“Live where you rent. Rent what you own.”

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“Live where you rent. Rent what you own.”

Juan V Lopez
Investor · Las Vegas, NV · Member since 2020 · 153 posts · 136 votes

“Live where you rent. Rent what you own.”

I’m sure many of you have heard Grant Cardone say this. I’m curious if anyone has applied it.

My wife and I own investment properties and had our minds set on purchasing our own primary residence before end of 2021. But after we dove into this theory, it has us second-guessing what we want to do.

The evidence is clear that owning your home is a bad “investment.” All expenses, no income. Big liability, not an asset. It’s wiser to take that money we’d use for a down payment and acquire more real estate.

But is everything about money? Even knowing that it doesn’t make fiscal sense to own where you live, is it smart to buy a home because you want a place where you can decorate it how you want to, put holes in the wall where you want to, and not worry about a lease ending every few years?

I understand all of this comes down what my wife and I get aligned on. It’s ALL we’re talking about this weekend 😂

Just curious to see if other investors rent their primary residence and your experiences. TIA 🤞🏽

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Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
5y

In my area it's quite a bit cheaper to own than to rent. That's why rental properties make good money. I also want to keep my kids in the same school so I don't move around.

GC is entertaining, but you have to remember he has an agenda. 

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  • Account Closed
    Rental Property Investor · Las Vegas, NV · Member since 2018 · 133 posts · 171 votes
    5y
    Originally posted by @Juan V Lopez:

    “Live where you rent. Rent what you own.”

    I’m sure many of you have heard Grant Cardone say this. I’m curious if anyone has applied it.

    My wife and I own investment properties and had our minds set on purchasing our own primary residence before end of 2021. But after we dove into this theory, it has us second-guessing what we want to do.

    The evidence is clear that owning your home is a bad “investment.” All expenses, no income. Big liability, not an asset. It’s wiser to take that money we’d use for a down payment and acquire more real estate.

    But is everything about money? Even knowing that it doesn’t make fiscal sense to own where you live, is it smart to buy a home because you want a place where you can decorate it how you want to, put holes in the wall where you want to, and not worry about a lease ending every few years?

    I understand all of this comes down what my wife and I get aligned on. It’s ALL we’re talking about this weekend 😂

    Just curious to see if other investors rent their primary residence and your experiences. TIA 🤞🏽

    I always liked Grant Cardone's philosophy and have lived by it for the last few years.  For me it makes more sense to rent where I live and rent out what I own, because I like the mobility/flexibility to move when I want, whether because of a job change (or job loss), maybe I don't like where I live, don't like the neighbors, etc.  I just sleep better at night, and it helped a lot when Covid happened and I didn't know if I was going to lose my job and my w2 income.

    I am actually going to be buying a place soon that I will be living in, but that's only because the rental market is so tight that I likely am not going to be able to find what I want or the price I want, and what I am buying is a pretty low payment because I am not over leveraging myself with debt.  If I lose my job the day after escrow closes I can easily pay the mortgage or move out and rent it for positive cash flow, plus I have rental income from my other rentals.  So it's really a pretty low risk scenario, and may not even be permanent if I turn it into a rental and go back to renting myself.

    Grant's ideas work for me since I don't like to be permanently anchored to anything or saddled with debt and big mortgage payments on an asset that produces no income, so I think it's solid advice for some people.

    6Reply
  • Mary E VeldkampPro Member
    Investor · 85032 · Member since 2021 · 16 posts · 15 votes
    5y

    I rent where I live to because it's so expensive in California and I move every few years with my projects.   I would definitely consider owning my primary, but it's not an available option for me as I chose location and living on the beach for a premium for awhile at this time in my life.

    5Reply
  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    In my area it's quite a bit cheaper to own than to rent. That's why rental properties make good money. I also want to keep my kids in the same school so I don't move around.

    GC is entertaining, but you have to remember he has an agenda. 

    24Reply
  • Joe S.Pro Member
    Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
    5y

    I guess it’s about trade offs and your size family. I have a number of children and we live in an area that is not a subdivision and Has a decent size yard.. The old saying happy wife happy life. We have quite a bit of equity in our home and we have discussed selling it several times, but we can buy rental properties without having to sell our personal residence. Everybody’s situation is a little different so only you can make the right call for what you need to do. 

    6Reply
  • Alecia LovelessPro Member
    Member since 2019 · 3k+ posts · 2k+ votes
    5y

    @Juan V Lopez For about 22 years I owned, ran, and lived in a bed and breakfast. After ending a 20 year relationship I realized the time had come to move on and an opportunity arose to buy a duplex close by. My new partner and I moved into 1/2 of the duplex and I sold the bed and breakfast. The other half we renovated and is rented out to my tenant from an ADU at the B&B who moved with us.

    For now as I am building my portfolio it makes sense to have income coming in from my primary residence through house hacking. I have a 5 year plan for retirement from my W-2 job. By then I would like to be able to move into a SFH.

    I think everyone is different for their tolerance of living with others. It never bothered me at the B&B having 14-18 people living under my roof at one time which is why I don’t mind the duplex. My partner on the other hand never had a college dorm experience and bought her first house at 24. She never lived in a mega-apartment complex so having the tenant next door in the duplex bothers her a lot more.

    You have to figure out your tolerance level before you jump into something you hate. If you buy a SFH expecting to have a roommate as a house hack to pay the mortgage and hate it you have a problem. If you buy a 4-plex on an FHA loan and live in one unit and hate it after one year you can move out and find a new tenant and buy a SFH with your income from the 4-plex and live alone.

    5Reply
  • Stephen KeigheryBusiness Member
    Rental Property Investor · New Orleans, LA · Member since 2018 · 716 posts · 555 votes
    5y

    @Juan V Lopez yes. I own 15 properties (21 doors) and have never owned a primary residence. My house purchases have all been strategic and number driven and my decisions where I rented were emotional.

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    10Reply
  • Jeff HornbergerBusiness Member
    Investor · Spokane Valley, WA · Member since 2012 · 45 posts · 42 votes
    5y

    @Juan V Lopez

    I struggled with this two as we bought 2 duplexes before buying our primary. I’ve always said buying the primary residence was the hardest for me. We had 2 girls and 1 on the way and living in a duplex wasn’t going to cut it for my wife too much longer.

    I decided I would Atleast have certain criteria when I bought the primary. I wanted the area that I lived in to be in a great school district and to be in a neighborhood that was appreciating and offered bang for my buck. The house needed to have atleast 2 stand out features from the rest of the homes I was looking at. Maybe it was a large yard, garage or theater room. Etc. something that I knew buyers would like if I were to sell.

    We eventually bought one and thankfully the market has only gotten stronger and we’ve seen good appreciation. We ended up pulling a heloc of 50k off the house to acquire more property or use the funds as rehab funds on them. I bought it with 5% down and asked the seller to pay all my closing costs. (I increased price to do this but wanted to save my capital)

    With the heloc and earning more money we bought a duplex and 2 4 plexes on seller contracts.

    My goal has always been for my rentals to cash flow my everyday living expenses. I’m getting close but still need to get a few more properties up to market rate. With a plan in place I would shy away from buying your primary.

    [email protected]509-994-5007
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    1Reply
  • Chris Szepessy
    Catskill, NY · Member since 2018 · 636 posts · 668 votes
    5y

    It CAN make more sense to rent where you live and invest where it makes sense. Sometimes a market is too expensive for someone to buy a primary house in. However, me personally, I like the stability of knowing I'm going to have a place to live. As we all know, LL can not renew a lease for any reason. And I can get whatever pet I want to. And sometimes when an area gets "hot" and investors with big money come in and invest millions into buildings, you can get priced out rent wise, too. I'm not mad that investors do that, my point is just that you may need to move because it's no longer affordable. The stability of knowing what my mortgage payment is every month until it's paid off is comforting. I can probably make a list a mile long of reasons why I enjoy owning a home...and someone else can probably make a list just as long as why you shouldn't own a home. It's basically personal preference.

    4Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y

    Live where you can afford. Rent where it makes you enough money to afford to live where you want.

    9Reply
  • Christopher Miller
    Member since 2020 · 20 posts · 20 votes
    5y

    Grant Cardone is a professional salesman and entertainer. He did not earn his fortune as a professional investor. Take his words with a grain of salt. I think if you intend to purchase the home to own for a very long period of time and purchase it with the same criteria you use for your investment properties, It's a no brainer to buy rather than rent.

    8Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y

    there are a lot of factors in this thought process..  do you have a family  are your kids in school  where is your job. 

    for me it was a no brainer to buy my primary .. the 500k 100% tax exemption after sale and living in it 2 years makes it one of the BEST investments.  WE have done this 5 times.. over the course of the years..  thats why CA and west coast real estate is what it is many millionaires are made simply by owning a primary residence . bottom line..  

    Now if I lived in fly over country with limited to no appreciation especially in high end executive style houses then I would have a different thought process on what to buy to live in etc. 

    But reality is if your single and dont care about moving if you need to. IE landlord wants the house back  LOL  or your wife is OK with moving and not having deep roots.. and or your OK with the schools.. but then you get booted and cant find a home in the right school district.. these are the downsides. 

    Bottom line its a life choice not necessarily and investment choice.  I can tell you though Oregon would still be a little backwater state if not for CA residences selling their homes pocketing 500k or more in equity and coming to live in this state. Same with Idaho and Nevada to a certain extent.  

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    10Reply
  • Christopher Miller
    Member since 2020 · 20 posts · 20 votes
    5y
    Originally posted by @Eric James:

    In my area it's quite a bit cheaper to own than to rent. That's why rental properties make good money. I also want to keep my kids in the same school so I don't move around.

    GC is entertaining, but you have to remember he has an agenda. 

    Completely agree. Cardone is primarily a salesman and entertainer. And I don't think this philosophy is even a good one.

    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Christopher Miller:
    Originally posted by @Eric James:

    In my area it's quite a bit cheaper to own than to rent. That's why rental properties make good money. I also want to keep my kids in the same school so I don't move around.

    GC is entertaining, but you have to remember he has an agenda. 

    Completely agree. Cardone is primarily a salesman and entertainer. And I don't think this philosophy is even a good one.

    He has a great airplane though..  

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    JLH Capital Partners51 Review
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    2Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    5y
    Originally posted by @Mary E Veldkamp:

    I rent where I live to because it's so expensive in California and I move every few years with my projects.   I would definitely consider owning my primary, but it's not an available option for me as I chose location and living on the beach for a premium for awhile at this time in my life.

    Just spent a week in 92651. Would I rent or would I buy, I ask myself. 

    I would Never, Never, Never buy in Californi-eye - the list of Why makes me cry, but I would never buy in Californi-eye 


    1Reply
  • Bradley Dosch
    Real Estate Agent · Seattle, WA · Member since 2019 · 301 posts · 188 votes
    5y

    Hey Juan, I like the way you think. As you said it all comes down to what's important to you. What are your priorities. Determine what you want and don't get too swayed by society.

    For me personally, I want freedom to do what I want asap and buying house hacks makes the most sense for that.

    I think you got the right outlook, just gotta get crystal clear on your vision!

    2Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    I guess it depends where you live.  Where I live it is a lot less expensive to own your own home than it is to rent. Plus once your home is paid off, you have the extra money to invest how you see fit.  Thinking ahead to retirement as well, I can't imagine having to rent for your entire life when your pension may not be that great.

    2Reply
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y

    Here's my two cents: looking at what's behind the advice can be useful. One thing we can all agree on is that you shouldn't think of buying a large, opulent, private house as a wonderful investment. It typically turns out to be less than desirable. Limit your emotional connection to your house and step away from the belief that your home needs to be an extension of your ambition.

    Before I started investing in real estate, I lived in an townhouse development north of Pittsburgh with an HOA in place, one step away from a gated community. The community was built in 1972 and has a pool, tennis courts, a clubhouse, events...and, currently, a $390 monthly HOA fee to cover its dilapidated infrastructure. The other owners tended to lament the fact that it had once been a "premier" area condo development in the 1970s and 1980s by virtue of its location less than a mile away from Pittsburgh's most upscale mall. The condo was worth around $200K, and I paid taxes on the $180K county appraisal.

    I currently live in a 1926-built duplex that I bought for $45K cash a few years ago, and I rent the upstairs out for a bit less than $1K. When I bought the place, I successfully argued my tax assessment down to $80K. While the area is generally considered up-and-coming nowadays, until recently it was right at the border of a heroin ghetto. Not the sort of place anybody would brag about in get-rich-quick-in-real-estate infomercials. But it's hard to describe how good this place has been to us in so many ways. More room than the townhouse. Giant basement for storage. Great tenants. Close to my wife's work. Very near our portfolio rentals. And the appreciation the area has seen has been nothing short of breathtaking for Western PA. It was a hard choice to make, but we made it, and the results have really been something special for us.

    This is what works in western PA. I'm sure it doesn't work the same way everywhere. But focus on what's behind the advice, and you'll be OK. You would not catch me dead again in a house that just drained money out of my pocket like the townhouse next to the mall with the HOA robbing me blind.

    9Reply
  • Ben Zimmerman
    Rental Property Investor · Raleigh, NC · Member since 2016 · 393 posts · 995 votes
    5y

    The notion that your own home does not generate income is silly, unless of course you plan on being homeless.  Your home generates the income of whatever you would otherwise be paying in rent due to the fact that everything in life has an opportunity cost.  Please show me this overwhelming evidence of yours that 'owning your home is a bad investment'.  If you are geographically stable, then owning will always beat renting in the long run.

    If you don't own your own home then realistically you only have two options.

    1. Be homeless

    2. Rent, and give your hard earned money to your landlord so he can make a profit.

    So either you spend your hard earned money paying down the mortgage on your own home, while gaining equity, tax benefits, and appreciation, or you can simply give your money away to your landlord and receive no economic benefits whatsoever.  It never ceases to amaze me how a bunch of people who realize there is great wealth to be made by owning a home and renting it to people, will suddenly in the same sentence advocate that they themselves should rent instead of own their own home.  

    But if you are in fact dead set on renting instead of owning, I'll gladly rent you any of my properties so I can profit off of your ideology.

    9Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    5y

    Keep in mind GC has bought primaries to live in before and made millions off them after redo. One is 5 miles from my house and he made a cool 7 mil in 36+ months or so. 

    3Reply
  • Jenning Y.
    Investor · USA · Member since 2015 · 168 posts · 243 votes
    5y

    His statement makes sense financially if one wants to live in a luxury high-end property.  For example, if someone has $5M cash while want to live in a $10 Millions mansion, he probably do far better financially by renting the $10M property and investing the $5M  in rental properties rather than dumping all his $5M in the $10M mansion.

    Of course, there are other non-financial factors mentioned by others.



      

      

    2Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    5y
    Originally posted by @Jim K.:

    Here's my two cents: looking at what's behind the advice can be useful. One thing we can all agree on is that you shouldn't think of buying a large, opulent, private house as a wonderful investment. It typically turns out to be less than desirable. Limit your emotional connection to your house and step away from the belief that your home needs to be an extension of your ambition.

    Before I started investing in real estate, I lived in an townhouse development north of Pittsburgh with an HOA in place, one step away from a gated community. The community was built in 1972 and has a pool, tennis courts, a clubhouse, events...and, currently, a $390 monthly HOA fee to cover its dilapidated infrastructure. The other owners tended to lament the fact that it had once been a "premier" area condo development in the 1970s and 1980s by virtue of its location less than a mile away from Pittsburgh's most upscale mall. The condo was worth around $200K, and I paid taxes on the $180K county appraisal.

    I currently live in a 1926-built duplex that I bought for $45K cash a few years ago, and I rent the upstairs out for a bit less than $1K. When I bought the place, I successfully argued my tax assessment down to $80K. While the area is generally considered up-and-coming nowadays, until recently it was right at the border of a heroin ghetto. Not the sort of place anybody would brag about in get-rich-quick-in-real-estate infomercials. But it's hard to describe how good this place has been to us in so many ways. More room than the townhouse. Giant basement for storage. Great tenants. Close to my wife's work. Very near our portfolio rentals. And the appreciation the area has seen has been nothing short of breathtaking for Western PA. It was a hard choice to make, but we made it, and the results have really been something special for us.

    This is what works in western PA. I'm sure it doesn't work the same way everywhere. But focus on what's behind the advice, and you'll be OK. You would not catch me dead again in a house that just drained money out of my pocket like the townhouse next to the mall with the HOA robbing me blind.

     Jim, your journey is amazing and brings home many great points. 

    I also live in a 'househack', not near a heroine ghetto, but right next to the neighborhood the income affluent live.  Mine is the one 1960s build that has a rental grandfathered in.  Owning in expensive markets takes some work and ingenuity. 

    it is now paid off and brings in plenty enough rent to cover maintenance, repairs, utilities, taxes and insurance.  Our 'metro' is a $430k median market but we are right next to a $700-900k+ neighborhood. 

    Owning can be done. Simple, functional, receiving income as you live there. Renting exposes one to too many risks and restrictions, especially if In a house.  The landlord could sell about any time. I'm asking nobody to have a dog or a trampoline or paint a room.  And when we sell, up to $500k is tax-free. Not enough?  Add low down, low rate loans for 30 years ro get into it.

    Why is this even a discussion?  Find something that works and have no payment or rent one day.  Rent where you live?  No freaking thanks. 

    5Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Christopher Miller:

    Grant Cardone is a professional salesman and entertainer. He did not earn his fortune as a professional investor. Take his words with a grain of salt. I think if you intend to purchase the home to own for a very long period of time and purchase it with the same criteria you use for your investment properties, It's a no brainer to buy rather than rent.

     Buying an investment property vs buying your own home have very little in common.  One is an investment that has a lot of help paying for it.  The other is a possession, where you pay for all of it.  They are not the same thing, and should never be based on the same criteria.

    3Reply
  • Alexander Szikla
    Real Estate Agent · New York City · Member since 2020 · 818 posts · 639 votes
    5y

    This argument always lacks a few beneficial, tangible components of home ownership. Not to mention the intangible and social benefits (i.e. lower crime rates, better schools, etc.). 

    Simply speaking financially, home ownership allows very cheap financing (A. low cost of capital), large tax benefits upon sale (B. $250k single / $500k married).

    A + B = Massive Equity Creation

    Equity creation doesn't necessarily mean cash flow.  

    4Reply
  • Nathan Ophardt
    Brooklyn, NY · Member since 2016 · 5 posts · 7 votes
    5y

    @Juan V Lopez

    I could get into the anecdotal data of how our triplex allows us to afford more home than we could ever afford to rent in a VHCOL city. But at a very basic level, aren't all of us here banking on the fact that it costs more to rent than to own? If the mortgage cost for any of our investment properties is more than rents for that area, we don't buy it.

    2Reply
  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    5y
    Originally posted by @Nathan Ophardt:

    @Juan V Lopez

    I could get into the anecdotal data of how our triplex allows us to afford more home than we could ever afford to rent in a VHCOL city. But at a very basic level, aren't all of us here banking on the fact that it costs more to rent than to own? If the mortgage cost for any of our investment properties is more than rents for that area, we don't buy it.

     Please explain your reasoning with actual numbers...with dollar signs in front.  Leave numbers with %%% behind them out of your reasoning.

    0Reply
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