Don’t believe the hype, renting is never a good long term strategy

I like BKF, he has great advice regarding budgeting, credit, stocks etc. His advice on establishing a housing budget that is 30% of your gross working income changed my life.  But one place we disagree is when he starts talking real estate and home ownership.  This quick blog will discuss why I believe the concept of renting your life away is TERRIBLE advice and why ALL assets matter, not just business and stocks.

Grant Cardone doesn’t want you to buy a home.  He wants you to rent, from him

If you have been watching Grant Cardone you hear him bashing the concept of home ownership.  He make valid points but you have to remember that Grant is a sales guy. His shows pitch his products, and provide an opportunity for him to run commercials that pitch products for others.  The key points Grant uses is pushing home loaner-ship via renting is that people want to be able to move when they want to (you can do this as a homeowner too, and passive income as a rental), they don’t have the down payment (there are programs to help with this), they want the amenities that come from renting (get a gym membership) and other BS reasons I cant think of right now. Because they are BS.

At the end of the day, Grant Cardone owns about 6,000 rental apartments and he needs renters.  What he is REALLY doing is selling you on being a tenant which makes you a customer, aka someone who gives him money. The last thing someone who owns 6,000 apartments wants to do is have you buying homes.  If I sold burgers I am going to constantly promote the benefits of my burger stand and bash the salads of this world, even if you can get the same or better nourishment from salads.  Grant Cardone has great advice on sales, and buying real estate, but you have to be careful of the bias in his message.

Think longer term not 12 months ahead of you

A long time ago I had a summer job delivering jumpers to wealthy families in the coastal areas of San Diego.  I would drive around these neighborhoods and be blown away (exposure expands you).  What you would see is old homes with beautiful kitchens and living spaces.  These were homes that were passed down to the kids who then used the equity to turn that home into their dream home for a fraction of the cost of a new build.

When you hear people talk about what they don’t want to do, you year a lot of “I” and not lot of, “my family”.  People want to rent so “I” can move when I want to, so “I” can save money, so “I” can live in the middle of the city.  Choosing renting over home ownership because it is something that YOU want to do is selfish. Stop being selfish and stop just thinking about how much its going to cost YOU. All that rent you are giving away is your kids inheritance either by the money you save or by the mortgage you pay down.

In an article I read they broke out the math on a home. Basically you pay $200k for the home plus interest, taxes and some other fees and you end up paying $365k.  This is significant because a lot of people judge equity by the difference between their cost basis (principal balance) and the market value, not taking into consideration ALL of the interest that they silently paid the bank.  Given all of that, I still think that its a worthy expense if you are willing to think about more than yourself.

A lot of the value in real estate is not in the appreciation but in paying off all the debt on the property and owning it free and clear (spoiler alert, you can never pay off your apartment).  There are people who have rented for so long that they could have bought multiple homes. Where is the sense in that? Meanwhile you also have kids who have to now do the same.  We have to stop living from generation to generation where we make our kids start from scratch meanwhile other cultures are starting miles ahead, not because of racism but because of planning and sacrifice. We always blame history and race, and oppression, but our ex slave ancestors owned more land than we did and owned more businesses.  History is not the problem.

In all honesty, the true sense of wealth comes from family. What can your family produce, what can your family retain?  If you all come together and pay off a home you then have resources to help them launch out and pay off their home.  It has to become bigger than just you and your spouse though.  You don’t have to save the culture you just have to save your family. If everyone does that the culture will be saved.

The name of the game is not equity and appreciation but generational wealth

The key is to buy smart.  The key is to use the BKF strategy of buying right not simply buying what some stranger with a desk job who will likely be replaced in 6 months told you that you could afford. A lot of people bought bigger homes under the premise that they would be able to refinance later because homes were going up.  YOU have to position yourself so that when you buy you make money when it goes up, you make money if it does nothing and you don’t go belly up if and when the market turns against you.  That is just savvy investing.

If you want to enter into the game, especially at the levels people invest at housing levels (hundreds of thousands of dollars) you better be strategic and you better have more education than just what a salesman I mean licensed real estate agent told you.  If you lose based on depending on what a salesman told you (even it its Grant Cardone) that is your fault for not getting the education required.

It’s arguable whether real estate creates generational wealth faster or better than stocks or business or other investments but that doesn’t mean you rule it out. You have to live somewhere anyway.  I saw a post about how much you would have if you put your money into all these different stocks as compared to sinking it into a down payment.  Those posts are stupid because they are based in hindsight.  You have no idea what kind of news came out during the holding period or what kind of emotions were occurring during that time as the market rallied and tanked or if people would have took losses or gains to early. Its stupid. Just like the bitcoin charts are stupid.  Investing doesn’t work like that.  Hindsight is 2020. Never base a decision based on how much it has made in the past.

Here are a few quick points about why buying is and always will be better than renting. 

Rent increases every year but your mortgage stays the same: This is huge today because rent has never been higher.  This is also important because as you age and get better at your job your income will increase.  This will allow what was once a large mortgage payment to become a drop in the bucket.  If you were renting that rent would have likely kept pace at about 50% of your income.  Don’t be silly, the owners of apartments know how much you are making and how much they can charge you. A lot of the times the business owner and the apartment complex owner are the same people.

Your kids can’t inherit your rent: When I was growing up my grandparents had this huge home in San Diego.  Something happened and they ended up selling the home and renting an apartment.  They rented that apartment for about 25 years.  If you look at what they paid in rent, not only would they have paid that home off, but they could have paid off two other homes.  Lets not even get into what that home in San Diego would be worth 25 years later.  I love them, but see how selfish that is? Comfortable for them but it robbed their heirs of millions. Be willing to get uncomfortable and maybe even over pay so that your heirs can live well.  

It’s not about tax write offs: For some reason the “you get a tax write off” idea just never made sense to me. You want me to spend money to save money? That’s like the idea that you save money when you buy a shirt for half off. NO, you still spent half.  Real estate isn’t about tax write offs.  That is just an added bonus and a very small bonus at that.  One thing to consider is that whether you realize it or not, you are paying property insurance and property taxes.  That is all built into your rent sir.  All of the things that you think you are getting away with by renting are built into your rent.  Otherwise it wouldn’t make sense for the landlord to own the building.  Think maintenance, repairs, cleaning, insurance, taxes, staff, you pay for it all in one way or another. Word to that annual rent increase that’s coming soon!!


This post could have gone on forever and I think I will ultimately turn it into a book. But over the years this is where BKF and I have fundamentally disagreed, to the point where he has blocked me, and will likely block me if he ends up reading this post.  This isn’t about him though, this is about the millions of people being misled and being fed the lie that renting should even be in the same conversation with someone who is a first generation wealth builder. 

Keep in mind that it’s not either or. Its not real estate or stocks or business, its ALL assets. I need them all, you need them all, and your heirs need to inherit them all.  If you are serious about getting your wealth right for your heirs, not just so you can stunt on the gram contact us at so we can get you locked into the great things we are doing at Todd Capital.

Be great, invest well,

Todd Millionaire



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