Posted on 03/12/2024 1:09:28 PM PDT by where's_the_Outrage?
Homeownership has long been a cornerstone of the American dream. It symbolizes independence, financial security and prosperity — but is it a dream worth chasing?
Not if you ask real estate investment guru Grant Cardone.
“Buying a home without a doubt is the worst investment people can make, yet it’s also the most common one,” he wrote in an Instagram post earlier this month.
“Is it because [of] the lack of knowledge people have when it comes to financial education? Or is it just because too many people are trying to fulfill their American dream?”
Whatever the reason, Cardone says he is on a mission to “change the trajectory.” Here’s what he thinks you should do instead of sinking deep into debt to buy a home......
He gave the example of spending $576,000 on a home that you keep for 10 years. On top of that huge total, Cardone said you’d also have to pay the following fees over a decade:
12%, or $69,120, in broker fees;
10%, or $57,600, in maintenance fees;
20%, or $115,200, in property taxes;
and 70%, or $403,200, to the bank
Those amounts add up to $645,120 — and when added to the original price of the home ($576,000), would bring the total to a staggering $1,221,120.
“A $576,000 home will have to be sold for $1.2 million in 10 years,” Cardone said. “You’re not going to sell it for that, to break even.” .......
Rather than buy a house, Cardone says you should rent where you live and use the money you've saved for a down payment to instead invest in real estate that generates passive income.
He advocates for residential real estate, which appears to have remained strong through the economic turmoil of recent years,
(Excerpt) Read more at moneywise.com ...
They are Gen Squat. They will have nothing.
His math isn’t wrong.
Perhaps we need to change the inputs and reasons WHY a home is not a good investment - especially, property taxes.
Why would somebody pay 12% in broker fees? The most should be 6%, 3 to the selling agent and three to the buying agent.
Why does he assume property taxes are $20,000/year? Mine are 10 times less than that. So like all liberals, he’s assuming that everybody pays the same as the dumb people living in the liberal areas.*
Those are some pretty high maintenance fees, especially if somebody paid over half a million dollars for a fixer upper. We do the maintenance ourselves, costs a lot less.
I can’t remember the other outrageous assumptions so I’ll just stop here
He is an idiot. The tax breaks alone bring in a goodly sum in return of investment. When prices fall, you can lose your ass if you are looking to sell.
Now if we get State government to quit taxing property on homes they rent to people, and on homes that are owner occupied, life in America would be much better for all in the working class.
Tax people who own over a certain number of properties at 100% of value. Find a way to get investors out of properties. Trillion dollar portfolios of peoples homes, is an abomination againt humanity and God.
Also, there are many large risks in playing landlord.
1) The place may go vacant - no cash flow.
2) Govco may arbitrarily declare a rent moratorium during a pandemic.
3) You have no idea really who you are renting to, and what they might do to the place because they just don’t care.
4) High cost of maintenance - $15k for a roof. $10k for an HVAC unit. $3k for a new water heater. Need a tree taken down? $3-5k. Lawn care, snow removal, wind damage. Etc, etc, etc.
Sure, if had 100 or 1000 units, you could hire your own crew, and plan for vacancies, spread the cost of maintenance. But own one home, and hope you make enough money on it? Good luck. Because luck is what it will take.
People should live in pods and eat bugs !
Should be illegal for non citizens and non us based businesses to own property.
I bought a home in 1999 for $220,000.00. I could sell it today for $700,000.00.
Feeling good about the move.
You linked to the author’s profile and not the article
Help me out here explaining what this financial Einstien is saying:
If you rent, you pay those same expenses to a landlord (the landlord isn’t losing money) plus any profit the landlord might make.
If you own a home, after you pay those amounts you have equity in the house.
No magical saving comes out of thin air if you rent.
This guy doesn’t know about other strategies that help home ownership pay off nicely. He’s also ignoring the fact that about 30% of homes don’t have a mortgage, so all that interest can be subtracted back out. My last home was paid, I sold it, carries 50% of the price in a mortgage. Paid cash for the latest home, it’s up 43% in 4.5 years. Also, I think the ability to move when I want to, rather than when the landlord wants me to, is a very valuable asset for our family stability.
You are also subject to a constrained rental market with more bodies than apartments.
I also would not follow his advice, but I would keep what I own within what I can afford.
That example is just renting from the bank for ten years.
Wife and I worked our arses off after we got married. Bought a house in MA for 127k...lived there working two...sometimes 3 jobs and raised two kids for 8 years.
We sold that house when the market was up for about 200k. Bought a great place for 125k.
Raised our two kids there for another 10 years. When they went to college and moved on we started looking and when the market was right again, we sold that house for 275k.
We bought a house in TN for half that which gave us dough to fix it up and make it a great retirement home. (Bye bye Taxachusetts). After doing more arse-working-off and saving every penny and investing smartly we have a nice cushion for retirement.
Buying houses is a good thing if you know the market, know your real estate and play your cards right. Not everyone can.
I started buying cheap houses
.......
Where do you live that you can buy cheap houses?
Most home sales in the US now are with Institutional buyers who are then renting them out. The homes will not disappear, and they will still be lived in, but the occupant will have no equity.
Don’t live there. Move somewhere else. Those numbers are bullshit here.
Social Security is a worse “investment”, and government has little equity after subtracting the debt.
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