{"id":80389,"date":"2019-03-10T05:00:34","date_gmt":"2019-03-10T11:00:34","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=80389"},"modified":"2021-04-30T14:28:03","modified_gmt":"2021-04-30T20:28:03","slug":"buying-a-house-not-for-suckers","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/buying-a-house-not-for-suckers","title":{"rendered":"Forget Everything You’ve Read: Buying a House is NOT For Suckers"},"content":{"rendered":"

Some time back, one of my favorite online financial gurus, Grant Cardone,\u00a0put out a video\u00a0<\/a>that\u00a0exclaimed, \u201cBuying a house is for suckers!\u201d<\/p>\n

Before that, he wrote here\u00a0on Entrepreneur<\/em><\/a>\u00a0that, “Unless you have 20 million bucks in the bank, in cash, you have no business buying a house.”<\/p>\n

It\u2019s not the first time I\u2019ve heard him say this, nor is he the only financial guru peddling this message today. Author James Altucher\u00a0has described<\/a>\u00a0time and time again how\u00a0he’s refused to own a house. Remit Sethi, the blogger behind the\u00a0I Can Teach You to Be Rich<\/em>\u00a0brand, often\u00a0cautions readers to be wary of buying real estate. Even Robert Kiyosaki, author of\u00a0Rich Dad Poor Dad<\/a><\/em>, has become famous for informing the public that a home is a liability, not an asset.
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\nRelated:<\/strong> An Investor Answers: \u201cShould I Buy a House for Myself or Purchase an Investment Property?\u201d<\/a><\/em><\/p>\n

Yet, for the majority of Americans, home ownership is clearly a part of the American Dream. Even\u00a0a guy like me — a\u00a0landlord<\/a>\u00a0for the past decade — has had to stop and ask if there is any truth to this. Is\u00a0<\/em>owning a home truly for suckers, as Cardone said?\u00a0Or was the headline over his Business Insider<\/em> video just click bait?<\/p>\n

Here, my goal is to explore the the three primary reasons Cardone and other financial gurus typically use for arguing\u00a0against buying a house — and offer a counter-argument.<\/p>\n

1. It depends where you live.<\/h2>\n

Should you own your home? Maybe. But, maybe not. Real estate\u00a0is<\/em>\u00a0expensive. In fact, that\u2019s one of the primary reasons a lot of homeowners and landlords fail.<\/p>\n

Besides the mortgage payment, the owner of the house also has to fix the plumbing, replace the roof, shovel the snow, paint the walls, replace the carpet — you get the idea. There are a lot of hidden expenses above and beyond the cost of the mortgage to consider, and the older the property is, the greater those expenses tend to be.<\/p>\n

However, in many areas, it is still\u00a0cheaper to own than rent. For example, in my town, I can purchase a decent single family home for around $75,000, which works out to a mortgage of around $500 per month, with taxes and insurance included. That same house would rent for about $1,000 per month. So, does the average homeowner of a $75,000 house have $500 in house-related expenses each month? Not unless he or she owns a terrible home.<\/p>\n

Therefore, where I live, at least, it makes a lot more financial sense to own versus buy — even with the repairs and maintenance required. Of course, in some areas, it might be far less expensive to rent than to own, while in larger cities such as New York, San Francisco, Miami\u00a0and other cities,the opposite is often true. All these facts add up to why you shouldn’t\u00a0take blanket advice from the internet when you make your decisions.<\/p>\n

\"multifamily-markets\"<\/p>\n

2. Owning a house makes you immobile\u00a0—\u00a0or does it?<\/h2>\n

This was the primary reason Cardone put forward for his argument\u00a0against buying a house. “To make money today, you need mobility,\u201d he wrote.<\/p>\n

Related:<\/strong> Buying a House: The Ultimate Guide to Purchasing Your First Property<\/a><\/em><\/p>\n

Personally, I found that weird — because I\u2019ve lived in the same county for 10 years, and I\u2019ve made money. Lots of it.<\/p>\n

So, do you truly need mobility to make money?\u00a0Sure, mobility is fun. I remember \u201cmobile life.\u201d Living out of a suitcase, sleeping on friends’ couches, eating leftover cold mac \u2019n cheese I found in the back of the fridge. All hail mobility!<\/p>\n

But, then, a funny thing happens: We grow up. We start having responsibility for things in our life. We actually\u00a0want<\/em>\u00a0some kind of stability. We want to raise our kids in the same place. We don\u2019t want to lose the friendships we have with our neighbors. We want to avoid having to move again and again and again because of someone else\u2019s decision.<\/p>\n

When you rent a home, yes, you can leave when your lease is up, which might be six or nine months down the road. Or, if you sell\u00a0your house, you can be out in a month or two. Even better, if you need to move suddenly, you can just rent your house out to a tenant and\u00a0—\u00a0gasp\u00a0—\u00a0move! Now, you are building wealth through rental properties\u00a0and<\/em>\u00a0you are free to be mobile\u00a0—\u00a0whatever that means.<\/p>\n

3. Is real estate a bad\u00a0investment?<\/h2>\n

Many financial bloggers love to point out that real estate values climb at a pace slower than that of stocks.\u00a0Okay, that\u00a0might be true, but it doesn\u2019t tell the whole story.<\/p>\n

As famed economist and Nobel prize winner Robert Shiller has pointed out, using the\u00a0S&P\/Case-Shiller Index, home values over the past 100 years have appreciated, on average, at nearly the same rate as inflation:\u00a0around 3 percent.<\/p>\n

So, should we immediately reject buying a house because it doesn\u2019t appreciate fast enough?<\/p>\n

Of course not. Real estate appreciation is just one of several benefits to owning property. When you own real estate, you don\u2019t usually pay 100 percent\u00a0cash for it. Instead, you obtain a loan and use a small down payment to take possession. That way, although the price of your property may increase only 3 percent, your actual return on investment could be significantly higher.<\/p>\n

\"rental-markets-2015\"<\/p>\n

The largest drawback to renting<\/h2>\n

The bottom line is,\u00a0should you buy a house?\u00a0I have no idea; maybe you should, and maybe you shouldn’t.<\/p>\n

But, if you base your decision on a financial guru telling you that \u201cbuying a house is for suckers,\u201d we need to talk.\u00a0In his video, Grant Cardone said that, \u201cThe best investment you can make is to have choices and freedom.\u201d I couldn\u2019t agree more. And when you choose to rent, you give up a sizable portion of your freedom to live the way you want to live; you hand that freedom over to a landlord like me.
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\nRelated:<\/strong> The 7 Vital Steps to Buying a Single Family Rental House<\/a><\/em><\/p>\n

When you own a house, on the other hand, no one is going to come kick you out because he or she has made a decision for the property that doesn’t include you. You won’t be forced to move your kids to another, less desirable, school district. No one will\u00a0arbitrarily increase your rent because the housing\u00a0market has improved, decreasing the number of homes and apartments available in your city.<\/p>\n

Further, no one is going to refuse you the ability to paint your bedroom the color you want,\u00a0or to put in gorgeous new hardwood floors. In other words, when you own a house, no one is going to tell you what to do.<\/p>\n

But do go ahead. Keep renting. I\u2019ll keep\u00a0buying rental properties<\/a>\u00a0and growing my own wealth. I\u2019ll keep telling you to clean your deck, I\u2019ll continue to deny you permission for your boyfriend to move in.<\/p>\n

I may also\u00a0decide to raise your rent, because I need an extra latte or two this month.<\/p>\n

Now, that’s “freedom.”<\/p>\n

[This article was originally published on Entrepreneur.com<\/a>.]<\/em><\/p>\n

We’re republishing this article to help out our newer readers.<\/em><\/p>\n

\"\"<\/a><\/p>\n

What do YOU think?\u00a0Is buying a house for suckers?<\/em><\/p>\n

Let me know your thoughts with a comment!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Recently, financial expert Grant Cardone said, \u201cBuying a house is for suckers!\u201d Is that statement REALLY true? Delve deeper here!<\/p>\n","protected":false},"author":710,"featured_media":96668,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6804],"tags":[],"class_list":["post-80389","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-selling"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/80389","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/710"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=80389"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/80389\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/96668"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=80389"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=80389"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=80389"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}