More With David CEO and host of the PIX11 TV Show “Renegade Money”, David J. Bradford has always been a fan of real estate as an investment, but his realtor friends don’t always appreciate his candid approach.
A former pastor turned wealth guru and financial educator, the US-born athlete is here to dispel a few myths about the most trusted and traditional of all loan structures: the homeownership mortgage.
“If you’re looking at a house as an investment,” says Bradford, who’s been shaking up the world of financial planning ever since he left car sales behind and became a serious player in financial awareness, “then you’re thinking about it all wrong. A house is not an investment. Does it show up on your net worth? Yes, if you have equity. But the house – where you sleep – is not an asset. It’s essentially a liability.”
How so? “Homeownership under a traditional mortgage structure takes money out of your pocket,” he says. “You have to pay property insurance and upkeep, and every now and then, your wife wants a new kitchen. A house is often a liability.”
The downpayment on your mortgage is where the problem starts, he says. And this is where his realtor friends start getting antsy. “Essentially I encourage a critical re-evaluation of homeownership and I urge my clients to consider the opportunity cost of tying up substantial amounts of capital in a single property.”
More With David and the “Renegade Money” TV Show
David J. Bradford’s journey as a renegade began with his decade-long tenure as the pastor who challenged the status quo of a white dominated church by transforming it into an inter-racial church in Savannah.
His journey from pastor to financial disruptor began after a crushing divorce. David
set aside his role as pastor to focus on his 5 children. At age 40 he had to start his life over. Transitioning into the business world, David left car sales to lead the sales team at a burgeoning hiring solutions startup before helping to build a financial agency. Now he’s found his room as CEO of More With David and as the host of the successful “Renegade Money” TV show on PIX11.
A staunch advocate for financial literacy, David is driven by a mission to elevate the financial well-being of America’s middle class. The financial myths promoted by powerful financial institutions deeply disturb him.
The Mortgage Myth
David J. Bradford. © Angel Guadalupe
Consider a scenario where you’re eyeing a $500,000 house, says Bradford. “That requires a 20% down payment, translating into $100,000. Essentially, you’ve committed $100,000 of after-tax savings to a property that you don’t yet own.”
Bradford is quick to dispel the myth that this initial $100,000 down payment represents equity. “That $100,000 is not equity; it’s your down payment. That sum remains inaccessible unless you decide to sell the house, leaving you without a place to live – if that’s your primary strategy,” he says.
This brings Bradford to his main point: the often-overlooked opportunity cost. “You’re losing the opportunity cost on $100,000 to make you money,” he says. “What if you put that $100,000 as a down payment on a rental property, or five rental properties, each of them producing about $1,000 a month for you? Now you’ve got $3,000 a month coming in as income, whereas the $100,000 offers you an absolute guaranteed zero.”
Reconsidering Homeownership
Bradford’s advice challenges the deeply ingrained notion that owning a home is the pinnacle of financial success. Instead, he advocates for a more strategic approach to capital allocation. “By exploring alternative options, like using your down payment as an investment in rental properties, you can generate a steady income stream,” Bradford says. “This approach not only provides immediate financial benefits but also allows for greater flexibility and growth potential.”
In a landscape where home ownership is often heralded as the ultimate investment, David J. Bradford’s renegade insights encourage a more nuanced perspective. By understanding the financial implications of homeownership and considering alternative investment opportunities, individuals can make more informed decisions that align with their long-term financial goals.
Consider Contractual Wealth
One approach that invests in the benefits of real estate without actually having to live in one home for the rest of your life is through a contractual fund, says Bradford. “Contractual wealth is how you build wealth. I just love being able to offer people a 100% passive way where they can get a lot of the profits from real estate investing without having to actually own the property.”
Contractual wealth means that I have a contract that tells me what I’m going to make, and the other person agrees to pay that at a certain period of time. So, for example, I have seen a tax-lien fund that’s built on real estate, buying real estate, and then flipping it and selling it to other people, and that gives a 22% return a year. That is a contractual return, just like a bank CD. Contractual wealth is what rich people like to use because they don’t want to lose money and they want to protect the downside.”
Bradford’s candid, no-nonsense approach may ruffle some feathers in the real estate industry, but it offers a refreshing take on the true nature of homeownership. His advice underscores the importance of viewing your home not as an untouchable asset but as one part of a broader, more dynamic financial strategy.
