Grant Cardone, a prominent figure in the financial industry, recently expressed doubt about the traditional American Dream of homeownership. He argues that it poses more of a financial burden than a benefit. In his eyes, symbols of middle-class prosperity such as cars, homes, and college education hinder wealth accumulation.
Set to release a new book titled “The Wealth Creation Formula,” Cardone is adamant that owning a home is not the financial security it’s often believed to be. In an October interview with GoBankingRates, Cardone pointed out that a home purchase requires a significant down payment, which becomes stagnant money that does not grow. He believes that the return on investment for single-family homes is lower compared to other assets. Cardone also highlighted the challenges of flipping homes for profit, given the need for substantial appreciation to cover interest, brokerage fees, and insurance costs.
Current real estate market trends support Cardone’s stance. Despite modest year-over-year increases in home prices across the U.S., homeownership costs have risen due to higher mortgage rates. This results in decreased buying power and makes home loans more expensive, adding to the financial strain for potential buyers. Inventory is also low, leading to intense competition for available homes, often culminating in bidding wars and further driving up prices in many markets.
Cardone’s advice draws attention to the fact that a home, for most people, can quickly transform from a dream into a financial and practical burden. Several reasons contribute to this:
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High insurance costs: Substantial property insurance, particularly in disaster-prone areas.
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Maintenance and repairs: Ongoing, costly, and time-consuming upkeep.
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Lack of flexibility: Long-term mortgages limit relocation opportunities.
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Financial risk: Mortgages tied to fluctuating property values present a significant risk.
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Unexpected expenses: Homeownership often brings unforeseen costs like emergency repairs.
Instead of buying a home, Cardone recommends renting and investing the money saved from a down payment into assets that generate passive income. During an interview in July, he cited examples like Warren Buffett, Steve Jobs, and Elon Musk, who owned minimal or no real estate, to illustrate his point.
Cardone’s perspective comes at a time when mortgage interest rates in the United States have soared, with the average rate for a 30-year fixed mortgage climbing to a high of 8.08%, a significant jump from the 3.22% seen in January.
Passive real estate investments, like crowdfunding or fractional ownership, offer people the opportunity to make money through real estate without the expense or burden of owning a home. Cardone’s own real estate firm Cardone Capital allows individuals to invest alongside him in multifamily properties. Other companies, like Arrived, even allow people to buy shares of single-family rentals with as little as $100.
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This article Grant Cardone Says Owning A Home Isn’t The American Dream It’s Hyped Up To Be — But Instead, ‘The House, For Most People, Is A Nightmare’ originally appeared on Benzinga.com
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