Why Multi-Family Will Always Trump a House
A home is the American dream, right? A white picket fence, a yard for the kids to roll around in, and setting your roots down for 30 years—and it’s an investment! Wrong. Investments pay you. That little white picket fence that millions of Americans own is a liability, not an asset.
James Altucher did a good job of showing the true cost of buying a home. He said the cost of owning is down payment + size of mortgage + all the interest payments + all the taxes + all maintenance + opportunity cost of time. You don’t need to spend tens of thousands of dollars of your hard earned money on a down payment, go into massive debt, and have fees and taxes for years to come. Nobody needs that, except those who are trying to control you. What you need is to save your money and invest in something that pays you—multi-family.
Owning a house is just one of the many myths Americans have bought over the years. The lies to save your money, make good grades, get a good job, play it safe, get a retirement account—and don’t rent—have been driven into the American psyche. Years ago, at 23 years of age, I remember being unable to make the $275 a month payment in the duplex apartment I lived in. My problem was not the fact that I was renting. I had an income problem.
The duplex I lived in is the image for the article…
Today I own 4000+ apartments that rent for $1000+ per month and have three other businesses that help millions of people. I share this with you to remind you no matter where you are today, no matter how bad it is, if you refuse to quit on your dreams and be obsessed with adding skills and knowledge, you will achieve all that you dream and more. Your success is important to me, that’s why I want to tell you to rent where you live and own what you rent.
If you look at the top 10% of all the money in the United States, the top 10% own sixty-six percent of all the real estate in the country.
Can real estate always be dependable? If you buy right it will be. In 2008-2009 I had two deals that cash flowed the entire time. I couldn’t sell them, couldn’t trade them, couldn’t do almost anything with them because of the marketplace that froze up—but they provided me with cash flow every month.
In 2007, I bought oceanfront in La Jolla, California—it was 21 units on the ocean—right there in front of the biggest break and people would go there because it’s beautiful—absolutely gorgeous. It was a negative cash flow of $20,000 a month every month from 2007-2010 until I sold that deal in the worst real estate market in the history of the United States since the Great Depression and I sold it for 4.5 million dollars. So, I lost $20K a month for 48 months, so that cost me $960,000 but since I sold it for 4.5m I still made 3.5 million dollars at the end of the deal.
Most deals I do cash flow. That means they pay me every month. I’m telling you so you know, some deals will not cash flow. You should not be invested in them. Get dependable cash flow. What does a house do? Houses don’t cash flow, how could it when you’re paying for it? If you’re paying for it is not cash flowing. That’s why a house is a bad deal, nobody should be buying a house—no one. It’s like buying a boat, and nobody has any reason to buy a boat.
Buying a single family home, besides not cash flowing, is a bad deal because it’s just one door. The only thing you want to have one of is a spouse, unless you’re polygamous. Everything else you want to have multiples. You want to have multiple front doors. You don’t want one McDonald’s—you want 50 of them. Why does network marketing work? Because you’re not dependent upon one person, you got hundreds and thousands of people. Never depend on one door, never depend on one stream of income.
If you want to get into multi-family real estate, you should first focus on one thing—expanding income.
Never ever depend on one flow for anything except who you sleep with. That $250,000 house you could buy might be worth $1,000,000 fifty years from now. I don’t want to wait 40 or 50 years to be a millionaire. You won’t even have a prostate muscle then. You need multiple doors and multiple flows of income.
With single family homes, even if you rent them out, you just can’t scale. You can’t have the economies of scale unless you buy the whole neighborhood, then you have the whole neighborhood calling you. I would sell that house and take your $100,000 and go buy a $400,000 deal with multiple units.
Real estate investing is not just about reading a book. I’ve never read a book on real estate. How do you know about the timing? You’ve got to be in the marketplace to know when the timing is right. You cannot show up in Detroit today, you already missed the party. You had to be in Detroit years ago to know. You probably needed to be in Detroit 10 years ago while it was going down to know when to act.
Most people get committed to an idea, and the idea is so small that when they hit the obstacles, they are likely to quit. That’s why you hate your job, you hate your job because there’s no big payday. You guys have to get a payday big enough. Every Monday a show at Grant Cardone TV—it’s called Real Estate Investing Made Simple. Email Ryan@cardoneaquisitions.com any questions you have on the topic and I’ll be here for you every week to tell you everything I know that has taken me from being a renter in a duplex who can’t pay $275/month to renting over 4000 apartments to people.
In Course 2 of my Playbook to Millions I dive deep into “Why I Invest in Income-Producing Real Estate” and “Investing to Build Wealth“. I discuss simplicity of investment, disruption free investing, dependable income streams, hedging against inflation, physical assets and leverage. Right now the Playbook is 80% off at my store for either the physical or digital version of the book. This sale will end soon.
Be obsessed or be average,
P. S. Don’t like reading books? Would you rather watch or listen to them? Today’s deal of the day is the Be Obsessed or Be Average On-Demand Video. 10+ Hours of me reading you my newest book expanding on it with my thoughts and why I put in and left out what I did.