Grant Cardone Says Renting Is the Best Thing People Can Do Right Now — Here’s Why
Written by
Marc Guberti
Edited by
Amen Oyiboke
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Many people dream of becoming homeowners. Buying a house establishes your place in a community and can provide more stability than a rental property. Landlords can gradually raise rent, and none of those monthly payments build your home equity.
However, real estate investor Grant Cardone mentioned in an interview with Ryan Pineda that renting is the best deal right now. It may not seem encouraging to young adults who feel like high housing prices are blocking them from homeownership.
However, Cardone makes a few great points that can give you a different perspective on the rent vs. ownership debate.
Costs Are Rising for Homeowners and Investors
Higher housing prices have been keeping out many people, but those rising costs also take a toll on homeowners and real estate investors. Houses have become expensive to build amid a housing shortage, and high interest rates also make it expensive to get into debt.
That means people who embark on homeownership have to contend with higher costs. While Cardone has bought many properties, he made most of those acquisitions back when interest rates were lower. He has been funding some of his recent deals with cash and is waiting for rates to become more attractive.
Insurance Is a Looming Threat
While investors and homeowners have navigated high debt costs and housing shortages before, insurance is the new boogeyman in the equation. Cardone explains that insurance can now be a dealbreaker. For instance, many insurers stopped offering flood insurance in Florida or started to charge much higher premiums. The same scenario has played out with wildfire insurance in different parts of California.
Cardone went through some quick math to demonstrate the impact of insurance. He states that the average Los Angeles home goes for $838,000, and you end up with a $5,000 a month payment on your mortgage. Cardone mentions that insurance now costs about $2,000 per month. Insurance premiums elevate the cost of homeownership and make it more difficult for owners. However, Cardone claims that these costs haven’t yet been realized in the renting market.
Real estate investors who have owned properties for a long time have a big advantage in this atmosphere. They can keep rents at low levels, while a new real estate investor has to come right out of the gate with high monthly rent payments just to break even.
You Can Wait Out Changes
Renting instead of buying a house gives you more time to wait out important developments that can impact real estate prices. The Federal Reserve can lower interest rates and immediately make it more affordable to borrow money. The Department of Government Efficiency can also bring down inflation by getting rid of wasteful government spending.
Grant Cardone believes that President Trump can improve the real estate market and create a good opportunity during his second term. Trump’s initiative to free up more lumber can increase production and make it more affordable to create homes.
In the meantime, if you live below your means, you can save enough money for a down payment when the housing market looks better. Although many people want to build home equity instead of making monthly rent payments, it can be worth sticking it out for a little longer. Renting gives you the flexibility to move quickly and capitalize on a great deal. However, most people are pretty much stuck after buying a home for better or for worse.
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