You may have seen reports in the news recently saying it’s better to rent right now than it is to own your home especially if you follow Grant Cardone, he will make sure you sell your home.
But before you let that impact your decisions, you should understand what these claims are based on.
A lot of the time, these reports are assuming things that aren’t realistic for the average household. For example, the methodology behind one of those reports says that renting is the smarter financial option because of the opportunity to invest money elsewhere. It assumes renters take the money they’d spend on costs tied to buying a home and put it in an investment portfolio.
But here’s the thing – most people who rent aren’t making those investments. Ken Johnson, Co-Author of the BH&J National Price-to-Rent Index, explains:
“One of the difficulties with the rent and reinvest model is many people . . . simply rent and spend the difference. . . . That’s wealth destroying.”
The reason homeownership is one of the best investments you can make is the wealth it helps you build. That’s why there’s a significant difference between the net worth of the average homeowner and the average renter (see graph below):
So, before you renew your rental agreement, think about the opportunity to build wealth that homeownership provides.
If you follow Grant Cardone, you will see that he keeps pushing everybody to rent. As much as I love him and his material, I personally think it is a wrong move for the majority of people.
You will pay the mortgage regardless in life. Now, whether it is your mortgage that you get to keep the home later, or it is going to be other people’s mortgage that will you help them pay it off. The decision is up to you