Non Accredited Syndication - Cardone Capital?

Question

Hi All,

I am looking for some information on syndication's. I am just beginning to enter the real estate investing world. I have 30k to invest and would like to slowly enter into syndication investments.

I recently came across Cardone Capital and the new non accredited fund which is due to launch soon. Does anyone have any experience with the Accredited Cardone Capital fund or other syndication investments that they can recommend as a new investor?

Thanks!

Frank Wong · Answer

Hi Ryan,

Based on your job and schedule it appears you are looking for a true passive income for an investment.  Syndication is really the only thing that fits that definition.  After doing your homework on the deals and companies there is not much you need to do.  Collect the check which is truly passive income.

Buying a rental property yourself will never truly be passive.  You can have a great PM but it still requires time and effort.   I would surely be looking at the medium tier homes and areas.  As great as it is to say I own 3 houses which are $40k each, I rather own 1 house at $120k.  As Jay says its a crap shoot for those low price homes.   I am also old school, I won't buy a house unless its cash.  I know leverage blah blah refi cash out.  That's just not for me.

Syndication can be your start, build up your passive cash flow and set yourself up to own something down the road.  I have not looked into Cardone Capital so can't say anything about it.  His videos are great and inspiring. I am a fan of his but you still gotta research his deals. The syndications that I have invested in works for me.  I think every investor should have both investments going.   I have 80/20 split. 80% I own and 20% is in syndication.  Why did I split it this way?  No one will care about my money more than myself.  I also trust myself first before anyone else.

Ivan Barratt · Answer

@Ryan Tuck it's simple. Look at 50 to 100 offerings before doing one. Then you'll know what a good deal looks like. There's a lot of them out there that will accept your status. You just have to do some research. Don't be in a hurry.

Also, listen to Grant Cardone on what he actually says on investing in anything before you have 100k! Perhaps you need to stack some more chips first! :)   PS> I'm a big fan of his sales training and his philosophy on apts but I have never reviewed a Cardone Capital offering so not sure on that part!

Watch out for Turn Key as well. The ROI is often NOT what's advertised. Spoiler Alert: most leave out the "turnover costs" when tenants move. This is in addition  to vacancy and repairs/maintenance and it will crush your model past year 2 or 3 and onward. Turnover burns a lot of investors. Trust me: I used to manage a lot of turn key property in Indy after the TK provider was fired! :)  Turnover costs killed every single investors' model.

Elijah Vo · Answer

@Ryan Tuck, I don't know about Cardone Capital, but we syndicated our first 114 unit apartment deal back in July and we're working on another currently, so I can speak on syndications.  I would say it's very possible to invest $30k into a syndication, but there are a some things I would consider:

1. Are the sponsors professional, trustworthy and ethical?

2. What are your goals? Syndications are great if you don't have the time to hunt down deals, actively manage a property (or property mgt. company), etc.  But, if you do have the time and you want more control, then you may consider being a sponsor/GP. In fact, I worked full time while we closed our deal. It wasn't easy by any stretch, but it can be done!

However, passively investing is also a good way to learn the ropes to become a sponsor/GP.

3. What is your risk tolerance? You should understand the risks involved in the deal and the sponsor's business plan, but typically, when you invest passively, you don't have to bare the same burden's as the sponsors.

I could go on, but if you want to know more about syndications, passively investing, or how we structured our last deal, please PM me and we can talk more!

Jay Hinrichs · Answer

Agreed if someone is looking for true passive and wants to spend 100k.. owing 1 or 2 low end C class rentals is rolling the dice.  compared to jumping on board with a Vetted experienced profitable syndicator..  I would say the syndication with the correct offering and company will out perform the low end asset every time.. no matter who is telling you that … and those that are telling you that are trying to sell you one... so consider the source..

Now if your goal is to build yourself your own large rental portfolio I get that going out on your own.. and investing in Pooled investments take on some risk compared to outright ownership.. so depends on your risk factors.. but comparing a 10 million dollar apartment complex to a low end 50k rental.. that's a no brainer.

Larry Fried · Answer

@Ryan Tuck  I am not familiar with Cardone Capital's syndication offering, but I have made a number of such investments with another company.  I have written extensively about these investments, as well as the changes that have happened over time, in my 4 part series: Have I Found the Holy Grail of Passive Real Estate Investing?

Jay Hinrichs · Answer

what I like to advise for those that ask me.. and of course on BP people don't ask we just chime in.

But I like to say  look at a median price point in a given MSA your interested in.. then buy within 10 to 20% of that.. don't buy at 40 to 50% of the median because that's NOT where homeowners are buying no matter how cheap the properties are.. they simply wont buy cheap properties to live in.

then invest again look at your rents and buy properties that rent for the top 25% of the rents of the given MSA.... for out of state folks this will give you a fair chance of success.. this illusion or irrational exuberance towards low end 30 to 50k houses for out of state investors is simply far to Risky.. one just needs to see the Carnage Mr. Morris created selling that dream and BS.

Ryan Tuck · Answer

Thanks for the reply Antoine,

If I was able to find a quality property manager and have enough market research in a different area I would definitely consider investing away from my current location. My current full time job has me relocating frequently and I do not have much time for travel.

Although syndications don’t have the same ROI I like the fact they are more passive and don’t require me to spend as much time visiting/researching locations and dealing with any vacancy issues.

Antoine Martel · Answer

Ryan.

With $30k you can buy your own rental properties and have control over your investment. You can buy 2 single family homes in the midwest with $30k and make over $500/mo in net cash flow while building equity every single month.

Is there a reason why you have chosen to invest in syndications instead of investing yourself?

Larry Fried · Answer

Ryan, I sent you a PM.

Jeffrey Almonte · Answer

Beware of lower-priced homes and the CapEx needed to stay profitable. Your CapEx and repairs will be much higher in the Midwest, especially with lower-end rentals. Also factor in the age of the property. Older properties present other issues like asbestos, knob and tube wiring, or cast iron plumbing.

From speaking with other investors, turnkey properties are not truly passive and returns could be marginal if CapEx and repairs aren't properly accounted for.

I haven't looked into the Cardone Capital fund and am not familiar with his offerings. Don't rush into it and review many offerings before jumping in.

Best wishes!

Non Accredited Syndication - Cardone Capital?

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