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Hi, I'm Ella Gurfinkel, your host of the AskElla Show and senior loan officer at Fairway Independent Mortgage. On my podcast, I cut through the noise to bring you honest conversations about real estate, mortgages, and financial planning.
I interview industry experts to tackle everything from homebuying basics to complex topics like reverse mortgages, trusts, and market trends. With decades of experience, I'm passionate about dispelling myths and providing clear, actionable advice.
Whether you're buying your first home, refinancing, or planning for retirement, I'm here to help you make informed decisions. Join me for straightforward talk about real estate and beyond!
Grant Cardone says never buy a house, always rent. He's actually right about the math in today's market, but then he tells you to invest in his deals instead. And that's where I think his advice becomes just a bit self- serving. Hi there, I'm Ella Gerfinkle, senior loan officer with 30 years of experience and over 2,000 families served over my lifetime. Today, I'm going to analyze if Grant Cardone's housing advice is sound, but I'm also going to question his investment recommendations
where Grant gets it right. Grant's core argument about renting versus buying is mathematically sound in today's market. He correctly identifies that home ownership ties up capital in a non-lquid asset with significant carrying costs. His example of preferring to pay 24,400 in rent versus 24,400 in mortgage payments makes sense because the renter has flexibility while the homeowner has additional costs. Property taxes, insurance, maintenance, opportunity costs of the down payment. So in many markets, you can rent for 20 to 30% less than the total cost of ownership. That difference can be invested in liquid diversified assets. The problem with Grant's alternative is where his advice becomes just a bit problematic. After convincing you to not buy real estate directly, he promotes investing in his real estate syndications and funds. Grant's typical syndication structure includes 2 to 3% acquisition fees, 1 to 2% annual management fees, 6 to 8% preferred return to investors, then a 7030 or an 80/20 profit split favoring the general partner grant above the preferred return. If a deal returns 15% annually, investors might see 6% preferred plus 30% of the 9% excess, roughly 2.7% totaling 8.7. Grant keeps 6.3 plus all fees on investors money. Now, let's talk about the fee structure. Let's examine the real cost of Grant's fee structure. On a typical 20 million syndication, for example, acquisition fees would range between $400,000 and $600,000. Annual management fees between 200 and 400 yearly. Profit splits favor grant significantly. Disposition fees upon sale another 1 to 3%. Over a 5-year hold, grant might collect 2 to 4 million in fees regardless of investor returns. Now that's a 10 to 20% of the total investment going to fees. Compare this to a rate with a half to 1% annual fees and complete liquidity. So here is the liquidity problem then. Grant's educations typically lock up investor capital for 5 to 7 years with no liquidity options. If you need your money, you're stuck until Grant decides to sell. This liquidity should command a premium return. But after fees, many syndications underperform liquid alternatives like REITs or real estate ETFs. A more honest approach. If you agree with Grant that renting makes more sense than buying, consider these alternatives. Real estate ETFs with.1 to half a% fees and daily liquidity. Direct investment in rental properties in cash flowing markets. reads with professional management and transparent fees. You can get real estate exposure without enriching Grant through excessive fees. Grant's right that renting often makes more financial sense than buying in today's market. But his solution investing in his high fee syndications primarily benefits Grant, not the investors. So if you're going to rent instead of buying, invest the savings in lowcost liquid investments. Don't pay someone else's fees to access real estate when you can do it more efficiently yourself. The math on renting versus buying should be based on your situation, not on what investment products someone is selling.