Financial guru Grant Cardone recently expressed skepticism about the traditional American Dream of homeownership, arguing that it is more of a financial burden than a benefit. In his view, the symbols of middle-class prosperity, such as cars, homes and college education, are hindering wealth accumulation.Cardone, set to release a new book titled “The Wealth Creation Formula,” contends that owning a home is not the financial security it’s often believed to be. In an October interview with GoBankingRates, Cardone points out that a home purchase requires a significant down payment, which becomes “dead money” that no longer grows. The return on investment for single-family homes, he said, is lower than other assets. He also noted the challenges of flipping homes for profit, given the need for substantial appreciation to cover interest, brokerage fees and insurance costs.Current real estate market trends support Cardone’s stance. Despite modest year-over-year increases in home prices across the U.S., homeownership costs have risen because of higher mortgage rates. This situation decreases buying power and makes home loans more expensive, adding to the financial strain for potential buyers. Inventory is also low, which means that the competition for available homes is intense, often leading to bidding wars and further driving up prices in many markets.His advice to potential homeowners is straightforward. “The house, for most people, is a nightmare — not a dream,” he said. A home can quickly transform from a dream to a financial and practical burden for several reasons:High insurance costs: Substantial property insurance, particularly in disaster-prone areas.Maintenance and repairs: Ongoing, costly and time-consuming upkeep.Lack of flexibility: Long-term mortgages limit relocation opportunities.Financial risk: Mortgages tied to fluctuating property values present a significant risk.Unexpected expenses: Homeownership often brings unforeseen costs like emergency repairs.Story continuesHe suggests that instead of buying a home, individuals should rent and invest the money saved from a down payment into assets that generate passive income. During an interview in July, he cited examples like Warren Buffett, Steve Jobs and Elon Musk, who owned minimal or no real estate, to illustrate his point.Cardone’s perspective comes at a time when mortgage interest rates in the United States have soared, with the average rate for a 30-year fixed mortgage climbing to a high of 8.08%, a significant jump from the 3.22% seen in January.Passive real estate investments, like crowdfunding or fractional ownership, offer people the opportunity to make money through real estate without the expense or burden of owning a home. Cardone’s own real estate firm Cardone Capital allows individuals to invest alongside him in multifamily properties. Other companies, like Arrived, even allow people to buy shares of single-family rentals with as little as $100.Read Next:”ACTIVE INVESTORS’ SECRET WEAPON” Supercharge Your Stock Market Game with the #1 “news & everything else” trading tool: Benzinga Pro – Click here to start Your 14-Day Trial Now!This article Grant Cardone Says Owning A Home Isn’t The American Dream It’s Hyped Up To Be — But Instead, ‘The House, For Most People, Is A Nightmare’ originally appeared on Benzinga.com.© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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Grant Cardone Says Owning A Home Isn’t The American Dream It’s Hyped Up To Be — But Instead, ‘The House, For Most People, Is A Nightmare’
