Grant Cardone "Buying a House is for Suckers"

[Sanj Modha]

I'm sure I saw Cordone tweet a case study about some homeless veteran who read the "10x Rule" and now makes money from construction and real estate. I'll try and find it.

 

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[Andy Black]

BTW, I'm always skeptical when people who get paid to provide information use words like "always" and "never"...

^^^ This. I'm sceptical of the words "always" and "never" - period.

Also "need" and "should".

People using those words end up in my "be wary of them" box.

I have to admit though, it's a clever way to create a divide that results in a heated and never-ending debate...

 

[MJ DeMarco]

I'm gonna say something here that no one (at least in 3 pages) has touched on, and it is why I own a house (paid cash, no mortgage)...

I don't like how things are progressing in the world...

Between corrupt government, corrupt media, and a worldwide financial system predicated on printed money and trillions in debt, I don't trust "money" -- or in other words, I don't trust "a number on a computer screen" that says you have $X millions, or whatever your personal number might be.

When shit hits the fan in the form of a financial collapse, hyperinflation, or whatever it might be, I DO NOT want to be in cash.

I want to be in hard assets to the best I can be; businesses, houses, tangible things.

For me, owning my home free-and-clear was the best form of insurance because your monthly shelter cost will ALWAYS be your biggest expense over your lifetime. Eradicating this, for the rest of my life, was extremely important to me.

Toss in the fact that I'm not one of these entrepreneurs who likes to vagabond around the globe-- my goal is to have my home be the resort-- a perpetual vacation -- so owning my home is VERY IMPORTANT. And this is why the statement is ridiculous because it ignores what an individual values.

Someone like @biophase who travels 6 months out of the year, then yea, I can see him possibly renting and being perfectly happy with it.



Anyhow, when the dollar collapses and is replaced with some globalized BS at 2 cents on the dollar with a new "Ameridollar", my home will retain its intrinsic value.

A number on a computer screen?

Cashing sitting in a bank that could be confiscated in the name of some government initiative?

I'm not interested in playing that game.

In this day and age, I'm interested in being as self-sufficient as possible.

While home ownership doesn't escape property taxes, neither does renting-- it's simply passed onto the renter.

PS: No, that is not a photo of my backyard, but it does appeal to me as (once again) I've been house shopping.

 

[LifeTransformer]

After reading this thread, I think I'll just settle for a camper van and travel north America.

J/K.

 

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[Sanj Modha]

BTW, I'm always skeptical when people who get paid to provide information use words like "always" and "never"...

Have you noticed the trend when they say "never/always" followed by some course/seminar on how to do it right. There's always a play.

 

[458]

I'm gonna say something here that no one (at least in 3 pages) has touched on, and it is why I own a house (paid cash, no mortgage)...

I don't like how things are progressing in the world...

Between corrupt government, corrupt media, and a worldwide financial system predicated on printed money and trillions in debt, I don't trust "money" -- or in other words, I don't trust "a number on a computer screen" that says you have $X millions, or whatever your personal number might be.

When shit hits the fan in the form of a financial collapse, hyperinflation, or whatever it might be, I DO NOT want to be in cash.

I want to be in hard assets to the best I can be; businesses, houses, tangible things.

For me, owning my home free-and-clear was the best form of insurance because your monthly shelter cost will ALWAYS be your biggest expense over your lifetime. Eradicating this, for the rest of my life, was extremely important to me.

Toss in the fact that I'm not one of these entrepreneurs who likes to vagabond around the globe-- my goal is to have my home be the resort-- a perpetual vacation -- so owning my home is VERY IMPORTANT. And this is why the statement is ridiculous because it ignores what an individual values.

Someone like @biophase who travels 6 months out of the year, then yea, I can see him possibly renting and being perfectly happy with it.

View attachment 12894

Anyhow, when the dollar collapses and is replaced with some globalized BS at 2 cents on the dollar with a new "Ameridollar", my home will retain its intrinsic value.

A number on a computer screen?

Cashing sitting in a bank that could be confiscated in the name of some government initiative?

I'm not interested in playing that game.

In this day and age, I'm interested in being as self-sufficient as possible.

While home ownership doesn't escape property taxes, neither does renting-- it's simply passed onto the renter.

PS: No, that is not a photo of my backyard, but it does appeal to me as (once again) I've been house shopping.

I'm not trying to troll you, i swear! But, just to play devils advocate, do you have a cash fund for county property taxes? Assuming you have one, what length of time would it buy you assuming your net worth went to zero overnight?

Assumption(I don't know what your house was bought/assessed at):
Asssessed at 2.5 million in Scottsdale $31,000 per year in property taxes
Assessed at 5 million Scottsdale $62,000 per year in property taxes

 

[CPisHere]

Billionaire Indians, Chinese, Russians and Arabs are buying up London properties like crazy. They know something Cordone doesn't.

Cardone owns hundreds of millions in real estate. You didn't bother to read or watch what this discussion is about.

 

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[MJ DeMarco]

just to play devils advocate, do you have a cash fund for county property taxes? Assuming you have one, what length of time would it buy you assuming your net worth went to zero overnight?

I think you misinterpreted.

I'm not suggesting taking your entire liquid net worth and put it into a house -- then you're just a fool living beyond your means and fronting affluence. If you have $1M cash laying around and you go buy a $900K house, sorry, you can't afford that $900K house.

If I pay cash for $2M house you better be damn sure I'd have YEARS of property taxes covered, even if they spike.

No matter if you RENT or BUY, this expense is passed on to either the renter or the live-in owner. There is no way around the tax implications of owning or renting -- the question is, how fast will it be passed on to you?

Just to give you an example: In AZ, a property tax increase takes nearly 2 years for it to actually occur. You first get a notice (a warning). Then it happens more than a year later.

However, you can bet RENTERS will be passed on this expense FIRST, before the owner has to pay it.

 

[CPisHere]

BTW, I'm always skeptical when people who get paid to provide information use words like "always" and "never"...

When the advice is incredibly counter-culture or against the norm, I think it stated that way to be outrageous on purpose.

Of course I'm sure Grant knows it's more nuanced than "NEVER BUY A HOUSE" but that doesn't get attention, and doesn't get people to question common wisdom as fully as they should.

We shouldn't assume that buying a house is the right decision - even if you "can afford it". For many people - they would be much better off using that money to invest in other ways & keep the flexibility of renting rather than buy a house.

 

[Mineralogic]

Cardone owns hundreds of millions in real estate. You didn't bother to read or watch what this discussion is about.

some guy Ryan on another Fastlane Channel seemed to dispute that and castigate the CARDONE

 

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[Lex DeVille]

Just want to say thanks to everyone who contributed to this thread.

We're moving across country in less than a year and wanted an intelligent conversation about owning vs. renting.

Somehow this thread just sort of popped up at the right time.

I'm still undecided, but at least there are lots of great points to consider, so thanks.

 

[Mac]

A lot of people buy a house because of their ego. I hear people say often "I don't want to pay somebody else's mortgage!" when I suggest renting for more freedom.

 

[biophase]

I'm not trying to troll you, i swear! But, just to play devils advocate, do you have a cash fund for county property taxes? Assuming you have one, what length of time would it buy you assuming your net worth went to zero overnight?

Assumption(I don't know what your house was bought/assessed at):
Asssessed at 2.5 million in Scottsdale $31,000 per year in property taxes
Assessed at 5 million Scottsdale $62,000 per year in property taxes

This argument or debate makes no sense. Anyone who's networth goes to 0 overnight is going to be in trouble if they own or rent. In fact, if you owned at this time, you put your home on the market at a discount, sell and get some cash back. If you rent, you don't have anything.

BTW, the taxes in Scottsdale are no where near what you posted. Try $6,000 a year for a $1m house!

 

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[biophase]

Just so I get this straight about this thread, we are talking about the home that you LIVE in. We are not talking about real estate investments. I thought I posted this math before somewhere, but couldn't find it so here it is again.

Let's say I had $1,000,000 cash and I needed to find a place to live.

I could buy a $1m home in a nice neighborhood. Done.

or

I could buy 7, $130,000 one bedroom condos (and have $90,000 left over). I can rent them all out and cashflow $600/mo each. This brings my incoming cashflow to $4200/mo.

Then I go and rent a $1m home for $5000/mo. So I have to come out with $800 out of pocket vs. my cashflow.

Now, if I owned the $1m home, my taxes would be say $500/mo, plus HOA, etc... so for simplicity let's just say that my owning home expenses were also $800/mo.

so let's say that everything balances out. You could argue that the maintenance on 7 condos would cost more than the maintenance on a $1m home. I don't know, but I would probably believe you.

Now let's pretend the housing market or the economy collapses. The $1m house is worth $850k. The $130k condos are worth $100k.

When this happens, people will go from buying to renting. The rent on your 1br condos will increase. The person owning the $1m home you are living in will need to lower rents. So you can actually go from -$800 to +$800.

Your business/work income dries up. You break the lease, or stay until the leash ends. Move into something smaller, say $2500/mo. You are still doing OK. You got your living expenses covered. You have many many options.

If you own the $1m home, you are very limited. You can just wait out the market until it comes back. If you lose your job or business, you may have trouble maintaining the home and making tax and HOA payments.

Let's say a biz opportunity comes along. You can sell 1 condo to get an influx of cash, vs. selling your $1m home or getting an LOC.

My point is that you have alot more options if you rent the home you live in and own the homes you invest in.

I get that people want a stable and long term home for their family. That may make it worth it to buy. But, I've seen so many homes for rent in every neighborhood that I've lived in that I can't believe that you wouldn't be able to find another home in the same neighborhood if you got kicked out by your landlord.

 

[Shades]

Not everything is pure money move.

If you are single or live with just your partner, sure you can rent. Have children or animals? Ehhhh IMO screw that.

So much of this topic doesnt come down to just money. I dont want a landlord. I dont ever have to deal with a landlord. I dont ever want to ask the landlord if I can paint the house or install a new countertop. All so I can tell people that I got a better deal then if I would of bought a house. To me personally its a matter of comfort. I need MY OWN space to do with what I please. And where am I getting a nice house on a bit of land in a area I want to actually live thats cheap? I see plenty of houses that rent for $1300+ that are either houses id never want to live in or a decent house where you have neighbors basically in your backyard. No thanks. Rental prices seem insane in many areas people actually want to live.

If you don't buy some ridiculous place you cant afford I cant see how renting ends up being better if you plan to live in a place 5-10 years.

 

[Shades]

A lot of people buy a house because of their ego. I hear people say often "I don't want to pay somebody else's mortgage!" when I suggest renting for more freedom.

Well of course if you travel the world and need all this freedom renting would likely work out better. That isnt everyone. Which is why its such a silly topic. To make where you live JUST a money question is dumb enough. But then to factor in all the other things that go in to that decision, of which everyones are different. I mean, 40% of the population never leaves their hometown and we are saying that renting for "freedom" applies to most people.....

 

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[458]

Why pay someone else for milk when you can just buy a cow? And of course it will appreciate, just feed it grass and sell it at auction later..

 

[Hyrum]

Just so I get this straight about this thread, we are talking about the home that you LIVE in. We are not talking about real estate investments.

My understanding is we are comparing the relative worth of buying a single 130k house versus renting a single 130k house. Obviously owning 7 income generating properties is better than owning a single non-income generating property, but I'm pretty sure that is not the argument Mr. Cardone was making with his video.

Two situations have popped up in my own life in the past few months. I know these are anecdotal, but might fall under the WCCA exercise from TMF . I'm pretty good friends with the guy who owns the house next to mine. Its a rental, so sometimes the neighbors leave something to be desired. The last ones, I found out, stopped paying rent soon after moving in. It took 9 months to get them out and afterwards, the home was trashed so bad he's going to have to have it demolished (and sell the empty lot to me). So never underestimate the abilty for a tenant to damage your property beyond what their deposit covers.
One of my good friends lives in Miami, where we has been renting the same house for over six years. He was told last month that the landlord decided to sell and he had 30 days to move out (his lease had moved to a monthly one). So now he gets to uproot his wife and 5 kids (I know, the topic of another thread), change schools, and go through the expense of moving to another house.

But my experiences might be extreme outliers, and the only person who can tell you what the right decision to make is yourself. All I know is that if a person who owns nearly half a billion dollars in rental properties is telling me that renting is the way to go, I'm going to do a little more due diligence before trusting him or her.

 

[biophase]

I personally think you have a lot more options if you own the home you live AND own the homes you invest in.

Why must it be either/or? Embrace the *AND*...

I think this is that same question of when do you buy something for yourself. In my example you could have easily spent $500k on rentals and the other $500k to buy your primary home. At some point, you make enough to make some moves that aren't the highest ROI possible because you just want something.

 

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[CPisHere]

some guy Ryan on another Fastlane Channel seemed to dispute that and castigate the CARDONE

Link?

 

[Runum]

When I began in real estate I read a lot of the REI books from gurus. They were running numbers and talking concepts that I could not see or understand. Their books did not seem to apply to my area.

Later I visited LA and Phoenix and saw the difference between their markets and my market.

To me, when you read a book or see a post about REI you have to think about their perspectives when they wrote it.

Real estate is local. The pricing, value, and appreciation depend on local market conditions. My area does not have the radical fluctuations in property values that some markets have. That affects some people's decisions about REI.

So, discussing real estate on a national level and then applying to each person's market, not sure we all see the same thing.

I do know of several couples that buy and fix and flip. They seem to make good money but they bust their a$$ trying to make the deals.

To make the blanket statement that real estate makes no sense to buy is not true for all. Each person has to run their own numbers and see how it stacks up.

I do own my house and a few rentals.

 

[Br@nd0n]

Living in an owned property is - most of the time - nonsense and should be avoided at all costs. Renting is the much better option most of the time.

I believe Grant is referring to the commitment of being stuck in one area say you live in California and an opportunity arises in Miami you cant just break a lease and go you have to try and sell close etc.. also you have money tied into a house like equity doing nothing for you and by the time you add taxes maintenance its about the same

also Grant mentions time you spend time maintaining a house when you rent someone cuts your grass does your maint. while your making money

also all the other reasons people mentioned on this forum.

 

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[Shades]

I believe Grant is referring to the commitment of being stuck in one area say you live in California and an opportunity arises in Miami you cant just break a lease and go you have to try and sell close etc.. also you have money tied into a house like equity doing nothing for you and by the time you add taxes maintenance its about the same

also Grant mentions time you spend time maintaining a house when you rent someone cuts your grass does your maint. while your making money

also all the other reasons people mentioned on this forum.

How many people does that apply to? How many people have a business that would make them move locations often? I mean, the person could simply WANT to move alot. In that case rent.

This time thing. I think we go too far sometimes. People want to act like they are working their business 29 hours a day. Are you REALLY gonna be working your business in that half hour you saved by not cutting the grass? I think its good to lift your head from the computer screen and go do shit like that.

 

[ZMan26]

I bought a house 3 years ago for $50k and lived in it for 3 years. Just sold it for 90k. We spent 10k on updates/maintenance over the 3 years so we made 10k a year on a 50k investment. Every situation is different but in my case owning my home was far better than renting.

Yea but what hes saying is that instead of putting your 50,000 on this house, you should have used it as a money down payment on an appartment building (lets say...8 apartments for 400K ? ) then you renters pay your mortgage while the property is going up in value (as well as the rent goes up )

 

[AllenCrawley]

Are you REALLY gonna be working your business in that half hour you saved by not cutting the grass? I think its good to lift your head from the computer screen and go do shit like that.

Some people's business IS cutting grass. Ask @SteveO

 

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[SteveO]

Some people's business IS cutting grass. Ask @SteveO

130 acres of it...

I have stayed out of this conversation for a reason. Many people have already stated that there are MANY variables here. Blanket statements don't apply.

 

[ddzc]

When I began in real estate I read a lot of the REI books from gurus. They were running numbers and talking concepts that I could not see or understand. Their books did not seem to apply to my area.

Later I visited LA and Phoenix and saw the difference between their markets and my market.

To me, when you read a book or see a post about REI you have to think about their perspectives when they wrote it.

Real estate is local. The pricing, value, and appreciation depend on local market conditions. My area does not have the radical fluctuations in property values that some markets have. That affects some people's decisions about REI.

So, discussing real estate on a national level and then applying to each person's market, not sure we all see the same thing.

I do know of several couples that buy and fix and flip. They seem to make good money but they bust their a$$ trying to make the deals.

To make the blanket statement that real estate makes no sense to buy is not true for all. Each person has to run their own numbers and see how it stacks up.

I do own my house and a few rentals.

Exactly this.

In my area, you're almost silly not to own a house. Homes have been going up on average 50k a year for the past decade in my city and the surrounding suburb neighborhoods. Some, even 80-100k a year increase in value...people are building a massive amount of equity just sitting in their homes, literally.

 

[Runum]

Also, any strategies written in REI books or material released before 2008 needs to be examined very carefully. Many real estate lending laws changed after 2008. Lately, I see lots of REI newbies jumping on the band wagon after reading older material.

 

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[biophase]

Ok, here is a question. Would this conversation change at all if you assumed that the home you bought would not appreciate at all in the next 10 years? Would you still be buying that house or renting?

 

[SteveO]

Ok, here is a question. Would this conversation change at all if you assumed that the home you bought would not appreciate at all in the next 10 years? Would you still be buying that house or renting?

The main variables in this scenario would be total rent and insurance for ten years vs. interest payment, tax/insurance, upkeep, cost of sale.