealth building that cannot be denied. I have been a homeowner since I was first married, at age 25 after college. It was partly a blind “follow the American Dream” motivation, but also based on the financial potentials of being a homeowner, especially IF appreciation occurs. Since I started in 1985, I have experienced, benefited from, and survived many economic cycles and realty boom-busts too.

    I would NOT consider planning on appreciation a viable business plan. So the other benefits of ownership must sustain a decision to buy your own home, and that could be a losing proposition, financially. I have known people who have done what you apparently are doing, sacrificing their own lifestyles to enhance their financial potential. One made many $Millions doing so, a woman named Sarah I worked with in the late 80s as her real estate agent.

    Here is Sarah’s story. Sarah was approx age 35 in 1989. She had never married, and was a school teacher who never earned more than $30K annual salary from any job. She was a legal secretary at the time I knew and worked with her. Since I was her agent, I was privy to her financial info, which, indicated she owned approximately 7 single family homes in Arlington, VA. And all but 3, outright! Her net worth in 1989 was approximately $1.3 Million. Now, the immediate point of that, is, she is proof that a high income is NOT necessary to make a lot of money with real estate investing.

    Second point, is how sacrifice can definitely accelerate or enable making lots of money in real estate investing, and her methodology will reveal this.

    Sarah explained to me that she would scrape up a down payment, slowly saving money by living a “low” lifestyle. Then, she would purchase a home that needed fix up work. She would move into the unfinished basement where she would create an apartment for herself, renovate the upstairs and rent the upstairs out to others, WHILE she resided in the basement. In this manner, she lived “free” with the tenant/roommates paying her mortgage and housing expenses.

    Then, as you say, “rinse-repeat.” Sarah would then be able to SAVE a lot of her income up for another down payment and fix-up expense funds. She would buy another house, move into the basement of it, rent out the basement apartment she left from, and repeat this process on the new house, and then next one, and on and on.

    I lost track of Sarah after 1991, but expect she probably never deviated from her business plan and today, is probably worth $30 Million (just guessing). IF she in fact rode several real estate appreciation cycles in the last 30 years, her properties would have long been paid off and at least appreciated 6X in value. And I doubt she sold any of them and also assume she bought many more after 1991.

    SO, the main point I would like to make here, is that “shoe-horning” oneself into a real estate purchase, as an “owner-occupant” like Sarah did, and then renting out the rest of the house while you are still an occupant, is a very realistic way to get into the rental business, for almost anyone who is willing to sacrifice lifestyle. Financing for owner occupant-purchase money is, of course, much more attainable and at better terms. And performing renovation work in your spare time, in the home you are living in, is efficient and a major opportunity for the average person to build sweat equity and cash flow too.

    Therefore, this methodology and strategy is an exception, a hybrid compromise, on the discussion about home ownership vs. renting. It works.

    And if Sarah tires of roommates and sharing her space and making sacrifices, she can pretty much live any lifestyle she wants to, now…

    • Engelo Rumora

      Thanks for your detailed comment Rob,

      Great story about Sarah and as you mentioned “there is no one size fits all”

      For arguments sake, I always like stressing and “fighting” for “my way” lol

      I’m looking forward to your reply on my next blog.

      Much success

  8. I disagree with your article. I live in New York and purchased my primary residence (an apartment 20 minutes outside of NY) and took out a 15-year mortgage and paid it off in 12-years. I took out a Home Equity Line of Credit (“HELOC”) and purchased 2 investment properties (1 in New Jersey & the other in North Carolina). All 3 properties were foreclosures. I do not pay rent that is paying someone else’s mortgage or building someone else’s equity but my own. I remain blessed!

    • Engelo Rumora

      Congratulations on your success Mosim,

      In my opinion you could have done more and quicker if you where more active instead of waiting for the market.

      I rent and have made millions running a few real estate companies.

      All in just under 5 years.

      A tonne of sacrifice and hard work but that was my path and it’s what I suggest others do.

      Continued success

  9. Quincy Lockett

    Engelo, I 100% agree with you. I am an investor in the Chicagoland/Northwest Indiana area and I too move “like a gypsy” and what I’ve found is that most people want as much luxury as they can “afford” NOW! I own several clean rental apartments in C class neighborhoods and have trouble procuring the tenants that should be renting from me.
    What I’ve found is the tenants whose income is 3x the rent find my units not glamorous enough for them and they’ll spend 1/2 their income on a rental. And the prospective tenants that want my units only make 2x the monthly income putting both parties in a precarious financial situation if a major expense pops up.
    Great article and discussion about the benefits of delayed gratification so that you can relieve the stress of having to work sooner rather than later.

    • Engelo Rumora

      Thanks Quincy and congratulations.

      You’re 100% right as with most folks it’s all about the “Now”.

      Whenever I see a mansion that I would love living in (Now), I tell myself “You haven’t’ deserved it yet… Work harder and buy it later” haha

      It’s just a mental trick that keeps me on track.

      Much success mate

  10. Wilson Churchill

    Using vs. not using debt seems to be key here. If you are willing to get a mortgage, you may find that your payment is actually significantly lower than rent, depending on where you live. You can also get roommates without restriction when you own your home. the roommates could end up paying the mortgage or even putting extra cash in your pocket. Using an FHA loan, you don’t need to put 20% down. Alternatively, you could use a traditional mortgage and other financing, such as credit cards, to make the purchase 100% financed. Buying a home can allow both the opportunity to capture appreciation and generate cash flow. You could really take it to the extreme by renting out every room, the basement and garage. The trick is to find the right deal.

  11. I agree 95% with you . I didn’t it a little different . I was in the military and have been retired since 2006. In the military you usually change stations usually every 3 years it all depends on what is going on in the world and the needs of the Army. When I returned form Germany I had 12 years in and a small boy and daughter and a good chunk in the bank. I was ready to invest and also wanted to have my own place. In 8 years I would be retired.( any of you remember Donald Sheets I bought his course yes I was up after midnight and though real estate was the way to go). I thought best option was to buy a duplex and live on one side and if I was moved to another post I could rent it out. So I purchased a 2 bed room 1 bath 1 car garage duplex FHA. The next year I had a 3 bedroom 2 bath 1 car gargle duplex built I used my VA, we needed more room our last son was born. We moved in to that one. Thats how I started my investing my mortgages were being paid by the renters. I kind of never moved from Texas after that, due to our unit was the first unit to receive the new combat tank then the Iraqi war started which I was ready to retire my retirement orders were canceled yes I was stop loss. After we returned from Iraqi freedom, 6 months laters I came on orders to Kuwait for a year . My family stayed here in Texas. When I returned from Kuwait 6 months later I finally retired after 23 years. 2 months after retirement from the Army I worked for 10 years in the Oil/Gas, making well over 6 figures combine with the rentals and retired pay. I eventually bought my home and also purchased 3 more duplexes. The 2 were paid off one in 12 years the other in 16 years saved a bunch of interest if you see it my way and the cash flow is 100%. All the time I was making double payments to the mortgages and what ever else money were I could knock down the mortgages. Last year at 52 I resigned from the oil/gas industry all 3 children are serving in the Army its just my wife and our 2 little dogs our cars are paid off have no credit card debt just the normal living expenses food, utilities cell phone, cable ect… I was burned out working from country to country and state to state. I met my goals Im pretty much debt free well in less than 3 years I will have the 3 other duplexes paid off.Im comfortable with my retired pay and the cash flow from the 5 duplexes. I guess you can call my plan house hacking. I believe any plan is a good plan as long as you put it into action. Financial independence is different from one individual to the next, Everyone is in different situations so not all plans will work. It all depends on what you call a comfortable living. Over 6 figures with no debt is comfortable to me and not being in the rat race of working for some one else is even better. I don’t need more than 5 duplexes. I manage and repair my 5 duplexes I was in maintenance field so getting my hands dirty is no problem. Im almost done with an online course I been at it since last October HVAC which has saved me mucho money. I have actually troubleshot and repaired a few AC faults at my duplex and saved that $60 – $100 service call, weekends and after hours is even more. I got off the subject a bit but just wanted to mention like I said every individual way to investing is different some will pay others to repair there investment properties I don’t if I can fix it Im there. Your plan is a outstanding approch I do agree. I would just hate all the shenanigans that come from having rude neighbors and rules to follow when you rent thats the con. Eventually you do want the American dream called peace of mind I wish you the best. Good post sir.

  12. Jay C.

    Sheeesh this must be in the closet of BP rinse and repeat articles as I have seen this cut and paste by as many authors.. Its great from the lenses of the young adults (kids) but has very little merit for folks who actually have good jobs. The flexibility to move around is a meaningless item when your at a good paying job. If you have limited education with no trade yes I guess its better to be a gypsy like outlined in the article. As well the notion about all those bad things that come with home ownership like maintenance…. goodness that comes with anything you own. Heck lets just go to Joes furniture mart and rent your couch, tv and all that stuff. It falls under the same premise as the article. While we are at it lets talk about flipping. You see most flippers they want to be buy and hold but a little problem exists. Its called cash flow and enough money. They dont have it and need to flip those home like a heroin addict gets his next fix..they have to. The buy and holders do so because they can. They have the funds and dont need to flip. It just like the author. If you looked his end game was to buy and hold his home the opposite of the article. He just has really high prices on it….unrealistic prices for the crowd on here.. A big ole dream to say the least. For those of you back in reality just remove a zero off the authors article and your there now.

    • Engelo Rumora

      Thanks for your comment Jay.

      A few things:

      1) “A good paying job” haha, well that’s awesome but what if a “better paying job comes along”? Or God forbid you actually get a little uncomfortable and start your own business

      2) Buying and holding using a tonne of leverage does not mean someone has “enough money” as you mentioned.

      3) “A big ole dream”. Sure, folks can remove a zero and go back to reality. It’s called the “American Dream”

      I’m living my dream everyday 🙂

      I wish you much success tho

  13. BP –

    Great post. Big thing, as well, is “time” as you had indicated. Even though I own a house, which will turn into a rental in 3-4 years, I have asked the girlfriend her thoughts on renting, as I would prefer that option. Time & expenses… can’t price time out. Thanks for sharing!


  14. When I had sufficient equity in my primary residence, I did a cash out refinance for a down payment and bought my second house. Then after I moved into my second house, I sold the first house and bought a mixed use income property. And finally I moved again and bought yet another house. Now I have a house to live in and two properties creating income.

    None of this would have been possible had I rented. If I had rented, I wouldn’t have gotten any equity to use for my down payment on my income properties, I would have gotten no tax breaks, I would have gotten nothing. Oh, I can hear you say, you could have saved so much by renting. Could I have saved $800K in 15 years? And how well would I have enjoyed those years living in a “crappy 2 bedroom” apartment?

        • Engelo Rumora

          Thanks Kurt,

          It’s hard to take you seriously when you don’t even have a proper Bigger Pockets profile.

          As much as I would love to go back and forth with someone competent.

          If you’re not sophisticated enough to set up a basic profile page, how can you then be sophisticated enough to discuss real estate investing?

          I wish you much success

  15. Chris Ayers

    Your home might not be an investment, but it can be used as a tool for your investments.

    I bought my name well under value, put work into it, now it appreciates for 100K more than I bought it for. I took out a HELOC and now I have a funding source for my deals.

    You can have the best of both worlds.

    • Yes, you can get a HELOC and use that to buy more real estate.

      You can do a cash out refinance and use that to buy more real estate

      You can rent it out and buy another house.

      You can sell it and buy more real estate.

      Lots of options when you own a house for a while and get a bit of equity.

      It’s a springboard.

      • Chris Soignier

        I used a HELOC to invest $150K into two different multifamily deals about 2 1/2 years ago. One yields 10% and move than covers the debt service, the other one sold for ~80-85% gain and the proceeds were re-invested into 2 more MF deals.

        • Yes, I have done very well using these strategies. My only regret is I didn’t buy more real estate sooner and that I sold a house 25 years ago for almost no gain that has gone up at least $500K. So my advice is buy early and buy often and try not to sell if you can help it.

  16. Clayton Sneider

    It is clear that your strategy works good for you financially. I agree that buying a large, fancy home can take away money that could be used for investment. However, you can have your cake and eat it too if you are willing to house hack, or be creative with your property. For instance, I bought my first house (a foreclosure) with 5% down, then finished the basement myself and rented that out for several years. The rent from the basement paid for the basement finishing several times over, and then the rent payed half my mortgage. The house has doubled in value since I bought it, making my return on investment well into the double digits since I only put 5% down on it. I then did a cash out re-finance on the house and bought a rental property, then I saved up more money and bought another one. I think I would have really struggled to buy those rentals without buying my primary residence first. All this time my mortgage payment has been lower than what I would pay in rent to live in a similar house (even accounting for maintenance). My primary residence has been the best investment I have ever made.

    • It’s something you hear over and over on BP and from the professed wealth gurus like Robert Kiyosaki, that your primary residence is nothing but a big boondoggle. But like you and millions of others, the house I lived in for many years was the best investment I have ever made. I put down $25K, paid much less than renting would have cost, and sold it for a million more than purchase cost. That’s a 4000% gain.

    • Ernest Ho

      I love this strategy, and also agree it’s not one size fits all. I realize and feel enlightened about mobilizing the equity built in my primary and shift towards this approach of living in a rental and putting the equity to work. Thanks for the article Engelo!

    • Engelo Rumora

      Thanks Clayton,

      You can make much more and much quicker staying liquid and putting your money to work constantly.

      Whoever says that their primary investment has been their “best investment ever” indicates that they haven’t explored other and more “labour intense” strategies.

      For example, all of my 400 deals have been “best ever” as they all got me a step closer to financial freedom.

      I didn’t invest and wait

      I invested, worked hard and manufactured growth/profit on every deal.

      Nothing comes easy in real estate and some are just willing to put in the work while others wait 30 years and call themselves experts lol

      Much success

  17. Howard Summers on

    $100,000 into a $500,000 house (where I live) is about the same payment (including taxes and insurance) as rent. You’d accrue about $7000 annually (at first) on principal reduction. Worth 4% appreciation, you’d make another $20K per year. Tax benefit would be roughly $2400 in cash annually (at first). So close to $30K annually off of a $100K investment.

    Now I’m not saying this is the best option out there or that people should go into it just because it’s the American Dream. (I did something similar to this, and used the heloc to finance the rental properties – most of which only beat these numbers buy a small margin). Just saying that is not necessarily a terrible option to buy a home.

    I actually like my regular job. I actually like feeling settled down. I love my back yard, my garage and fruit trees. And I like the income from my rental properties. I feel I have my cake and I’m dealing it too.

  18. Steve Vaughan

    I agree one should not put all capital into a McMansion or HGTV ooh and ash primary res that pays you nothing. But there are other ways to own a home and not be a tenant.
    We are semi-luxury house-hacking right next to that neighborhood with a 60s MIL unit down in the lower quarter. Every month our balance sheet rises. We have no LL rent raise or sell risk and we can have a dog and pick our own paint colors.
    Being in like the most affordable market in the country I was surprised you assumed everyone is buying a $500k high society house…

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