Private equity fund manager and real estate investor Grant Cardone has always viewed real estate as a tool for building incredible wealth. But especially in 2024, he believes there will be great opportunities for those who want to make money through real estate investing.
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That's why investing in real estate is Cardone's No. 1 way to build wealth this year.
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Current real estate corrections now allow you to purchase for less than construction cost
When determining whether a property is a suitable investment, it is important to consider renewal costs, or the costs it would cost to build the property as a new construction. Cardon, who will host Real Estate Summit 2024 in Hallandale Beach, Fla., in March, said that in the current market, you can often buy for significantly less than replacement cost.
“For example, we just signed a contract in Tampa for $225,000 per door, but if we were to build it now, it would cost at least $350,000,” he told GOBankingRates. .
This lower cost also doesn't take into account the time and money saved by purchasing an existing property.
“Even if we start construction today, it won't be approved until next year, 2025, and it won't be completed until probably 2027,” Cardone said. “That replacement cost of $350,000 is what it would be if you started construction today, not what it would be if you started construction three years from now. You will have to bear the burden. [will] Continue to rise, [then you’re saving even more]”
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Cardone explained that due to the current real estate market adjustment, there are currently many rental properties available at prices below replacement cost.
“If Americans want to tap into the real wealth of this country, they need to move away from buying single-family homes and into a different asset class: apartments,” he said. “If this were 2008, single-family homes would be the opportunity. But now it's 2024, and apartments and offices are being modified. They should look for loans that will help them. Then, if they form a group to fund that asset, they will become richer than they could ever imagine.”
Rent will rise in 2 years
Cardone likes rental real estate as an investment because it generates immediate cash flow. We also expect our cash flow to soar over the next two years as rental prices rise dramatically.
“As long as there are [average] Mortgage is double [average] Rents are going to go up,” Cardone said. “The average mortgage is about $3,800. The average rent is only $1,800. Rents are going to explode because people can't pay their mortgages.”
In addition, rents will also rise due to the lack of rental properties, he said.
“Two-thirds of the apartments currently being built in this country will be completed this year, and another third will be completed next year. [then] It’s over,” Cardone said. “There's not going to be any more construction in this country. Then we're going to have a big problem in 2027 and 2028, because not only will there be a shortage of housing, but there will be a shortage of rental properties.”
Finally, as demand increases in currently affordable areas, rents in those areas will rise dramatically.
“The average rent in Florida is about $1,900. [in] San Francisco, $5,700,” Cardon said. “So rents in Texas, Florida, Alabama, the Carolinas, the entire Southeast are going to go up. They're going to stay flat for two years, and then they're going to explode.”
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This article originally appeared on GOBankingRates.com: Grant Cardone: Why Real Estate Is My Favorite Wealth-Building Investment for 2024
