A while back, Grant Cardone, one of my favorite online financial gurus, put out a video saying, “Home buying is for suckers!”
before he wrote here entrepreneur That, “Unless you have Rs 20 million in cash in the bank, you have no business buying a house.”
This isn’t the first time I’ve heard him say this, nor is he the only financial guru sending out this message today. Author James Altucher has repeatedly described how he refused to own a home. The blogger behind it is Remeet Sethi i can teach you to be rich Brand, often warns readers to be careful with buying real estate. Even Robert Kiyosaki, author of rich Dad Poor DadHas become famous for telling the public that a home is a liability, not an asset.
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Still, for most Americans, home ownership is clearly a part of the American Dream. Even a man like me – a landlord for the past decade – had to stop and ask if there was any truth in this. Is Is owning a home for suckers really, as Cardone said? or was titled above business Insider Video just click bait?
Here, my goal is to explore the three primary reasons Cardone and other financial gurus commonly use to argue against home buying — and offer a counterargument.
1. It depends where you live.
Do you want your own house? Perhaps. But, probably not. real estate Is expensive. In fact, it is one of the primary reasons that so many landlords and landlords fail.
In addition to the mortgage payment, the homeowner 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, the higher those costs.
However, in many areas, it is still cheap compared to rent. For example, in my city, I can buy a nice single family home for about $75,000, which works out to a mortgage of about $500 a month, including taxes and insurance. Rent for the same house would be around $1,000 a month. So, does the average homeowner of a $75,000 home have $500 in home related expenses each month? Not unless he is the owner of a terrible house.
So, where I live, at least, it makes a lot more financial sense to own versus buy – even with the necessary repairs and maintenance. Of course, in some areas, renting can be much less expensive than owning, while in large cities like New York, San Francisco, Miami, and others, the opposite is often true. All of these facts add up to why you shouldn’t take blanket advice from the internet when making your decisions.
2. Owning a home makes you sedentary – or does it?
This was the primary reason Cardone cited for his argument against buying the house. “To make money today, you need mobility,” he wrote.
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Personally, I found that odd – because I’ve lived in the same county for 10 years, and I’ve made money. lots of it.
So, do you really 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 taking responsibility for things in our lives. we really want some kind of stability. We want to raise our children in the same place. We do not want to lose our friendship with our neighbors. We want to avoid being swayed again and again because of someone else’s decision.
When you rent a house, yes, when your lease expires, which could be after six or nine months, you can leave. Or, if you sell your home, you could be out in a month or two. Even better, if you suddenly need to relocate, you can rent out your home to a tenant and—gasp—move! Now, you’re building wealth through rental properties. And You are free to be dynamic – whatever that means.
3. Is real estate a bad investment?
Many financial bloggers like to point out that real estate values tend to climb at a slower rate than stocks. Well, that may be true, but it doesn’t tell the whole story.
As renowned economist and Nobel laureate Robert Shiller pointed out using the S&P/Case-Shiller index, home values have increased on average at roughly the same rate as inflation over the past 100 years: about 3 percent.
So, should we give up on buying a home right away because it hasn’t appreciated fast enough?
no way. Real estate appreciation is just one of the many benefits of owning property. When you own real estate, you usually don’t pay 100 percent cash for it. Instead, you obtain a loan and use a small down payment to take possession. This way, although your property price may only increase by 3 percent, your actual return on investment could be much higher.
Biggest loss is rent
The bottom line is, should you buy the home? I do not know; Maybe you should, and maybe you shouldn’t.
But, if you base your decision on a financial guru who tells you “home buying is for suckers,” we need to have a talk. In his video, Grant Cardone states that, “The best investment you can make is choice and freedom.” I couldn’t agree more. And when you choose to rent, you give up a great deal of your freedom to live the way you want to; You hand over that freedom to a landlord like me.
Connected: 7 Important Steps To Buy A Single Family Rental House
On the other hand, when you own a home, no one is going to kick you out because he made a judgment for the property that you are not involved in. You will not be obligated to transfer your children to another, less desirable, school district. No one will arbitrarily increase your rent because as the housing market has improved, the number of houses and apartments available in your city has decreased.
Besides, no one is denying you the ability to paint your bedroom any color you want, or to install gorgeous new hardwood floors. In other words, when you own a home, no one is going to tell you what to do.
But go ahead. keep renting I will continue to buy rental properties and build my own wealth. I’ll keep telling you to clear my deck, I’ll keep refusing to let you let my boyfriend in.
I might even 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 Entrepreneur.com.]
We are republishing this article to help our new readers.
What do you think? Is buying a home for suckers?
Tell me your thoughts with a comment!
Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
