Grant Cardone Touts 50-Year Mortgages As A 'Major Real Estate Opportunity'

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Real estate investor called the 50-year mortgage idea a  "major real estate opportunity" shortly after President Donald Trump implied he would create 50-year mortgages in a TruthSocial post.

Cardone said that 50-year mortgages would result in lower interest rates and reduced monthly payments. These are the important details real estate investors should consider as 50-year mortgages gain more traction.

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Longer Mortgage Terms Increase The Pool Of Buyers

A 50-year mortgage term will attract more buyers since the monthly payments are lower. Some people may reduce their monthly payment by hundreds of dollars per month by getting a 50-year mortgage instead of a 30-year mortgage. The increased pool of buyers sets the stage for real estate investors to raise prices on their properties, due to rising demand.

The 30-year mortgage accomplished those same goals and contributed to soaring housing prices. Housing didn't become unaffordable for most people overnight, but the ability to break a house purchase down to 360 monthly payments with interest played a decisive role, with the New York Times referring to it as a "30-year trap" in 2023.

The 50-year model offers the same upsides and downsides as 30-year mortgages, but at a higher scale. Real estate investors and banks stand to benefit the most as asset prices continue to rise. Rent and housing prices have been rising in tandem, according to the U.S. Treasury, and comfortably outperforming wage growth in the process.

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Complaints About Debt Servitude

Cardone's X post received some backlash from people who view 50-year mortgages as debt servitude. They jokingly said that there should be 69-year and 100-year mortgage terms instead of just stopping at 50-year terms.

"Our children will get 100-year mortgages," one X user said.

"50-year mortgages [are] great for real estate and banks. Not [so] much for the debt slave," another X user responded.

The affordability crisis mostly stems from housing prices, according to the U.S. Census Bureau, which said that the median housing costs are 21.4% of someone's income. Although 50-year mortgages promise lower monthly payments, it may be temporary as homeowners and investors raise the prices of their homes due to the increased demand.

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Refinancing Can Get A Lot Better For Real Estate Investors

50-year mortgages can boost demand for real estate properties and add equity to an investor's properties. The extra equity gives them the flexibility to conduct cash-out refinances so they can buy additional properties or invest in other assets.

For instance, Cardone is a big fan of crypto and uses real estate cash flow to buy Bitcoin. Refinancing into a 50-year mortgage allows investors to realize higher cash flow right away, and if they use a cash-out refinance, they will also have more capital to deploy into assets like Bitcoin.

It's understandable why real estate investors see 50-year mortgages as a good opportunity. They are simply playing with the cards that have been dealt, assuming Trump follows through with 50-year terms. However, 50-year mortgages are a substantial hurdle for aspiring homebuyers, the formation of new families, and the hope to reverse declining birth rates.

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This article Grant Cardone Touts 50-Year Mortgages As A 'Major Real Estate Opportunity' originally appeared on Benzinga.com