Grant Cardone Blasts the ‘American Dream’ of Homeownership — Here’s How He Chooses to Build Wealth Instead
In a nation where a staggering 94% of Americans view homeownership as a cornerstone of the American dream, Grant Cardone, a prominent real estate mogul and entrepreneur, is making waves with his contrarian perspective. According to a recent survey by LendingTree, the aspiration to own a home is deeply ingrained in the American psyche. However, Cardone argues that this obsession with homeownership is not only misguided but financially detrimental.
The Case Against Homeownership
In a candid post on his YouTube channel, Cardone boldly states, “No matter how much you guys complain about rent, it is still half of what it costs to live in that piece of s— house that you call the American dream.” His assertion is clear: owning a home is a poor investment choice. Cardone’s critique is rooted in the financial realities of homeownership, which often include high mortgage payments, property taxes, maintenance costs, and the lack of liquidity that comes with tying up capital in a property.
Recent analyses, such as one conducted by Bankrate, reveal that on a typical monthly basis, it is 37% more expensive to buy a home than to rent one. This trend holds true across all 50 of the largest metropolitan areas in the United States. Cardone believes that families who choose to rent instead of buy can save the difference and invest it in more productive assets.
Investing in Commercial Real Estate
While Cardone dismisses the notion of homeownership as a viable wealth-building strategy, he champions commercial real estate as a superior investment avenue. He points out that commercial properties have historically outperformed the stock market, but until recently, they were primarily accessible to the ultra-wealthy. However, Cardone emphasizes that ordinary investors can now participate in this lucrative market by investing in commercial real estate syndications or real estate investment trusts (REITs).
He argues that rental properties, particularly commercial ones, can generate consistent cash flow and higher returns compared to residential homes. “A rental property will always make more money than a house will,” he asserts, highlighting the potential for substantial returns through rental yields and capital appreciation.
The Numbers Speak
To back his claims, Cardone cites data showing that the U.S. housing market has delivered an annualized return of 6.6% from March 1992 through March 2024. In contrast, the S&P 500 index has returned about 8.41% on an average annualized basis during the same period. When factoring in dividends, the annual return from the S&P 500 could reach as high as 10.24%. This comparison illustrates that stock market investments have historically outperformed homeownership.
Moreover, Cardone points out that homeowners do not generate cash flow from their properties. Unlike rental properties, which can provide monthly income, a primary residence does not yield any financial returns unless sold. This lack of cash flow is a critical factor in Cardone’s argument against homeownership as a wealth-building strategy.
Exploring Alternative Investments
Cardone also advocates for diversifying investments beyond real estate and stocks. He mentions that “any cryptocurrency” would have historically outperformed the housing market, with Bitcoin achieving a compounded annual growth rate of 100.68% over the past 12 years. However, he acknowledges the volatility of cryptocurrencies, which can make them unsuitable for the average investor.
While Cardone’s views on cryptocurrencies may be polarizing, his emphasis on diversification resonates with many financial experts. By spreading investments across various asset classes, individuals can mitigate risk and enhance their potential for returns.
Conclusion: Rethinking the American Dream
Grant Cardone’s critique of the traditional American dream of homeownership challenges long-held beliefs about wealth accumulation. His perspective encourages individuals to rethink their financial strategies and consider alternative investment avenues that may yield higher returns and greater financial freedom.
As the landscape of wealth-building continues to evolve, Cardone’s insights serve as a reminder that the path to financial success may not always align with conventional wisdom. By prioritizing investments in commercial real estate, stocks, and other assets, individuals can forge their own paths to prosperity, potentially redefining what the American dream truly means in the modern era.