Marcus Lemonis vs. Grant Cardone: Do You Need a Place to Lay Your Head or Do You Need Cash Flow?
“The financial lessons learned from homeownership, combined with the self-esteem earned through saving a down payment and the sense of security that comes from owning the place where you live, is a powerful combination,” Marcus Lemonis told CNBC*. “In order to buy a home, you need to have a down payment, in order to have a down payment you need to budget properly, in order to budget properly you have to buy one pair of shoes and not three pairs of shoes. It teaches you a form of moderation.”
To be clear, Lemonis is arguing that much of the value to be gained from buying a house is the experience you get in preparing to buy a house. I disagree. The only value you need to be thinking about is something called the Rule of 72.
The “Rule of 72” is a way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, you can know how many years it will take for your investment to double.
The problem with a house is it’s going to take a LONG time for your money to double.
The rule of 72 used to show that putting your money in the bank was a great thing to do. Compound interest rates were higher back when I was growing up, but today if you gave 100K to Bank of America, it would take 72 years or longer for your money to double. In Japan, it costs you money to keep money in the bank. For these reasons, you need a new vehicle to invest in. Forget about shoving your cash over to Bank of America, and don’t be fooled into thinking that a house is much better.
Any good investment should allow you to do the following:
1) Protect your capital—Investing shouldn’t be gambling. You don’t want to lose the original stash of cash you’ve put away.
2) Give you at least a 6-10% return—Anything less than that is just not very good. You don’t want average investments, you want good to great investments.
3) Give you the possibility of appreciation—The best investments don’t just give you regular cash flow back, they grow in value over time.
4) Give you tax advantages—The tax man takes enough from you already, especially if you live in the Soviet state of California. You need to take advantage of every tax relief you can by finding investments that let you legally keep your dough.
The truth is, the bank is used for people who don’t trust in themselves.
People give their money over to someone to give them small returns because they don’t want to take the responsibility of investing for themselves.
Buying a house, despite what Marcus Lemonis says about it being a “sense of security”, is a slow and painful way to double your money. You need to be doubling your money quicker than what the banks will give you or what any house will do for you. The house is about protecting money, but it doesn’t give a return or any tax advantages.
I’m seeing doubles in 3 years, 4 years, and 5 years investing in multi-family apartment buildings. This is the new compound interest.
These investments protect my capital, give me larger returns every year, appreciate as I keep getting checks every month, and give me tax breaks.
I’m warning you, if you buy a house, you may get “rich”, but it won’t be until your prostate falls off. There are better investments than a home, folks. You don’t need a “place to lay your head”, you need cash flow. Rent where you live and own what you rent.
I’m looking for others to invest with me in my deals now. Learn more at Cardone Capital. Don’t wait until you are 90 years old for your money to double!
Grant Cardone is a New York Times bestselling author, the #1 sales trainer in the world, and an internationally renowned speaker on leadership, real estate investing, entrepreneurship, social media, and finance. His 5 privately held companies have annual revenues exceeding $100 million. Forbes named Mr. Cardone #1 of the “25 Marketing Influencers to Watch in 2017”. Grant’s straight-shooting viewpoints on the economy, the middle class, and business have made him a valuable resource for media seeking commentary and insights on real topics that matter. He regularly appears on Fox News, Fox Business, CNBC, and MSNBC, and writes for Forbes, Success Magazine, Business Insider, Entrepreneur.com, and the Huffington Post. He urges his followers and clients to make success their duty, responsibility, and obligation. He currently resides in South Florida with his wife and two daughters.