Forget Everything You’ve Read: Buying a House is NOT For Suckers

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Recently, one of my favorite online financial gurus, Grant Cardone, put out a video that exclaimed, “Buying a house is for suckers!”

Before that, he wrote here on Entrepreneur that, “Unless you have 20 million bucks in the bank, in cash, you have no business buying a house.”

It’s not the first time I’ve heard him say this, nor is he the only financial guru peddling this message today. Author James Altucher has described time and time again how he’s refused to own a house. Remit Sethi, the blogger behind the I Can Teach You to Be Rich brand, often cautions readers to be wary of buying real estate. Even Robert Kiyosaki, author of Rich Dad Poor Dad, has become famous for informing the public that a home is a liability, not an asset.

Related: An Investor Answers: “Should I Buy a House for Myself or Purchase an Investment Property?”

Yet, for the majority of Americans, home ownership is clearly a part of the American Dream. Even a guy like me — a landlord for the past decade — has had to stop and ask if there is any truth to this. Is owning a home truly for suckers, as Cardone said? Or was the headline over his Business Insider video just click bait?

Here, my goal is to explore the the three primary reasons Cardone and other financial gurus typically use for arguing against buying a house — and offer a counter-argument.

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1. It depends where you live.

Should you own your home? Maybe. But, maybe not. Real estate is expensive. In fact, that’s one of the primary reasons a lot of homeowners and landlords fail.

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.

However, in many areas, it is still cheaper 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.

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 and other cities,the opposite is often true. All these facts add up to why you shouldn’t take blanket advice from the internet when you make your decisions.


2. Owning a house makes you immobile — or does it?

This was the primary reason Cardone put forward for his argument against buying a house. “To make money today, you need mobility,” he wrote.

Related: Buying a House: The Ultimate Guide to Purchasing Your First Property

Personally, I found that weird — because I’ve lived in the same county for 10 years, and I’ve made money. Lots of it.

So, do you truly need mobility to make money? Sure, mobility is fun. I remember “mobile life.” Living out of a suitcase, sleeping on friends’ couches, eating leftover cold mac ’n cheese I found in the back of the fridge. All hail mobility!

But, then, a funny thing happens: We grow up. We start having responsibility for things in our life. We actually want some kind of stability. We want to raise our kids in the same place. We don’t 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’s decision.

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 your 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 — gasp — move! Now, you are building wealth through rental properties and you are free to be mobile — whatever that means.

3. Is real estate a bad investment?

Many financial bloggers love to point out that real estate values climb at a pace slower than that of stocks. Okay, that might be true, but it doesn’t tell the whole story.

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

So, should we immediately reject buying a house because it doesn’t appreciate fast enough?

Of course not. Real estate appreciation is just one of several benefits to owning property. When you own real estate, you don’t usually pay 100 percent cash 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.


The largest drawback to renting

The bottom line is, should you buy a house? I have no idea; maybe you should, and maybe you shouldn’t.

But, if you base your decision on a financial guru telling you that “buying a house is for suckers,” we need to talk. In his video, Grant Cardone said that, “The best investment you can make is to have choices and freedom.” I couldn’t 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.

Related: The 7 Vital Steps to Buying a Single Family Rental House

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 arbitrarily increase your rent because the housing market has improved, decreasing the number of homes and apartments available in your city.

Further, no one is going to refuse you the ability to paint your bedroom the color you want, or 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.

But do go ahead. Keep renting. I’ll keep buying rental properties and growing my own wealth. I’ll keep telling you to clean your deck, I’ll continue to deny you permission for your boyfriend to move in.

I may also decide to raise your rent, because I need an extra latte or two this month.

Now, that’s “freedom.”

[This article was originally published on]

What do YOU think? Is buying a house for suckers?

Let me know your thoughts with a comment!

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.


  1. Jeff M.

    Brandon: I am glad you provided this correction. My opinion is that you and Josh do the BP community a disservice when you give “personalities” like Grant too much unmitigated airtime. Harsh feedback? Listening to his podcast was like watching the High School bully strut through the halls with his minions behind him saying “awesome, awesome”. Contrast this to the Podcast with Bill Powers on 185. You had an insightful discussion with Bill and I learned a lot.

    Thanks for what you do and keep on learning with us.

    • Steve Hovencamp on

      Great article but I actually agree with Grant Cardone on this particular subject. The guy does have 45 hundred units and a private jet. I’ll probably be ridiculed for agreeing but that’s fine.

      • Susan Maneck

        Yeah, he makes a lot of money off of suckering people to rent rather than buy. Me? I’ve told every one of my tenants to let me know when they are ready to buy because I will always sell them the house they live in or a better house if I have one. I also tell them about the programs they can go through on home ownership and how they can get 5K towards their down if they do so. But my dream is to make as many of them them into homeowners as possible. But there are plenty of places where renting is makes more sense than buying and that is where the mortgage exceeds the rent as Brandon rightly points out. I’d say it is the case in California but I just bought my vacation/retirement condo in Lake Tahoe for 110K and currently have it rented for $975. Not the returns I’m used to getting here in Mississippi, but I’m going to live in that condo someday and if I waited I would never find something affordable. Besides, I have the best property manager possible, my mother.

  2. Ben Leybovich

    Listen, good looking….

    First, back off of Grant Cardone is wrong is wrong stuff – that’s been done…by me…and done very well indeed!

    Second, you are wrong here, and Grant is totally right, and coming from me that’s not nothing, considering our past 🙂

    You just have to internalize the numbers. You bought a house a while back, right? Probably already spent $20,000 on it since you bought it, remodeling the kitchen and all the rest. You paid more than you should have to begin with, because this house is what your wife wanted. And now, good luck getting out of it.

    Furthermore, over the next 10 years, you will spend another $20,000 to keep the thing working as it should. This means that in order to get out, you’ll need to cash out purchase price + $40,000 + RE commissions — and that’s to break even.

    Now tell me – is that happening in Montesano in the next 10 years? And in the mean time, your property taxes and insurance are going one way – can you guess which way?

    The house we live in is a liability, just like Rich Dad and Cardone say, and the only way to turn the paradigm is to either get in at a substantial discount to market, or to househack in order to offset the cost.

    On my house in Lima I did neither, and I felt the pain when I sold, for more than I paid, but less than I had in it over the years. You’ll find out what this is about in a few years 🙂

    • Jason Brenizer

      Ben Leybovich. Hero.

      You always run the numbers down to the bone, and I thank you for that.

      Most homeowners fail to keep rigorous capital expense records to know if selling will have a negative return. How many people buy their own house strictly as an investment? They usually lend so much weight to proximity to work or the quality of the school system.

      I live in central Austin, TX. Prices here are crazy. I still live in the house I bought in 2002 as a live-in slow flip. I bought the worst house in a pre-gentrification neighborhood for $130K, did a $50K renovation. I planned to sell within 5 years.

      I kept it as a rental when my wife and I lived overseas for 5 years. The last group of tenants turned our lovely 2500 s.f. home into a music venue for SXSW, without our consent of course. Talk about learning the lesson of owning outside your market and bad property managers the hard way.

      $45K later, it’s our house again. Yes, it appreciated greatly. We could get a buyer within 2 weeks at $600K, even though the kitchen could use a serious remodel. The land alone is worth $250K.

      But we got lucky with appreciation only because I picked the right location. Some would argue I read the trends. I say no matter how much data I thought I had, it was still a gamble. Not quite roulette. More like poker.

      If the market goes down again, some of the appreciation will be lost. Maybe all of it, if Kiyosaki’s big fall happens this time around.

      And still with all that glorious appreciation, my house is the very definition of a liability. More money goes out than comes in on a monthly basis.

      When we upgrade (to a million dollar home) we’ll definitely be renting.

    • Paul Hormann

      I agree that your house can mostly be a liability, but so is the human need for shelter. You’re born with a built-in liability you can’t get rid of. So I think the comparison is not whether or not you break even, but if buying a house or renting that same house is more or less of a liability. This would need to factor in cost of money, liquidity (opportunity cost of down payment), tax incentives, risk, etc. I could put the comparison spreadsheet together for it, but I think I’ll concentrate on looking for more deals instead 🙂

      • Bill Briscoe

        ^ Exactly this Paul.

        If I rent a comparable house to what I live in, I’m out $25K-30K per year in rent (and none of that is tax deductible). Instead, I’m paying $735/mo in mortgage, and another 400 in Tax and Insurance – less than half of comparable rent.

        Furthermore, the rent is going up every year for the rest of my life, and faster than just my tax and insurance goes up. Meanwhile, my mortgage will be paid off at some point, and that $735/mo is no longer a liability. And I pay less in income taxes than I would if I rented, due to my property tax deduction, and interest.

        Maintenance/Renovations? I certainly don’t spend anywhere near the 10-15K more that I would be paying to rent on this. Maybe $350 a year on paint bc my wife likes to decorate. Roofing? – I’m getting a new one next month because of a hail storm, and worst case will be out of pocket only $1500, but due to the excess insurance payments they are giving me for fence damage that I fixed myself for free, it will probably cost me nothing.

        What if I want a new fridge or washer/dryer or furniture? Renters pay for those themselves too, at least in my area, on top of rent. Plus they should be paying renters insurance for their belongings, also on top of rent.

        Car insurance? I get a discount there because I own my home. Not really a reason to own, but a nice bonus.

        Mowing and snow clearing? Resident pays for that regardless of ownership status…

        And best of all, when I get old and go to the nursing home, I have a saleable home worth a quarter million assuming zero appreciation. Whereas if I rent my whole life, I would have only the other investments I had acquired over time, but since I would have been paying so much in rent, they probably wouldn’t be as substantial as the outside investments I already have purchased on top of my home.

  3. You wrote: \”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.\” … \”Therefore, where I live, at least, it makes a lot more financial sense to own versus RENT.\” [ you actually wrote OWN VS *BUY*]

    But we know you know that\’s not the whole story!

    Let\’s say an average homebuyer puts down 20% or $15,000 with a 30 year fixed mortgage. They could have instead taken that $15K and put it in the stock market and made about 10%/yr compounded or about $260,000.

    The renter pays $500/mo more for 30 years = $180,000.

    Therefore the renter is 260,000-180,000 = $80,000 ahead.

    Wouldn\’t it be silly for me to say, \”Therefore, where you live, at least, it makes a lot more financial sense to RENT versus BUY!\”

    Obviously that would be silly because there are a zillion variable and other things to take into consideration — appreciation of home, but expenses home owners pay that renters don\’t, increases in rent, but increases in property taxes, some people put down less, but then they probably have PMI or a 2nd mortgage, etc, etc.

    Therefore any real financial analysis has to take MANY factors into consideration, and a blanket statement like saying monthly rent is higher therefore homeownersip is better, is silly.

    BONUS: If you are an entrepreneur, which obviously the readers of this site are, then what ELSE could you do with $15,000 or so? In other words, what is your lost opportunity cost if you buy a house? Try this on for size!…

    5 People Who Turned $1,000 Into $1 Million

    • Chad Carson

      I took Brandon’s point as the decision DOES have a lot of variables. That is why blanket statements like home ownership for suckers is ridiculous. Brandon is just giving some much needed balance.

      And the math you used to make a point was off. You are being generous estimating 10% returns in stock market, past performance aside. But even if the renter has $260,000, you penalized the owner for $180,000 of payments and forgot about renters $1000 adjusted for rent increases. That is $360,000 if rents never increase!

      And the home owner has no debt and perhaps a $200,000 house or better after 30 years.

      So $260,000 – $360,000 = at least -$100,000 for renter vs -$180,000 + $200,000 = $20,000 or more for owner. Again, numbers are too simple but Brandon’s example and other points make sense.

      • “And the math you used to make a point was off. You are being generous estimating 10% returns in stock market” and no, that is perfectly reasonable with a 30 year time horizon.

        “and forgot about renters $1000 adjusted for rent increases” & No I didn’t. I actually wrote, “increases in rent, but increases in property taxes” — which you forgot go up, and so does insurance, and also renters don’t pay for appliances when they go bad, or roofs — homeowners do.

        “And the home owner has no debt” & why would a renter have debt??

        “perhaps a $200,000 house or better” & there is massive variation in home value increases, or decreases!, depending on many variables. Investing in the stock market correctly (a globally diversified portfolio of low-cost index funds utilizing Modern Portfolio Theory) is highly likely to achieve very close to a 10% return with a 30 year time horizon.

        • Chad Carson

          I gave you the 10% stock return. That is not the issue with the math. And rent increases vs tax/ins increases is not the issue. Call it a wash, although 3% inflation on $1000 rent is more painful than inflation on a couple hundred per month tax/ins bill.

          The issue is you left out the equity in his free and clear home.

          If the value is $150,000 – $200,000 in 30 years, he can sell and use that wealth. And $150-$200,000 is better than $80,000 last I checked.

    • Chad McClain

      You’re calculations are missing a pretty important part. What says the homeowner can’t invest the $500 monthly savings in the stock market? The compounding interest from the continuing investment alone swallows the $80,000 difference whole and puts the homeowner drastically ahead.

      • You own a house? You think you never need to replace the roof? Siding? Air compressor? Water tank? Windows? Appliances? Carpet? Mow the lawn? Re-pave driveway? Repair toilets? If you don’t have a reserve fund — as a homeowner — you are going to be in for some nasty surprises over 30 years!!

        • Bill Briscoe

          Yes, I own a house, and have for 15 years. maintenance doesn’t cost me anywhere near $500/mo. As Brandon said – if it did you must have a really bad house.

          Mow the lawn? Seriously, I’m tired of debunking these non apples to apples fallacies. SFH renters MOW THEIR OWN GRASS. What type of dwelling you live in and whether or not it has a yard is a separate decision from owning vs renting. Rent vs own should be strictly a financial decision between comparable properties.

          I fix my own toilets for under $20 in parts. Appliances? Renters have to pay for those in my state – fridges and washers and dryers aren’t included in the rentals I own. Water Tank? $600 once every 10-12 years. Air compressor? Never owned one. Siding – I have brick and it pretty much lasts forever. Paint, I do myself for $35/gal. Roof? I’m getting a new one for next to nothing due to hail damage. (My insurance is kinda high, but its still lower than renting. Landlords have to price in the insurance too). Carpet – that’s about the only significant expense I’ve made in my homes. But still no where near $500/mo for all of the above items.

          And if you want to put a value on my labor – for one, I enjoy projects, and two, I’m uncomfortable with strangers being in my home. So its less of a hassle for me to fix my own toilet on the weekend than it would be to have to call a landlord and meet him and let him into my private bathroom and wait for him to fix my toilet.

  4. Matthew Gardner

    I dunno – I think “allowing” tenants to paint a bedroom and having a domestic partner move in seem like pretty reasonable requests. It’s great to have rules and standards; it’s also great having long term tenants who are not being treated like recalcitrant teenagers.

    • Deanna Opgenort

      If the boyfriend can pass the same background check as the initial tenant, fine. If the boyfriend has just gotten out of prison for stealing weapons from the government or has tried to steal a plane, um no. (these are real examples, BTW. Why a name search of tenant prospects is mandatory).
      As far as painting, I allowed purple and pink bedrooms once. The single coat of cheap white paint on move-out didn’t cover. In the chaos of moving, tenants simply don’t have time to do everything, despite best intentions. My new tenants will get to paint, but only a light neutral color that won’t need to be repainted when they leave (a classy tan w/white trim, & maybe a sage green). I’ll even supply the paint since one of the rooms was in need of touch-up anyhow (win/win).

  5. Isaac Hobbs

    Cardone is both right, and wrong but it depends on the location. I work in a large residential brokerage and his video from Business Insider went through the office a couple weeks ago with the obvious negative reactions from my fellow brokers who’s livlihood depends on selling people a home
    As I’ve worked through it I believe he is completely right in the sense that owning a home may bring a long-term return of pennies when leveraging your money, time and effort could bring you back millions. So obviously if someone is investing in something that brings back only pennies then the guy making millions is going to say that is stupid and be correct. However, most people don’t want to put time, effort and money into taking risk and building portfolios or the like. For these people, owning a home is the best decision for them because rather then throwing money down the drain by renting, at least they’re staying somewhat stable.
    For me personally, I rent a cheap apartment with a couple buddies and use my money for my business, my first purchases will be multi-family that I can rent out. This makes financial sense to me and is the best way forward in this area. For my parents though who are part of the hardworking middle class who just want to be enjoying their life now and not be learning new things or taking risks, I’m advising them to just stay in their home and maybe, maybe buy another home in the future they can rent out and build equity in.
    Bottom line, for different people with different goals, there’s going to be a different opinion. I agree with Cardone because it fits my goals, I also advise people to do just the opposite because that’s what will work best with their goals.

  6. Greg Stoner

    Grant Cardone is a scientologist so his credibility is negligible at best.

    Scientologists of course believe that Xenu (/?zi?nu?/), also called Xemu, was, according to Scientology founder L. Ron Hubbard, the dictator of the “Galactic Confederacy” who 75 million years ago brought billions of his people to Earth (then known as “Teegeeack”) in DC-8-like spacecraft, stacked them around volcanoes, and killed them with hydrogen bombs.

    So if your views differ from Cardone then you should be relieved!

  7. Goran Vejzovic

    I am both a fan of BP and GC. Its true most of the time “shock value” in GC’s world pays the bills so why not pique peoples interest and promote a healthy discussion about the topic. Like everything in life, there is no “the best way to do something” that covers every single individual on the planet. People have different set of circumstance and where they are in life so to each their own. Focus on your OWN goal and what you want to achieve, how you get there does NOT have to be by following anyone else’s footsteps. Make your own path!

    Great article btw!

  8. Joe Cantanzriti

    Great article Brandon Turner. These controversial topics are what make real estate so fun and exciting day in and day out because there isn’t one right answer to anything for everyone. Grant Cardone’s ideas certainly are controversial but he does own more real estate than 99% of investors on BP so he must be doing something right.

    • Christopher Lombardi

      Cardone makes his money through motivational speaking, books, courses and advertising. He says he “preserves” his money with real estate. He also said he thought it was stupid to buy real estate with little or no money down. “The only purpose of real estate,” he says, “is to preserve money.” This is not a guy people should look to for real estate advise or financial advise. He is a great motivational speaker and there is nothing wrong with that, but his intelligence is not in real estate or financial matters. He owns tons of real estate, but didnt make his money in real estate, he made it through other means.

  9. Damon Jude

    Good article that shows a different perspective! I tend to think Cardone’s advice is geared towards those who would put “getting rich” in the forefront of the “slow and steady wins the race” concept.

    The numbers would say Cardone’s theory is correct, since investing in multi-family housing would give you a higher return than a single family home in both short and long term investing.
    If you invested in an additional multi-family complex instead of using that down payment on a home, you’d come out with a better ROI in almost every case.

    However, to each his own, since comfort and convenience may be a necessity for many to function properly.

  10. steve portock

    Cardone is right. Seriously how are you are investors and can’t see this? House don’t appreciate ever, let that sink in please. Houses are not some magic thing that goes up in value. Your purchasing power went down in value, that’s all that happened, you just are not seeing it. A house is like a car, most expensive when brand new, there is utterly no reason for it to go up in value. Its all a game being rigged by realtors and others who have in interest in this. Take your grandparents house from however long ago, look at what they bought it for. Next look at what its worth today. Now take that magic “profit” you think you made on it when it sold. Next take that same purchase price and inflate that to today’s dollars and tell me if you made any money on it? In pretty much all cases you did not make a dime, and in fact lost money. 3% inflation is a joke of a number and nowhere near reality. In my own example I have been renting a house from a corporate nationwide lender, for over 4 yrs now. Given all that they have fixed in that time, I am pretty dam glad I did not “own” this lol. If you are honest and run your own numbers, you almost never make any money, and are lucky if you break even at best. Unless you bought a house way under market and fixed it up, that might be the only scenario where one makes money on a house, however most people are not doing that.

    • Bill Briscoe

      Owning is not about the appreciation. That could happen and it would be a bonus.

      But owning is about the amortization. Part (most of you have a low interest rate) of your monthly payment goes to paying down the principle on the loan, and you are still paying less per month for mortgage, tax, insurance AND maintenance than you would to rent the SAME home in most areas of the country – certainly where I live.

      Also a house is Not like a car. Car prices invariably go down. Homes bought in a normalish market will track inflation (which is usually positive). No, they may not go up in real value, but you aren’t losing value either like you do on a car.

      • steve portock

        Bill please stop it, you clearly have no idea what you are talking about. You don’t ever “own” the house, thats a lie that keeps on playing itself out. Stop paying your property tax and show me what you own when the gov’t entity where you live takes your house. Renting is still cheaper in almost every area of the country now. You lack the ability to analyze the situation for what it really is, and its clear you have no clue how money works in this country or what’s happened over the last 30 years. On the back end of that low rate mortgage you think is so cheap is a pension fund thats getting a negative return, its a dangerous game being played now. Just stop it and quit with responding back like everyone here is in second grade. Most here know quite a bit more about money than you do and its quite obvious from your responses. Houses don’t appreciate ever, there is nothing that makes that happen, you just don’t get that the higher price your house now fetches if you sold it, is really how much purchasing power your money lost over a given time span and interest rate. If rates stayed constant and the money here was stable, you would see little to no appreciation whatsoever. Go ask your grandparents or anyone their age if things cost less today than they did 30 yrs ago, in fact I bet you even have a 401k and think you will see a dime of that when you retire too lol. Cardone is right, and anyone who disagrees please argue some objective facts that shows otherwise, i have yet to see that in any response on this.

        • David Krulac

          1. Agree, on appreciating values of houses. As I talked about in Bigger Pockets Podcast #82, clearly Capital Gains Tax should be indexed for inflation. You are paying in many cases totally a tax on inflation. If you buy a house for $25,000, keep it for 25 years and sell for $100,000, almost all if not all of the “Capital Gains Tax” is a tax on inflation over that 25 year period. If the tax was ever to be indexed, the tax payer would see for themselves how little gain not attributed to inflation.
          2. Agree, if you don’t pay your real estate taxes, you will eventually lose your real estate. There are about 18 countries in the world out of 200 or so that have no real estate taxes. I’ve been to two of them. In one country there is no income tax, no capital gains tax, no real estate taxes and no inheritance/estate taxes. Sounds like a great place! However that’s not happening here in the US, ever.
          3. Disagree that renting is cheaper in almost all of the country. with the low interest rates like 3.5% fixed for 30 years, the cost of ownership is way down. Just sold a SFH on Monday. The buyers P+I is $519. Taxes and insurance another $157 mo. for a total of $676. I had rented the house for $1,250, tenants paying utilities, cutting the lawn and shoveling the snow. The house was sold retail through the MLS to an owner occupant, who clearly is paying $574 less per month than the tenants on the same property. The house has a new 50 year roof, new high efficient gas furnace, new central air, all new floor coverings, new paint inside and outside, new gutters and downspouts, new range and dishwasher. It also has a fireplace and 200 amp electric. (No other appliances were provided either to tenant or buyer, both supplied their own.) Its not going to cost $574 in maintenance a month on this house. This is not an anomaly, I sold another house in the neighborhood this year for $79,900 with gas heat and central air. Sure there are high priced areas where buying is more expensive than renting, I was just out at the SF Bay Summit for example. But out of the 50 states, there are plenty of areas where buying is cheaper in some cases much cheaper.

  11. Julie Hassett

    YESSSSS!!! I’m so glad you wrote this post. The whole time I was listening to him spout this rhetoric, I was thinking what a huge contrast it was to your and Josh’s “do what works for you” attitude.

    No doubt, buying a primary residence is an investment in HAPPINESS – first and foremost. It won’t make you happy every day, but that IS one of its main purposes. Sometimes I just stand in my amazing living room and look around and tell my house how much I love it. Seriously.

    I want to put down roots, build community and make an impact in Baltimore. So buying a beautiful home with a yard in a superb neighborhood for the same price as renting a rowhome makes sense for me.

    Will I get all my money back when I sell? Who knows? Probably not.

    But if tough times were to require it, I’ve got two extra bedrooms and a basement I can rent out and no one can tell me that violates my lease.

    So, “do what works for you” is still the NUMBER ONE thing to remember when you’re considering buying a home. And if and when you do, I hope it makes you HAPPY above all else.

  12. Your bottom line is correct. You have to do your own analysis. Anyone can run the numbers, but only you know your preferences and how much you are willing to pay for them. For me, finally buying a house was the sweetest freedom.

  13. Mark Spidell

    When you take a very qualitative concept like home ownership and mix it with a very quantitative concept like real estate investing you will get a lot of different opinions. As investors and homeowners we know that the experience of living in certain areas varies drastically. In some “better areas” there are not a lot of rental options. Atleast not subjectively “good” rental options.

    How much are these qualitative homeownership considerations worth if it means living in a better area?
    Living near a good school
    Makes spouse happy
    Closer to recreation
    Shorter commute

    From a personal finance perspective, a high overhead primary residence should always be viewed as a luxury. I am not sure if I agree with $20 million in cash as the best way of saying it, but certainly a strong argument can be made for not having a lot of excess house if you have a net worth under say $2 million.

    I live near some pretty amazing trophy properties. The range of costly amenities can be very wide from just having a bit more house than you really need all the way up to your own private stable filled with polo quality horses and your own helipad with copter! The sky is the limit.

    I think the biggest point that Grant (and a lot of others) is trying to make is to put yourself in the best position to take risks so you can create your best life possible. I wrote a blog along this theme:

    Home ownership certainly can become a trap for a lot of people as it is easy to become stuck in the unhappy W2 rut with the root cause being lifestyle creep.

    PS…props to @Ben Leybovich for starting off his comment with “Listen, good looking…” I guess he can say that kind of stuff because he is always wearing that dark suit.

    • I think Brandon’s number 1 reason (it depends on where you live) hits the nail on the head. Obviously, if you can purchase a home in your desired location for a monthly outlay that is much less than renting a comparable property- yes, you probably want to take that deal. I would argue that buying a multi family would be a better financial decision…..but I digress…The fact is, buying a home for less than the cost of rent is not a possibility for many of us. In my area, my wife and I rent a nice apartment in a prime location for about $1100 total after all is said and done. The cheapest comparable home we could buy in our area would likely cost from $1800-$2000 per month after a 5% down payment on a conventional loan. This number also takes into account property taxes and insurance. Also would have to consider the increase monthly cost in maintenance, utilities, cap x, etc………So for us, yes, it makes sense to continue renting for now.

      In our case, buying a home limits the ability to save money for future investments in real estate that could potentially offer cash flow and true long term wealth. I would strongly encourage people to analyze THEIR income vs. THEIR rental market vs. THEIR market if they were to buy. If you think there’s a good chance you’ll be able to save about the same amount of money as you otherwise would renting, go for the buy. But a word of caution, you MUST consider ALL of the variables that come with home ownership before making this decision-and it’s a long list, so take your time. If buying a home places a strain on your finances and doesn’t allow you to save for any future endeavors, STAY AWAY. I think this is the main point Grant Cardone is trying to get across. If you’re serious about investing, it makes zero sense to put yourself in a position where you are strained and can’t save enough money for future investments.

      To Brandon’s point about freedom: Yes, the landlord can raise the rent, force me to move out, and not allow me to paint. But on the flip side- if I don’t own the joint, I don’t have a to worry about the plumbing, electrical, roof, and all sorts of other issues. And when you own a home, your mortgage is not fixed. Property taxes and insurance can increase your mortgage on a yearly basis and could feel just like a hike in your rent…

      The bottom line: Always analyze information carefully and cater it to your specific situation. Don’t use blanket statements to justify your decisions. It HAS to make sense for your market, your lifestyle, your desires, and your ultimate goals.



      • Bill Briscoe

        “And when you own a home, your mortgage is not fixed. Property taxes and insurance can increase your mortgage on a yearly basis and could feel just like a hike in your rent…’

        Possibly true, but a mortgage (the principle and interest part) does go away after 15 or 20 years while rent just keeps going up. Landlord is never going to thank you for paying off his mortgage by giving you free rent.

        Long term thinking…

    • Bill Briscoe

      “When you take a very qualitative concept like home ownership and mix it with a very quantitative concept like real estate investing you will get a lot of different opinions.”

      Which is why you shouldn’t mix the two concepts. Its a common decision making and decision support fallacy.
      “How much are these qualitative homeownership considerations worth if it means living in a better area?
      Living near a good school
      Makes spouse happy
      Closer to recreation
      Shorter commute”

      These are all things that can potentially be bought OR rented. But as you noted, renting them can be difficult or expensive. If these are “needs”, then your situation likely favors owning.

      In my Real Estate Finance courses I always stress that the rent vs buy decision should be reduced to a financial one. First decide what type of dwelling you need/want to live in, then compare the cost to rent or to buy the SAME or virtually the same house (or apt/condo, or trailer or whatever).

      You can’t financially compare renting grandma’s garage to buying a 5 bedroom home. That’s a needs/wants decision, not a financial one. (And there are probably some garages in my county that could be purchased for less than 1 month’s average salary, saving the garage dweller the monthly rental in perpetuity).

      But once you reduce the decision to strictly a financial one, all other factors being more/less equal, the equation usually becomes one of time. How many years must you remain in the owned home for the monthly cashflow savings – assuming (PITI+Maintenance-tax savings) <( Rent+Renters Insurance) – to cover the entry and exit costs and to earn an acceptable ROI on your down-payment.

      "Acceptable" can vary from person to person, but assuming good credit, low interest rates, slight appreciation/inflation, and the common price to rent ratios in my area, a 8-10% ROI (annualized) can be turned in a surprisingly short time, and higher ROIs from longer occupancies.

  14. David Goossens

    I know quite a few people in The Bay Area that are glad they bought houses in the 1990’s. The appreciation has made them millionaires. They are now cashing out and moving out of state. Like anything in REI, the anwser is usually “it depends…”

  15. walker seid

    Besides cap ex your house must appreciate 10% more for selling fees. If you live in it for 10 years and pay 5k in taxes per year it also has to appreciate 50k to break even. Its really only a good idea to buy if you are going to rent it out within a couple years of buying (passing on the expenses to the tenant) or if your good with owning a liability.

  16. Christopher Smith

    People don’t typically buy a home as an “investment” in the strict financial sense. They buy a home so they can establish themselves in an area where they want to live in a property that they can specifically tailor to their own hearts desire. That’s pretty hard to duplicate with a rental property, no matter how much you are willing to pay.

    I own several rental properties and have made a whole lot of money with them, but I also own a home. I bought them all at an incredibly fortunate time so I will make money on the home as well as the rentals (the home is already 2X in value from what it was 5 years ago when I bought it). However, I wouldn’t even care if I didn’t make money on the home as long as the “total” value I derived from it made it worthwhile, and I think for most folks that is the case.

    So is investing in a home the best way to maximize your financial balance sheet – no its not – but that’s not the goal for most folks, its the quality of lifestyle, family, friends and some meaningful value at the end that are at least at to some degree is unique to home ownership.

  17. Adrian Stamer

    Record low interest rates, deductible taxes and interest, stability, comfort, appreciation, HELOCs to mention a few reasons…

    But really the whole internet game is say something provactive so it goes viral and people write articles and comments etc giving you free press.

    Life is all about balance, saying wait until you have $20 million is the bank to purchase a house is an absolutely ridiculous statement. I’m assuming he didn’t even go out to eat until he had $2 million in the bank?

  18. Richard Warner

    Cardone is a fantastic mentor. He teaches and promotes people to become wealthy beyond their own belief and has a net worth we can all respect, coming from nothing. The only reason people don’t like him is because they don’t understand the information.
    No offense to Brandon, I like him! But I’m also not going to take political advice from a teenager.

  19. David Krulac

    Great Article, Brandon.
    1. It depends where you live. While in some places its a lot cheaper to own than rent, especially with rent increasing faster than prices, on the other hand the places where rents are low in relation to value, like San Francisco & Manhattan is where lots of people want to be and prices keep escalating. Areas where prices are escalating is not necessarily a bad area.
    2. Owning a house does make you immobile in a sense, sure you could turn it into a rental if you want to leave the are, or you could AirBNB it. But it is easier to move out of a rental, especially if market conditions turn bad. Try selling a house in 1981 or 2008, its not so easy.
    3. Is Real Estate a bad investment? After buying and selling 900 properties, I’d have to say NO. sorry, Grant. But I don’t rely on data from Case Schiller either. The CS studies are based on average house purchased at average prices by average people. Real estate investors, especially people at BP are not average. the successful real estate investors are way ABOVE average and are buying the best deals, not average or less than average deals. There is a big difference between Joe& Jill home buyer and Ray & Rose Real Estate investors; the latter are getting the best deals that are not shown in CS data reports.
    4. Nobody will force you out of your owned house. For the most part yes, but then there is Sheriff Sale, Tax Sale, Eminent Domain, even Adverse Possession all of which can force you out of your own house without your concurrence.

    • steve portock

      I am loving the responses, but all of you who argue against Cardone, are making his argument. Let’s get a few things out I think we can agree on. Cardone to me is making the point that the home you own is not a good investment, he is correct on that, and even further, you don’t actually “own” your home ever. Try not paying your property taxes or whatever other nonsense the criminal gangsta’s know at gov’t come up with, you will see what you “own”. To the rest of us here doing this to make money, as long as you buy for x, and sell for higher y, and profit after costs, of course its a good thing to do. Cardone is all about making money, owning your own home is not about that, its nothing more than an emotional money losing purchase that the majority of people will do, myself included. I have owned homes before, even tried to buy them to fix them up, I never got a good deal because I had to deal with a spouse who got emotional about it, once that happens, you are done. Even in the best of cases, we barely broke even on them. People put too much stock in a home by deluding themselves into thinking its more than what it is, a place to eat, sleep, hang out and do whatever. Its just a box, nothing magical about it. I rent for now, given my situation its the best deal for me, owning would only cost more and I don’t feel like shelling out more $$$ just to address an emotion. Up against ordinary people who own homes, I still have more $$$ at the end of the day. I am not comparing myself to investors, thats a completely different thing. Brandon could have done better on this, its not his best writing, but so what, he is a nice guy and I still enjoy what he does.

  20. Tyler Oxley

    Brandon- as a fellow Washingtonian, I’d like you to show me 75k houses that rent for 1k. My inability to find such deals anywhere here, has taken my investment focus out of state…
    The primary reason to buy a home is to stabilize your cost basis for housing. Buy a house now and you’ll never see a rent increase. In 20 years it will be nice to still be making the same payment you did in year in 1. Of course, property taxes will raise your overall cost, as will upkeep. Some homes are easier/cheaper to maintain than others and this needs to be a factor going in. You’ll never get the emotion out of it. I personally have have rentals AND rent my current home. For me it works.
    All said, most people do not have an investor mindset or want to be a landlord. I’ve known a number of “accidental” landlords that couldn’t wait to be out of it despite some really good positive cash-flow. Probability is that the average person moves every 3-4 years (due to job relocations or other considerations) Until they settle down for a long duration, probably in their 30’s – owning a home is a very bad idea.

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