"Live where you rent and rent what you own."

[Christian G Leone]

I'm sure you've all heard the saying "live where you rent and rent what you own." Although I think most of us can agree that Grant Cardone is a salesman and a showman, is there any merit to what he's saying?

My goal is to create cash flow. I live in northern New Jersey which is an expensive market (duplexes going for over $600k). I currently live home (24 yo) and have been able to save up $70k over 2 years from my engineering job. Does it make sense to purchase a single family home in a less expensive market like south jersey and rent that out and move myself into a modest 1 Br 1 Ba apartment for $1700 per month? My original plan was to house hack but I've been looking for a year and I haven't been able to find anything that makes sense.

Any advice is appreciated!!!

[Jake S.]

Im sure youll find a house that suits your needs eventually but yeah a good househack home can be tough to come by. Personally, I like owning where I live. I like the perks and renting has NEVER appealed to me. And as you said, Cardone is a salesman.

Best of luck to you!

[Reed Rickenbach]

Realistically you can't create much pure cashflow with $70k (turnkey companies in low-cost areas will severely underestimate repairs), so I think you'd have the biggest impact by directly subsidizing your housing cost with a house-hack. Just keep looking or try to call owners of 2-4 units directly.  

[Paul De Luca]

Quote from @Christian G Leone:

I'm sure you've all heard the saying "live where you rent and rent what you own." Although I think most of us can agree that Grant Cardone is a salesman and a showman, is there any merit to what he's saying?

My goal is to create cash flow. I live in northern New Jersey which is an expensive market (duplexes going for over $600k). I currently live home (24 yo) and have been able to save up $70k over 2 years from my engineering job. Does it make sense to purchase a single family home in a less expensive market like south jersey and rent that out and move myself into a modest 1 Br 1 Ba apartment for $1700 per month? My original plan was to house hack but I've been looking for a year and I haven't been able to find anything that makes sense.

Any advice is appreciated!!!

If you can't house hack a 2-4 unit property you should try to buy a house, live there for a year, move out and rent it out. Also one other interesting strategy I heard of one guy that lived at home with his parents, bought a house to live in part time and then he rented it out on Airbnb when he wasn't there to meet the occupancy requirement. Not sure what the STR rules and regulations are where you're at but it's an idea.

Or like you said you could buy a house to rent out and then rent an apartment for yourself but then you'd need to put down significantly more money down for the house.

[Scott E.]

It's easy for people like Grant who have a net worth of ~$1,000,000,000 to say this. But for the average person, owning a home is without a doubt a tool to increase your net worth.

Stat from Business Insider: According to data from the Federal reserve, the average homeowner has a net worth 2.8 times the net worth of the typical person who doesn't own a home.

I've heard Grant say that owning the home you live in is a liability. Yes it can be. It's a liability when you need to change a light bulb, repair a leaky faucet, or replace your roof. But in my experience, appreciation outweighs the maintenance expenses by a lot.

I bought my first house at 25 and sold it 5 years later. I walked away with a tax-free net profit of $130,000. Would I have saved $130,000 had I chosen to rent for those 5 years instead? Nope.

[Chris Davidson]

@Christian G Leone work up a house hack, I find it hard to believe you can't find one. Find a house that can be converted to more units or rent by the room.

If you can buy right in a high value area it will work out way better in the long term. Finally see what your numbers look like when you increase rents by the same% (your primary is going to rise faster than your cashflowing rental as the basis is higher).

Best of luck and way to crush it on the savings!

[Vanessa Ivonne Hernandez]

I tried to househack Northern NJ too but I didn't have enough purchasing power. My income was good but I couldn't find numbers that would work for me. (It's possible work here though, usually taking on renovations to add hidden value.)

Purchasing a single family and renting it out is one option if there's a market for it in the area. If the rental income from that adds up in your analysis then go for it. 

However, I wouldn't continue to pay rent to someone else. Depending on what sacrifices you can make at this stage in your life, you can possibly get a single family, rent it out by room, and live there too. 

Remember we can make purchases for different reasons. One reason can be to significantly reduce our living expense in an expensive market. Something to consider.

[Mohammed Rahman]

Hey @Christian G Leone - generally with real estate, everyone will have different goals and you should figure out what your goals are or else you'll be susceptible to everyone else's opinions (even Grant Cardone's). 

In terms of whether or not the plan you suggested makes sense... does it align with your goals? If your goal is to start owning real estate while having tenants pay for a big chunk (if not all) of your mortgage while you build equity and appreciate then sure it makes sense. 

If your goal is to cashflow, then you should know like most high-price metro areas, NYC and parts of NJ won't necessarily cashflow right away unless you bring a big down payment/cash. 

Speak with @Shawn Mcenteer, he's the godfather of househacking in NJ and can at the very least point you in the right direction. 

[Eliott Elias]

I live by this, putting money into a property you live in is a waste. You could have used that money to have a tenant pay your mortgage. If you are not buying at the scale I am it may make sense. 

[Shawn Mcenteer]

Well Said @Mohammed Rahman .  Cash flow is possible in NJ @Christian G Leone but it comes at a cost. Find the right property that requires updating/ renovating is the fast way to getting cash flow in New Jersey.  If you are open minded to renovating and finding properties that need work it can be done.