[Mortgage Is ‘Just A Fancy Bullsh*t Word For Paying Rent For 30 Years To The Bank,’ Says Real Estate Billionaire Grant Cardone — Here’s Why Renting Could Be A Better Financial Move
](https://finance.yahoo.com/news/mortgage-just-fancy-bullsh-t-171148202.html?guccounter=1)
He assumes an average monthly rental cost of $1354, and 3% rent increase annually. I have lived in apartments where they increased the rent 10% one year and 15% the next.
Even putting that aside, ok, by the time you’re dead, say it works out to the same amount spent. But as an owner, you’ve now invested in a generational asset. Renting now means your kids and theirs will also likely rent.
Gtfo.
My mortgage is about that, on a 3 bedroom home, because I was fortunate to buy it in the mid-10s before prices in my area went insane. Our original mortgage was about $1150, but it’s gone up $200 due to property taxes over 8 years. This averages an increase of $12.50 per year, but I know people whose rents have increased by $200 in a single year in my city. Getting a fixed rate mortgage (and refinancing when interest rates are low) is so much more stable than renting
I’d kill for my rent to only be $1354.
That’s about my mortgage payment.
You’re forgetting that elder care will eat up that wealth.
At least they can sell the house. /s, but not.
Which is the problem we have: For way too many people an asset capable of depreciation is their main or even only retirement savings. So reducing the price of housing will be a problem for a lot of local and state taxpayers.
Not saying it’s right, just saying how it is.
Wait - can you explain this further?
Why depreciating asset?
Also, they probably aren’t selling it right? Just using as a rent-free option after paying mortgage to lower cost of living?
What am I missing?
If we increase the supply of housing, the price of existing stock will go down. Heck, if we keep hedge funds out it might go down, or at least not increase as much as it would.
What pays for the elder care without that wealth?
The highest population experiencing homelessness is boomers and more and more of the elderly are on the street now.
The state subsidizes their nursing home. That article is false at least in my state.
They do that here in Australia too (probably better than the USA) but there are way more people seeking placement in aged care homes than there are beds available. Waiting times are in the years and so people end up on the street. Especially with the way rent and cost of living is these days. Government pension doesn’t pay enough to rent anywhere.
Even if the subsidise, they still have to find something open in their price range.
My rent has gone up at least $50-$100 a year when renewing my lease since I’ve been an adult renting a residence. In 2015 when I got my first apartment it was $750/month, utilities included except for electric and internet. 2 apartments later and an increase every year, I’m paying $2,000 month plus all utilities and fees for trash. It ends up being like $2350/month all said and done. And sure it’s a nicer place, but it’s not that much nicer. I’m so thankful I don’t have kids, because I can’t afford to feed myself, let alone children. I don’t know how parents are doing this right now.
Aight let’s see. Mortgage is a fixed rate over an agreed upon term that ends with you owning the property, rent increases every year, you have no control over the property and you get fucked constantly.
Yup, totally the same thing.
Also my mortgage for my 1/2 acre property with 1500 sqft house is $50 less per month than my 900 sqft poorly constructed “high end” apartment rent was about to spike up to. You know, after renters protections were removed during the pandemic.
Quick edit: furthermore, it took me until I was 30 to buy a house. In that time I spent 170k in rent, when I started renting the property I’m currently living in was worth 140k. That’s pretty easy math right there. Just like… Come on.
But… but… but you still have to pay for maintenance and repair.
Ok I’m half kidding, given you still have to pay those things but depending on how the math works it can still be cheaper to own.
The thing is as a renter you basically pay for maintenance and repair anyway. If as a renter I damage a wall, I pay for it, if I leave the house messy when I vacate I pay for a cleaner out of my bond. If the place is freshly renovated my rent is higher to cover it, if there’s an unforeseen expense like a tap bursts, sure the owner pays for it… but then my rent goes up 150 a week next year because of “market trends”
It’s always cheaper to own given you live an adult life for at least like 15 years. The rub is whether or not you can afford the upfront costs to get a property.
Also you pay for maintenance and repair and taxes and all that nonsense in your rent, it’s just one bill instead of multiple.
Generally cheaper to own, depending on you staying in the same place for 3-5 years and the market conditions in the interim.
If you bought in 2021 and sold just now, you’re probably having a rough time.
I mean if you bought in 2021 and sold now you probably still made about 90k American. But you’d be fucked on the interest rates if you tried to buy again.
But if you were a real estate mogul, and sold a bunch of properties, on average you’d make 90k per property over those two years and not be dealing with interest rates, which is why the guy from the article is telling people to rent.
But you do have a point, it’s not always. If you bought earlier this year and only intended to stay one year, you’re fucked
I mean if you bought in 2021 and sold now you probably still made about 90k American
Depends on your area but most likely not. Homes in my area have fallen ~15% in value. Plus the costs of selling. Plus the costs of buying your new home. Nah.
The average across America have increased by 90k though over that time. Your area is… Strange.
Cost of buying is negligible, it’s really just cost of selling. So fine, you’d come out with like 65k
As soon as Biden stops the money printer the whole market is going to crash like in 2008 until then enjoy mass inflation.
Inflation is already below long term averages. Got any more takes that defy data?
Yeah we heard these amazing takes in 2008 too.
The avarage American spending power doesn’t seem to agree with you since nobody is buying houses and Genocide Joe now wants to give away house buying money to prop up the bubble.
As soon as Saudi jacks up the oil prices the American economy is going to freefall.
Maybe we could ban hedge funds from owning houses?
This would fix the issue but the hedge funds bribes on congress will block this.
owning several properties for renting and not needing to actually work is the real fancy bullshit.
did anyone tell that to this leech?
“I love renting. I never have to fix anything that’s the landlords job”
To
“Landlords do NOTHING”
In a few short years.
Tenant: “Hey landlord, my furnace isn’t working anymore. Fix it please.”
Landlord: Makes one phone call to a contractor and uses 10% of this month’s rent to pay them
My landlord makes maybe two phone calls like that a year, and she will have “earned” $40,800 of my money. Somehow, people like her have convinced people like you that simply owning a home that and doing 1 hour of cumulative work once a year is worth 30% of an engineer’s income.
Fuck off, leech.
People are aware that you don’t have to live in a house for 30 years if you get a 30 year mortgage, right? That hasn’t been a thing since the 80s.
Correct. Note usually says 1 or 2 years.
At least you get something in return for “paying rent” to the bank. Paying rent to a landlord is just paying someone elses mortgage, for no return whatsoever.
I hate to tell you this, bud, but one day, you’re going to die. You can’t take that house with you. Use your money to travel, and live.
Same for that landlord, he can’t bring the profit he made. I’d rather make sure the money stays in my pocket than his.
Either I spend the money to pay the mortgage or to pay a rent, I’d rather have something I can live in and pass along to my kids.
I traveled quite a bit already, both for leisure and for work before settling down to have a family.
Yeah! Once you’ve spent all your money traveling you can just sell your… oh wait.
And you’re still going to die. Live doing what you want to do, or on your knees in debt before the bank. Your choice.
More like:
Live on your knees past retirement age or take out an early 9mm retirement plan before you’re too old to work.
Also, your mortgage payments don’t go up every year, assuming you’re not a moron and got a fixed rate mortgage. And eventually they stop altogether.
Good luck getting a fixed-rate mortgage these days though.
Wdym?
I mean they’re really hard to get now. Even with really good credit.
Maybe I’m misinformed but I believe anyone can get a fixed or variable mortgage of whatever term they choose - the part that is negotiable is the rate on that debt.
So like with good credit or a bigger downpayment you can get a lower rate, but either way you can still probably get a 10% 5y fixed I think almost anywhere.
(I might be off - haven’t looked at rates in a while)
PS. Sorry about that other rude person. There’s nothing wrong with not knowing something, as long as you’re willing to learn
Lmfao.
No they’re not hahah No wonder u don’t own a house…too dumb
That’s uncalled for. I’m dumb as shit and I have a house. Didn’t even know what amortization was when I bought
That’s not true in the slightest.
I gotta renew and I have access to both fixed (6.08%/5y) and variable (6.80%/5y) rates.
The thing about variable rate is that it will not change your monthly payments when the interest rate changes, it changes the amortization (ie: how fast or slow) you’ll end up paying your mortgage according to the interest rate.
It’s a gamble though, personally I’d rather go with fixed at the moment. I did save a bit with the variable rate when I renewed in 2014 and the interest rate ended up going down.
Having a landlord be responsible for home fixes and appliances is pretty nice to be honest, provided they aren’t a shit landlord. I have a mortgage now which is nice, but the additional headaches are real.
Owning a house is definitely not for everyone, and having a savings account for emergency repair is a must. I tend to do most repairs myself, but I know my limits and will pay someone when I know I might screw it up.
Will you come fix my creaky floor? I have no money left and I’m too tired.
Right after I fix my creaky floor.
I also don’t know how to fix creaky floors.
It really depends on what part is creaking, but somewhere there’s a gap near the creak between the joist, subfloor, and/or floor that’s letting things flex. Gotta close that gap to stop the squeak.
Personally I really like doing my own home repairs and such, I get a lot of satisfaction and even though I’ll grumble and curse the whole time and will often procrastinate on some of my projects, I do really enjoy myself the whole time I’m doing it, even if I don’t always admit it. It kind of drove me nuts when I lived in my apartment and I wasn’t allowed to do a lot of the little repairs and upgrades I wanted to do myself.
But I can definitely appreciate that it’s not a thing for everyone, and because of that it really pisses me off that a lot of landlords, property managers, HOAs, condo associations are so shitty because there’s a lot of people who it frankly doesn’t make sense for them to own a home and be responsible for the maintenance when they don’t have the skills, time, or desire to do it themselves.
We bought my mother in law’s house, she had a whole bathroom that she basically didn’t use because the toilet had a small leak and the aerator on the sink faucet was clogged up with lime and sediment. That took me maybe $20 worth of materials and an hour and a half to fix counting the time it took me to drive to the hardware store with some built in time to wander around gawking at tools I don’t need. She’s someone who probably shouldn’t own a house and would be better served with a decent rental situation, but that’s a lot easier said than done, so now I get roped into doing little repairs for her at her new place is addition to handling my own stuff.
It’s a generational thing. Back in the day, most knew common car, plumbing, electrical issues and their solutions. Nowadays, people consult YouTube and promptly forget it 5 minutes later.
The abundance of information, sadly, doesn’t mean everyone can discern good and bad advices. On top of that, there are a lot of bad advices.
It could also be the fact that a Mon-Fri 9-5 job just isn’t the norm and often isn’t enough for one to live for a majority of Americans, so they have less time to learn, then make those repairs. In addition, prices for tools and materials have obviously gone up, making those repairs more expensive than “back in the day.”
Say your AC stops working at the height of summer. You go online and download the manual from the manufacturer, follow the directions to diagnose the issue. Awesome! You know what’s wrong, you just need to make a special trip to the hardware store (maybe where you live isn’t close to one since brick-and-mortar is more and more rare) and you can’t afford to wait for it to be delivered. So you buy the part and tools required at whatever price they’re selling for there because you can’t shop around. You don’t have another day off until next week, so you try to work a little bit every day on it, but you’re tired from your two jobs and only have a few hours free every day really. You’re having to stop and start constantly so you never get any momentum going on the work and it’s taking forever and the whole time you don’t have air conditioning so it’s hot as fuck. You don’t really know what you’re doing so it’s slow going. You’re losing sleep because it’s so hot and at least one of your jobs is physical and tires you out before you spend an hour tinkering with it every night. The little time that you normally get to spend with your kids is taken by this repair, and it takes almost a full week, and you have to hope you didn’t make a small mistake, because again, you don’t know what you’re doing and you’re just going from the manual, like “back in the day.” Or you could just dip into the savings and hire a guy to come out and fix it in an afternoon.
But you’re right, it’ probably just kids these days.
One should discern between things that do require a technician, and stuff that doesn’t. I’d argue fixing an A/C unit is more on the professional side of things. But yeah, I agree with you - it’s cheaper to hire a technician than spend the time yourself.
“Debt incumbent home owners don’t go on strike”
He’s not exactly wrong. If you have a mortgage, you do not really “own” anything and essentially have a “landlord” through your lender.
You may not just be mad at renting/landlordism. Your ire may be for the generalized concept of private property.
I think some things should be private property. Basic housing should not.
If you have a mortgage, you own what you paid (except interests).
If you bankrupt and are unsolved on a mortgage, and they take the house, the house is sold in an auction, the bank gets what’s remaining in the mortgage, but the rest is yours.
The point being that your place of residence, the place where you possibly stake your roots and raise your family, is not fully yours and can just as easily be taken away if you suffer any type of financial misfortune or fail to keep up financially with the market around your community.
The relationship to your lender is very similar to a renter’s relationship to their landlord.
Equity is a benefit, surely, but indebting yourself for 30 years in a location you may have compromised for is the other side of it. And your relationship to a higher authority who truly owns your property remains (until the debt is paid, of course).
Inherently, it all comes back to private property and one’s relationship with its owners.
The relationship to your lender is very similar to a renter’s relationship to their landlord
Is it though? Landlords typically have hot opinions on what you do with the property. Banks don’t care so long as you don’t literally destroy it. When I rented I felt stifled in things like modifying my place, adopting a dog, painting walls, etc. Owning my place feels a lot better even if it costs a lot more.
I get what you say kind of from a financial sense but even then it’s radically different. You can pay extra every month to get a mortgage finished early. Each year you get more and more equity and are in a better financial spot. When a lease renews your landlord has the option to say “I want more money, so you have to pay extra now” or just straight up refuse to let you live there anymore, and at the end you have nothing. And a foreclosure is a much lengthier process with more outs for a homeowner than an eviction is for a renter.
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If you’re in a market where rental rates are much lower than what you’d pay monthly on a mortgage
Is there even such a thing?
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Wild. Here in the Netherlands any mortgage you can be approved for on a middle class salary will be 3/4 to 2/3 of the average area rent.
Just by virtue of the fact that banks have stricter rules for income to mortgage payment ratios.
He’s not exactly wrong. If you have a mortgage, you do not really “own” anything and essentially have a “landlord” through your lender.
Except there is an end to those payments after which you do actually own the roof over your head.
Plus, the lender doesn’t want to “renovict” you or pull any of the other bullshit that typical landlords try to get away with.
Every time I see articles about this my knee jerk reaction gets more and more unhinged. Regardless, the world would be a better place if people like this were dead.
Thats the nicest way to say it. These people fucking suck.
They’re living piñatas and it’s time to pop em.
Billionaire landlords breathing public air is just fancy bullshit. The air on this planet is not for them. They have not earned it.
“Freedom is overrated, people are happier when they pick cotton.” Slave Owner
Fuck that. It helps build generational wealth. Something this fuck stick doesn’t want you to do.
And he personally owns how many houses?
And coincidentally wants people to rent them.
To be fair, I doubt he has mortgages on any of them, so while he may be a dumb asshole, he’s not being hypocritical here.
If renting doesn’t make sense at half of what it costs to pay the mortgage, how does the mortgage make sense
Where on earth is renting cheaper than a mortgage?
Let’s say it’s in Orange County where the house is $800 grand," Cardone said. "You’d have to sell the house for $2 million just to pay the interest bac
As opposed to paying even the same in rent, where you get NONE of it back?
assuming a 3% annual increase in rent
Lol, what planet do they live on?
On that 800k house, it takes a little over 30 years to get 2 million out of it if the house appreciates at 2% per year. Housing in many places has appreciated much faster than that (much faster than the market or any other single thing, including cryptocurrency)
And this is why we have a housing shortage. Because it’s in the financial interests of owners to restrict the building of housing.
In high CoL places, rent is routinely much lower than a mortgage— not to even mention the incredible down payment that you have to get the loan in the first place.
As an example, a one bedroom apartment in SF would cost you around $1,000,000 to buy. If you somehow have $200k to get a mortgage, your monthly payment is about $6k. To rent that same apartment, you’d only (lol, only) pay ~$3000-4500.
On top of this, the cost of owning is higher than just your mortgage payment. Your lender will most likely require homeowners insurance which can easily run a few thousand dollars per year (compared to a couple hundred for renters insurance). You also have to pay for the big repairs yourself when as a renter if the heat breaks that’s the landlord’s problem.
This is me. I live in LA, near Hollywood. I pay 3k/month in rent for a 1200sq ft 2br apartment that’s close to everything.
A condo similar to my apartment (it was a condo conversion of a building similar to mine) in my neighborhood sold for almost a million this past year. That’s about 6k/month all in w/ taxes and whatnot, not including maintenance costs.
Why the fuck would I pay double to own the same thing, and lose all my flexibility, when I take that 3k difference every month and invest it. Which builds wealth too. Sure, my investments may not be as inflation protected as a home, but they’re a lot more fucking liquid. And I can move in 30 days no unsold house hanging over my head.
In Australia and most developed cities in Asia rent is cheaper than a mortgage.
Do mortgages function the same in those Asian cities?
I mean you could compare the ‘monthly payment’ on Jenose in Korea but it’s not the real number. It’s not comparable.
This is not correct for Australia.
I’m looking at places in Melbourne at the moment. A 1-bedroom place is around $450 a week or $1800 a month roughly.
You can easily get a cheaper mortgage than that for a 1 bedroom place. Potentially even get a 2 bedroom unit for same as you’d pay in rent.
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It’s the Catalina wine mixer
