My Issue w/ Grant Cardone's statement to never buy a house
I enjoyed episode 250. Congrats guys on making it.
I think Grant had some good content to challenge my paradigm on investment strategy. However, his view on not buying houses doesn't make sense for the following reason (I know he's echoing something Robert Kiyosaki said as well so I'm countering some credible voices).
Anyway, it costs more to rent an equivalent home than what you would buy. In addition, you're accumulating equity while paying off your house if you buy. So his argument that the equity you have in your home could have been used for another cash producing investment isn't completely true.
Case in point, Let's say you buy a $300K home, so you're out the $70K in down payment and closing costs. So it's true that is money you can be using for an investment. On the other hand, your P&I + insurance + taxes for your home is probably at $1,900/ month, whereas for an equivalent home to rent you're looking at $2,500/month +, a difference of $600/month. Over the course of 5 years, that's $36K in rent savings + $30K in equity you've paid into you home which nets you at about even.
So a better answer is if you want to like the sexy life style and move around every year or two, then he's right, you shouldn't buy, but if you plan to stay somewhere longer because you have a regular job, etc. then there's a breakeven point where it makes sense to buy, especially when you add in other benefits like being able to draw a line of equity on your house and tax write offs on mortgage interest.
Trulia has a great tool to calculate the break even point between rent vs buy on any property.
https://www.trulia.com/rent_vs_buy/
I'm curious to know what others think. Cheers