Friday, 6 November 2009

The Millionaire Mind by Thomas Stanley, and home-buying

This was the final element of Thomas Stanley's book that interested me, particularly because most people imagine that the wealthy live in huge mansions with swimming pools, and hundreds of bedrooms, and that is evidently not the case.

-Most of the wealthy people Dr Stanley surveyed for his book had lived in the same home for many years.
-Over half of them lived in houses with fewer than four bedrooms.
-They tended to live in 'nice neighbourhoods', where the houses were not newly built. (He describes them as old houses, but this is by American, not UK, standards!)
-This was partly because these areas tended to have good state schools, but also because better historical price information would be available for areas with older houses.
-These people would not take on large mortgages in order to buy a house, in the hope of benefiting from future price rises, because of the risks involved.
-They would not take advantage of a high-earning year or two to sign up for a huge mortgage.
-They would not generally build their own houses, unless they had knowledge in this area – lawyers were particularly averse to doing so! - because of the time, risk and expense involved.
-They would take their time to research an area, and never buy a house in a hurry, particularly not in an unfamiliar geographical area even if they had to relocate for work.

So, in summary, they generally buy old, reasonable-sized houses in nice areas, near good schools, and intend to stay there long-term rather than trying to make a profit and move on. And barely a swimming pool in sight....

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