For generations past, home ownership was a significant rite of passage that signaled stability, commitment, and, often, prosperity.
But, in this as in so many other cases, millennials are different.
As of 2015, adults under age 35 made up 19 percent of U.S. households but less than 10 percent of homeowners, according to a report released by Harvard University’s Joint Center for Housing Studies. In fact, in 2015 home ownership for that group fell to a historic low of 31 percent.
Entrepreneur and bestselling author Tony Robbins says that, while millennials might be missing out on the social upsides of home ownership, real estate is not the best investment they could be making
“One of the weakest performers [is] your own personal real estate, because it doesn’t provide much income,” Robbins says. “It’s an inflation hedge. You do a little better than inflation, and you can have your own home, so there’s a psychological, emotional benefit.”
Instead, millennials in a position to buy property should be considering how to do so in a way that will provide them additional cash flow, he says.
“If you can own real estate, real estate with an income is the one [form of] real estate that’s more valuable,” says Robbins.
Opinions on the imperative of millennial home ownership vary.
Self-made millionaire Grant Cardone tells CNBC that home owners are forced to continue to spend unceasingly, and that he regrets buying a house at age 30.
“Unless you have 20 million bucks in the bank, in cash, you have no business buying a house,” says Cardone.
In personal finance classic “Rich Dad Poor Dad,” author Robert Kiyosaki notes that houses should be viewed as a liability, as opposed to an asset, and points out that it’s not a given that a home will appreciate in value.
“I am not saying don’t buy a house. What I am saying is that you should understand the difference between an asset and a liability,” Kiyosaki writes. “When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.”
Robbins emphasizes that real estate investing doesn’t need to entail keys and a welcome mat.
“You can [invest] through a REIT. You don’t have to buy everything, you get a piece of all these things,” Robbins says.
But whether millennials choose to spend their nest egg on a nest, or begin focusing on a portfolio instead, Robbins says the worst mistake is making no investment at all: “The most important thing, I think, for millennials, is to get in the game.”
Written By: Kathryn Dill