Grant Cardone Just Called Out A Common Net Worth Myth – And Homeowners Won’t Like It
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Real estate investor Grant Cardone encourages people to rent where they live. While it may sound counterintuitive to aspiring homeowners who view rent as throwing money away, Cardone lays out a strong argument for renting instead of buying.
He also believes that homeowners should not include their house when calculating their net worth. He views a house as a liability if you’re living in it instead of having a tenant. Not every homeowner may like this assessment, but Cardone presents key details worth considering.
Don’t Miss:
A primary home does not produce any income. While that’s not the function of a primary home, it’s worth keeping in mind when you are calculating your net worth. Cardone only views real estate as an investment if it’s generating passive income. You need a tenant to make money with a single-family home. Some people can list an extra room on Airbnb, while other investors buy duplexes and rent out the vacant unit.
Cardone used to invest in single-family homes, but he now prefers apartments since they have many units in the same location. Ambitious real estate investors who are getting started with single-family homes can benefit from keeping that long-term vision in mind.
However, if your home is a primary residence, it’s not able to provide any cash flow that covers expenses. While you can build equity and benefit from appreciation, it’s better for real estate properties that generate positive cash flow from rent. That way, the property is profitable right away, and any capital gains are bonus money.
Trending: This AI-Powered Trading Platform Has 5,000+ Users, 27 Pending Patents, and a $43.97M Valuation — You Can Become an Investor for Just $500.25
Cardone also mentioned that homes are liabilities. He presented costs like property taxes and maintenance. Both of these expenses make up 1% of your home’s value, which comes to a combined 2% per year, according to Cardone.
However, that’s not where the expenses stop. You have to pay closing costs both ways. You’ll pay these costs when you buy the home and when you decide to sell it.
