Grant Cardone: 7 reasons you should invest in real estate instead of leaving your money in the bank
Grant Cardone is a self-made millionaire who has amassed much of his wealth through his real estate sales and investment consulting business. While any type of investment comes with a certain level of risk, real estate has long been considered a lucrative option for many people, including Cardone.
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Cardone believes that investing in real estate can help people more secure their financial future than leaving money in a checking or savings account — even if that savings account is a high-yield account. With that in mind, here are Grant Cardone’s seven big reasons why you should invest in property rather than leaving your money in the bank.
Non-residential real estate can be profitable
Some types of real estate are more profitable than others. Cardone suggests investing in multifamily properties, such as apartments, rather than any other type. The main reason for this is that these types of properties can have more tenants who can regularly pay rent to you, the landlord. Depending on how much you charge for rent, you may end up covering the mortgage, maintenance, taxes and property insurance, while earning additional income.
According to Cardone, America is also a chartered nation – just like many other parts of the world. For this reason, and because new technology is unlikely to change this, Cardone believes multifamily properties will remain profitable in the future.
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Real estate is resistant to inflation
Another reason to invest in real estate comes from the fact that it is more resistant to inflation than keeping your money in a bank account. Cardone believes that real estate can weather any storm, including inflation and even deflation.
Besides, as the inflation rate rises, apartment rental prices also rise. By investing in an apartment complex or other multifamily real estate option, you can continue to earn a steady income even when other aspects of the economy change.
Real estate is a tangible asset
When you invest in a piece of real estate, you have control of the tangible assets. When you keep money in a bank account, your cash is also tangible. However, real estate tends to appreciate while physical money often remains stagnant or depreciates in value.
As Cardone noted, as housing and rental markets improve, your property can also gain value. This can lead to long-term growth and more profitable investment opportunities in the future.
You can increase rental rates
Grant Cardone also noted that rental prices will likely continue to rise for the foreseeable future. This means that by investing in real estate that can support multiple individuals or families, you can continue to earn more money over time. The more units you own, the more your income can increase as well.
When you keep money in a bank account, one of the only real ways to increase it is to contribute more money to that account. The financial institution determines the return, not you. Even if your money is in an interest-bearing account, that return is unlikely to be high compared to what you can get from real estate. For this reason, Cardone sees real estate as a better financial asset than cash in the bank.
Bank accounts offer low interest rates
The other key point Cardone made is that the interest rates associated with traditional savings and checking accounts are usually low. In some cases, such as with checking accounts, there may be no interest return at all, regardless of how much money is in the account.
According to the Federal Deposit Insurance Corporation (FDIC), the national deposit rate for a traditional savings account is 0.43%. It’s just 0.07% for interest-bearing checking accounts. Meanwhile, real estate tends to have a higher average annual return.
Real estate allows diversification
According to Cardone, putting your money in income-producing assets like real estate can be more beneficial for your future than keeping it in the bank. This is especially true if you are looking to increase your income or diversify your investment portfolio.
When you leave your money in a bank account, you have the advantage of easy access to it when you need it. This can be especially useful in the event of a financial emergency. For this reason, it’s not necessarily a bad idea to keep some cash in your bank. But if you have the means, investing your money in different investment vehicles may be more financially smart.
Cardone suggests investing your money in several different properties, ideally in different locations, to maximize potential returns. Doing so allows you to maintain some level of control over your assets while increasing your net worth and income. It also helps mitigate the risks that come with investing as you will have multiple properties to offset any losses.
Housing prices continue to increase
The cost of owning a home has risen, leading many people to rent rather than become homeowners. According to Grant Cardone, mortgage rates have recently been around 8%.
What this means is that more people are likely to search for rentals like yours, thus increasing your earning potential. This is most likely to happen when housing options in your area are limited or when those who want to buy do not qualify for a mortgage loan.
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This article originally appeared on GOBankingRates.com: Grant Cardone: 7 Reasons You Should Invest in Real Estate Instead of Leaving Your Money in the Bank
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