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 ...
Right. Where did he get 12%? My property taxes are low like yours. Depends on where you live.
I’ve owned four homes. Three of them appreciated a great deal. I rolled over the equity and now have a $525 month mortgage on a 600k home. If I croak, my wife can live her days out secure under her own roof. Owning a home has done its job.
I guess he hasn’t seen the price of renting? Renting is forever. Rent increases forever. Did smart boy take that into account??
““Buying a home without a doubt is the worst investment people can make”
Home ownership is generally a good investment (depending on the area) so I believe he is quite wrong about that.
However home ownership is not just about financial benefits and money. It is about quality of life.
Having a yard for your children to play in is better than a common space near an apartment. It also provides better security than an apartment. You can also better modify and adapt it to your needs etc.
Most rentals were not purchased yesterday. The price of rent is usually reflective of the cost for a similar unit, and in many cases is less than the cost of the payment of a purchased home (assuming PITI in the payment). Once you get past the monthly mortgage/rent, a rental starts to get substantially cheaper. Renters do not pay for maintenance, and on average a homeowner is going to pay about 5% of the replacement cost of the house per year (amortize life expectancy of components of a house at 20 years before replacement needed). In many cases, renters do not pay for utilities either (this is referred to as ABP or All Bills Paid) properties. What Grant is saying is to let someone else carry those costs, and take what you would have spent on them and invest in residential real estate with those funds, and you will be better off. Cash flow today is better than Equity returns tomorrow, because Cash Flow is guaranteed, whereas equity is not.
it also teaches people to respect personal property when you have a stake in something similar.
Home ownership has long been the best way for the middle class to build wealth.
This guy does not bother to tell you that not only do you have to pay income tax on your rental income you also have to pay capital gains tax (35%) on the profit when you sell. You pay no income tax on the profit from your home when you sell. At least up to $1 million. And the interest on your mortgage is a tax deduction.
Yeah I am not even going to question the author’s motives as I know nothing about him or care to look him up.
But I do know the left has an agenda to discourage home ownership and prod us into urban high-rises since it require less carbon resources etc.
The left wants people to get used to having less money, belongings and resources.
Less freedom
What a moron. Besides, he has a conflict of interest and is biased in his views.
Owning real estate in which one lives is a viable form of investing an asset protection.
The guy is obviously a bonehead.
It’s a place to live and a roulette spin.
Government taxing policies on home ownership are what’s tipping the economic balance of owning a home.
Numbers seem suspect to me. Nobody pays 12% to sell their house and the interest number appears based on no down payment or higher than market rate.
He doesn’t seem to factor that rent goes up each year by 3-5% if you are renting from a person, as high as 10% if renting from a big company.
Not to mention that buying an investment property is buying a second job. It can be lucrative but it does require effort.
Back of napkin calc I need my house to appreciate by 25% over 10 years to beat investing my down payment at 10%. Not a sure thing but a decent diversification.
This article smells like more “have nothing and like it” propaganda.
I have always rented. Moved around in my twenties managing large hotels. No kids.
Been at my current address for 25 years.
All of that money he discussed wasn’t spent. Now it’s all in a fat IRA and other investments. In about 5 years my wife and I will have a few million when I retire. She’s 6 years younger and will continue running her payroll company for another 5.
My complex let’s us fix up our unit as we see fit. It’s spacious for 2 (1300 sq ft).
Absentee owners with their damned rental properties are a curse on any subdivision. They rent to Section 8 recipients all the time, it’s their gold standard, and all of a sudden you’ve got six vehicles/trucks in the driveway next to your house. And no one speaking English. When that roof needs replacement the absentees buy the cheapest black shingle one they can find. Houses end up looking like trash. Damned HOA is useless won’t lift a finger to help the owner-occupied properties. You all are nothing but a greedy bunch of landlord pigs.
This is BS. My mortgage payment is AT LEAST $400 less than the going rate for an apartment smaller than my house. I bought on the dip and am sitting on a 3.25 interest rate laughing at people who are paying upwards of 8%
We bought our house pre-covid, and it has gone up a LOT since then.
Renters depend on the landlords and face eviction and rent increases. It’s money gone. Period. You have NOTHING to show for it.
So even supposing he MIGHT be right about spending $576,000 on a home that you keep for 10 years to ultimately cost you $645,120 additional to a alleged total cost of $1,221,120, when you rent all that money is GONE. Poof!
And you have NOTHING to show for it.
You buy a home because it’s a place to live.
I used to listen every week to a show called Moneyline. Host was Bob Brinker. That was exactly what he said to all who called in on the subject.
BS.
I have a 2.25% mortgage. Only an utter fool would not buy as much as they could buy when it was 2.25%, and only an utter fool would rid themselves of what they bought.
Just up the road from me they have turned a field into a housing development. the first row of houses are in and already sold. Another road has been put in, last week “for Sale” signs went up on all the lots. As of Sunday they all have been sold.
And I moved into the country to get away from the city. Now the city has engulfed me.
A person buying a house better look at where that neighborhood will be in a few years. A Hood, tenement slum? What type neighbors will be living there in ten years?
Look at the house. A well built one or a shoddy built one disguised as a well built one.
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