'The worst investment people can make': Real estate guru Grant Cardone believes too many Americans are chasing the dream of homeownership. Here's what he says you should do instead

Cardone on ‘the worst investment’

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Homeownership has long been a cornerstone of the American dream. It symbolizes independence, financial security and prosperity — but is it a dream worth chasing?

Not if you ask real estate investment guru Grant Cardone.

“Buying a home without a doubt is the worst investment people can make, yet it’s also the most common one,” he wrote in a recent Instagram post.

In a video attached to that Instagram post, he gave the example of spending $576,000 on a home that you keep for 10 years. On top of that huge total, Cardone said you’d also have to pay the following fees over a decade:

• 12%, or $69,120, in broker fees;
• 10%, or $57,600, in maintenance fees;
• 20%, or $115,200, in property taxes; and
• 70%, or $403,200, to the bank

Those amounts add up to $645,120 — and when added to the original price of the home ($576,000), would bring the total to a staggering $1,221,120.

“A $576,000 home will have to be sold for $1.2 million in 10 years,” Cardone said. “You’re not going to sell it for that, to break even.”

He described the exercise as “dead money” — a term used for an investment that has shown little increase in value or is locked up for a long time with little yield.

What Cardone thinks you should do instead

Cardone advocates for residential real estate, which appears to have remained strong through the economic turmoil of recent years, while other parts of the commercial real estate sector — like offices, hotels and retail — have struggled.

If you’re keen on getting into the real estate game, consider crowdfunding platforms — a process championed by Cardone — that allow everyday investors to pool their money to purchase property (or a share of property) as a group.

Necessity-based commercial real estate

Necessity-based commercial real estate is known for being able to withstand economic uncertainty. And First National Realty Partners makes this asset easily accessible through their online platform.

With FNRP, accredited investors can invest in grocery-anchored commercial real estate and own a share of properties leased by national brands.

FNRP’s team manages the investments for you, so all you have to do to take advantage of this lucrative investment is sit back and enjoy your quarterly distributions.

Invest in rental properties

If you’re keen on getting into the real estate game outside of the commercial space, consider crowdfunding platforms — a process championed by Cardone — that allow everyday investors to pool their money to purchase property (or a share of property) as a group.

Arrived, for example, allows you to invest in shares of rental homes and vacation rentals without taking on the responsibilities of property management or homeownership.

With Arrived, you can browse a curated selection of homes, each vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy and start investing in real estate with just $100.

Invest in REITs

You can also invest in a residential real estate investment trust (REIT), publicly traded companies that collect rent from tenants and pass that rent to shareholders in the form of dividend payments.

Real estate investment firm DLP Capital makes it easy for investors to access the lucrative potential of REITs.

The platform offers a variety of funds in residential and multifamily real estate with targeted annual returns of up to 13%.

What to read next

• Jeff Bezos and Oprah Winfrey invest in this asset to keep their wealth safe — you may want to do the same in 2024
• Owning real estate for ‘passive income’ is one of the biggest myths in investing — but here’s how you can actually make it work
• You don’t need to invest like Warren Buffett to get rich — this simple technique tops his returns without taking on more risk

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.