The debate over whether to buy or rent a home has been ongoing for years, and it’s understandable why. For many, purchasing a house represents the largest financial commitment they’ll ever make.
While personal circumstances play a key role in this decision, real estate expert Grant Cardone has a clear stance on the matter.
He stated, “I’d rather pay $2,400 in rent than the same amount on a mortgage because I can leave that rental every 10 months, while a mortgage locks me in for 30 years.” During a chat with YouTuber Kevin Cooney, he emphasized the flexibility that comes with renting.
According to Cardone, one of the biggest distinctions comes down to costs. “Owning a home isn’t an investment if you’re residing in it, it’s just a fixed expense. In fact, I wouldn’t even count it as part of my net worth,” he explained.
He highlighted various expenses that homeowners face, such as homeowners association (HOA) fees, property taxes, regular maintenance, and what he dubbed “lack of control insurance.” These costs can add up quickly. A recent Bankrate study estimated that the “hidden costs” of owning a typical single-family home in the U.S. could reach around $21,400 by 2025, covering everything from taxes and insurance to repairs and utilities.
To clarify, Cardone isn’t against the idea of owning property. As an established real estate investor, he has accumulated wealth through buying and selling properties. What he insists on, however, is that he only takes on debt when it’s associated with assets that can generate income.
“I’d prefer a 7% mortgage if it means renters are paying more than 3% in my property,” he indicated to Cooney.
This perspective is quite bold. While many homeowners are focused on securing the lowest mortgage rates, Cardone argues they may be overlooking the bigger picture: who is actually bearing the financial burden.
It’s also worth noting that not all rental properties end up being profitable enough to completely cover mortgage payments, especially in the current market. The profitability of renting is reliant on several elements like location, property price, interest rates, and demand for rentals.
Even if you decide to own a rental property, you’ll still encounter many of the same fixed expenses as regular homeowners. Plus, finding dependable tenants can be quite a challenge. Being a landlord isn’t necessarily an effortless role; it often involves a lot of management, maintenance, and unexpected issues.
On a brighter note, you don’t have to buy properties outright to invest in real estate today, and you certainly don’t have to deal with leaky faucets.
Crowdfunding platforms have made it much easier for average investors to dip their toes in the real estate market. With backing from notable investors like Jeff Bezos, individuals can invest in shares of rental properties with amounts as low as $100, without the hassle of property management.
The process sounds straightforward. You can browse through a curated selection of homes that have been vetted for suitability and income potential. After you find something appealing, you just choose how many shares you want, and then you can start receiving rental income distributions from your investment.
For accredited investors looking to step into the $35 trillion U.S. home equity market, there’s an opportunity to invest in owner-occupied homes. With a minimum investment of $25,000, you can gain exposure to properties owned by multiple individuals across top U.S. cities.
Alternative options also exist, such as commercial real estate investments focused on food-anchored properties. With a minimum of $50,000, investors can participate in ventures involving well-known brands like Whole Foods and Kroger, without the burdens of being a landlord.
To get started, you simply have to answer a few questions about your investment preferences. This leads you to a comprehensive list of available properties.
