Grant Cardone is a self-made millionaire who has made much of his fortune through his sales consulting business and real estate investments. While any type of investment comes with some level of risk, real estate has long been considered a lucrative option for many people — Cardone included.
Cardone believes that investing in real estate can help people secure their financial futures more than leaving money in a checking or savings account ever could — even if that savings account is a high-yield account. With that in mind, here are Grant Cardone’s seven biggest reasons why you should invest in real estate rather than let your money sit in the bank.
Nonresidential Properties Can Be Lucrative
Certain types of real estate are more lucrative than others. Cardone suggests investing in multifamily real estate, such as apartments, over any other type. The main reason for this is that these types of properties can hold more tenants who can regularly pay rent to you, the property owner. Depending on how much you charge for rent, you could end up covering the mortgage, maintenance, taxes and property insurance, while earning supplemental income.
According to Cardone, America is also a renter’s nation — just like many other parts of the world. Because of this, and because it’s unlikely that new technology will change this, Cardone believes that multifamily real estate will continue to be lucrative in the future.
Real Estate Is Resistant to Inflation
Another reason to invest in real estate comes from the fact that it’s more resistant to inflation than keeping your money in a bank account. Cardone believes that real estate can weather any storm, including inflation and even deflation.
Along with this, as the rate of inflation increases, so do apartment rental prices. By investing in an apartment complex or another multifamily real estate option, you could continue to earn a steady income even when other aspects of the economy change.
Real Estate Is a Tangible Asset
When you invest in a piece of real estate, you have control over an asset that’s tangible. When you keep money in a bank account, your cash is also tangible. However, real estate tends to appreciate whereas physical money often either remains stagnant or depreciates in value.
And, as Cardone pointed out, as the housing and rental markets improve, your property can also gain in value. This can lead to long-term growth and more lucrative investment opportunities in the future.
You Can Increase Rent Prices
Grant Cardone also pointed out that rent prices are likely to continue to increase in the foreseeable future. This means that by investing in real estate that can support multiple individuals or families, you can continue to earn more money over time. The more units you have, the more you can potentially boost your income as well.
When you keep money in a bank account, meanwhile, one of the only real ways of increasing it is to contribute more money to that account. The financial institution is what sets the yield, not you. And even if your money is in an interest-bearing account, it’s not likely to be that high of a yield compared to what you could get from real estate. Because of this, Cardone views real estate as a better financial asset than cash in a bank.
Bank Accounts Offer Low Interest Rates
Another key point that Cardone mentioned is that the interest rates tied to traditional savings and checking accounts are typically low. In some cases, such as with checking accounts, there may be no interest yield at all, regardless of how much money you have in the account.
According to the FDIC, the national deposit rate for a traditional savings account is 0.43%. It’s just 0.07% for interest-bearing checking accounts. Real estate, meanwhile, tends to have a higher average annual return.
Real Estate Allows for Diversification
According to Cardone, putting your money in an income-earning asset like real estate can be far more beneficial for your future than keeping it in the bank. This is especially true if you’re looking to supplement your income or diversify your portfolio.
When you leave your money in a bank account, you do have the advantage of having easy access to it when you need it. This can be particularly useful in the case of financial emergencies. Because of this, it’s not necessarily a bad idea to keep some cash in your bank. But if you have the means, investing your money in different investment vehicles could be financially smarter.
Cardone suggests investing your money in several different real estate properties, ideally in different locations, to maximize your potential returns. Doing this allows you to retain some level of control over your assets while growing your net worth and income. It also helps mitigate the risks that come with investing as you will have multiple properties to balance out any losses.
Housing Prices Continue To Increase
The cost of owning a home has increased, causing many people to rent rather than become homeowners. According to Grant Cardone, mortgage rates recently hit around 8%.
What this means is that more people are likely to seek out rentals like your real estate properties, thus increasing your earning potential. This is even more likely to occur when housing options in your area are limited or those who would buy don’t qualify for a mortgage loan.
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