Grant Cardone / Cardone Capital

166 Replies

@Grant Grimshaw I read another thread I’m here about GC and money in his deals. From the sounds of it, it seems he has money in the deal til it closes, then he sells shares, effectively getting his money out of the deal.

Long story short, I don’t think he has any money in the deal for long

@Calvin T.have we heard of him? Lol uh ya. GC is legit. If you haven’t heard of him then you haven’t done your research in real estate. 👀

Originally posted by @Justin G. :

@Calvin T.have we heard of him? Lol uh ya. GC is legit. If you haven’t heard of him then you haven’t done your research in real estate. 👀

Yep, I'm a newbie in the real estate game (40+ years). Only have around 644 units, but I'm growing. So much for me to learn..

@Calvin T.

Very smart dude (10X principle).

He's a bit "in your face/extroverted" for my taste, but I'm sure he's helped a lot of people. He's on one of the BP podcasts as well.

I was with a mentor of mine who controls/manages about 10,000 units and had never heard of Uncle G. Too busy 10xing it on his own to go down a YouTube rabbit hole apparently! He had also never heard of Bigger Pockets. Most of the bigger players could care less. 

Like other's have said GC is a big player in relation to the average multifamily operator on BP, but in the world of Private Equity Real Estate and institutional investing he is a small player. 

But like he says (paraphrase) - "There's always someone bigger than you just appreciate what you've accomplished." - Said while comparing his G550 to a 737 lol! 

https://www.nmhc.org/research-insight/the-nmhc-50/...

https://www.nmhc.org/research-insight/the-nmhc-50/...

Currently trying to do my due diligence on Cardone Capital and Grant Cardone as a possible "Accredited Investor" in Fund IV ( $100,000). I came across your question and I emailed Ryan Maya who is our contact person for this fund. His response was that Grant will have 5%-10% invested in Fund IV, their current offering. Perhaps the next question I need to ask is for how long? 

Currently, we have more questions than answers. BP is amazing and I have only been a member for one day. I appreciated everyone sharing so openly. THANK YOU! 

Originally posted by @Ron Vitkun :

Currently trying to do my due diligence on Cardone Capital and Grant Cardone as a possible "Accredited Investor" in Fund IV ( $100,000). I came across your question and I emailed Ryan Maya who is our contact person for this fund. His response was that Grant will have 5%-10% invested in Fund IV, their current offering. Perhaps the next question I need to ask is for how long? 

Currently, we have more questions than answers. BP is amazing and I have only been a member for one day. I appreciated everyone sharing so openly. THANK YOU! 

 What's the deal structure? I've briefly heard him speak about his deals but it sounds like it's a 6% pref then 35GP/65LP split which is a rich tax to pay. Also what is his acquisition fee and asset mgmt fee? Is the asset mgmt fee based on a % of equity managed or a % of gross income? Also at time of sale do you get your initial capital back before he touches a dime of that 35%? 

Kyle,  I will try to answer to the best of my ability. It may be best for you to review the PPM to be sure I have not shared info that may be incorrect.  

The length of the deal is 10 yrs. For an accredited investor it is a $100,000 min. Preferred return is 6%, Distribution is monthly, Target IRR is 15% In their sales piece it does show other properties that did close I believe an average of 5.4 yrs. This is a large fund with a total of 4 properties. three A, one B+ property, one inTexas, all other here in Fla where I live. I know these markets, and Florida is experiencing amazing population growth. So that part of the investment is exciting and makes sense. The 10 yrs of my money being tied up, combined with a sales guys pushing way too hard to close the sale, and wanting us to increase the amount we were considering above the $100K was too much for us. When combined with comments from individuals here on BP, all who have a ton more experience than we do, I will be looking at other passive investments.

I hope this helps some. Take care and good luck. 

Originally posted by @Ron Vitkun :

Currently trying to do my due diligence on Cardone Capital and Grant Cardone as a possible "Accredited Investor" in Fund IV ( $100,000). I came across your question and I emailed Ryan Maya who is our contact person for this fund. His response was that Grant will have 5%-10% invested in Fund IV, their current offering. Perhaps the next question I need to ask is for how long? 

Currently, we have more questions than answers. BP is amazing and I have only been a member for one day. I appreciated everyone sharing so openly. THANK YOU! 


5% - 10% seems very vague. The offering documents are pretty straight forward and are regulated by the SEC. That 5% -10% that is suggested should be in the offering materials are they are not fact. Remember, there's an old saying.  Sound bites and verbal agreements are not sworn testimony; only in writing is. Just remember, buyer be ware. A few questions you should ask your GC contact (or better yet, have him comment on this thread).

1) What are the ongoing management charges that will be incurred?

2) Do those charges effect my 6% min distribution?

3) Is GC's piece an equity position or services position (I.E. management)?

4) What happens if the fund collapses or the rents are not paid on time?

Personally, of you are just interested in 6%, I'd look at some solid closed end funds.  Seems too much risk for my appetite and way too many unknowns. 

@Calvin T. @Ron Vitkun

I've never looked at a GC deal, but I think I can make some pretty good educated guesses just based on our business model and deals we've done and how he structures his deals.

From my understanding he claims to close the deals with his own money and then sells his interest post closing. Nothing wrong here, although I am curious if there's any mark up (probably not is my guess)

Since he is raising money for a fund and not a one-off deal, they are usually structured with mandatory capital calls as money is needed for new deals (mentioned in earlier posts of this thread). This is not uncommon because it means your money isn't tied up in no assets until a deal is found and needed. Some people do the capital call structure, others don't.

I would definitely look at his fees, for deals of his size and considering they are low management intensity, a 1% acq fee and 1% asset management fee on Net revenue would be close to what I would expect.

Considering these are Class A a 6% pref seems fair, a 65-35 split over that seems a bit high, but nothing too aggregious (saw it mentioned earlier not sure if true).

As far as if he keeps money in, I would expect he will, 5-10% of total equity is normal and fair considering the size of the fund.

As far as the length of the investment, usually funds will have a pre-determined expected length (seems like 10 years), but will have clauses to extend that if the manager (Cardone) deems it necessary for a "wind down" period I believe its called, again nothing uncommon about that.

At the end of the day being a passive investor is giving someone else control. The difference between a fund and a one-off investment like we do, is the funds/returns can be blended between deals, if you invest in a fund you may not know the specific properties that will be acquired, and it's just less known. On a one-off deal you are still passive, no control, but your money is for that specific deal, it ends when that deal does, and theres less mixing of things around. There's pros and cons to both, you just have to understand what is right for you.

Hope that helps!

Chris,

WOW, thank you. That is a huge help. We are currently looking at crowdfunding sites realcrowd.com & crowdstreet.com. The more I read, the more I realize how little I know. We are in no hurry to jump in. We have self-managed our retire accounts, and cash account with TD Ameritrade for +5 years. We also have a JV with the investment firm that purchased our property in 2013 and an NYSE company. 2017/2018 were much easier to invest and watch your accounts grow. 2019 is a very different stock market year. More time and less of a return. Time to look at alternatives and passive investment in real estate may meet those needs.

BP is the best first step I could have made!

Ron V. 

Originally posted by @Chris Grenzig :

@Calvin T. @Ron Vitkun

I've never looked at a GC deal, but I think I can make some pretty good educated guesses just based on our business model and deals we've done and how he structures his deals.

From my understanding he claims to close the deals with his own money and then sells his interest post closing. Nothing wrong here, although I am curious if there's any mark up (probably not is my guess)

Since he is raising money for a fund and not a one-off deal, they are usually structured with mandatory capital calls as money is needed for new deals (mentioned in earlier posts of this thread). This is not uncommon because it means your money isn't tied up in no assets until a deal is found and needed. Some people do the capital call structure, others don't.

I would definitely look at his fees, for deals of his size and considering they are low management intensity, a 1% acq fee and 1% asset management fee on Net revenue would be close to what I would expect.

Considering these are Class A a 6% pref seems fair, a 65-35 split over that seems a bit high, but nothing too aggregious (saw it mentioned earlier not sure if true).

As far as if he keeps money in, I would expect he will, 5-10% of total equity is normal and fair considering the size of the fund.

As far as the length of the investment, usually funds will have a pre-determined expected length (seems like 10 years), but will have clauses to extend that if the manager (Cardone) deems it necessary for a "wind down" period I believe its called, again nothing uncommon about that.

At the end of the day being a passive investor is giving someone else control. The difference between a fund and a one-off investment like we do, is the funds/returns can be blended between deals, if you invest in a fund you may not know the specific properties that will be acquired, and it's just less known. On a one-off deal you are still passive, no control, but your money is for that specific deal, it ends when that deal does, and theres less mixing of things around. There's pros and cons to both, you just have to understand what is right for you.

Hope that helps!

Well, as a real estate developer since the late 70's and accumulated over 400 units that are all paid off I can tell you one thing.. "A fool and his money are soon parted"

But, hey, what do I know. I am just a guy from the Bronx.

 

I would start with the Vanguard REIT and then, if you want, dabble slowly into real estate. Start with a 2 - 4 unit building in your area and expand from there. If you have a lot of funds in Ameritrade (a million +), you can enable margin and, in a way, be your own bank. Just make sure you negotiate a lower rate on margin. I am also at Ameritrade and I pay .25% over prime. I miss the days when prime was 0.00% - 0.25%.





 

Originally posted by @Calvin T.:
Originally posted by @Chris Grenzig:

@Calvin T. @Ron Vitkun

I've never looked at a GC deal, but I think I can make some pretty good educated guesses just based on our business model and deals we've done and how he structures his deals.

From my understanding he claims to close the deals with his own money and then sells his interest post closing. Nothing wrong here, although I am curious if there's any mark up (probably not is my guess)

Since he is raising money for a fund and not a one-off deal, they are usually structured with mandatory capital calls as money is needed for new deals (mentioned in earlier posts of this thread). This is not uncommon because it means your money isn't tied up in no assets until a deal is found and needed. Some people do the capital call structure, others don't.

I would definitely look at his fees, for deals of his size and considering they are low management intensity, a 1% acq fee and 1% asset management fee on Net revenue would be close to what I would expect.

Considering these are Class A a 6% pref seems fair, a 65-35 split over that seems a bit high, but nothing too aggregious (saw it mentioned earlier not sure if true).

As far as if he keeps money in, I would expect he will, 5-10% of total equity is normal and fair considering the size of the fund.

As far as the length of the investment, usually funds will have a pre-determined expected length (seems like 10 years), but will have clauses to extend that if the manager (Cardone) deems it necessary for a "wind down" period I believe its called, again nothing uncommon about that.

At the end of the day being a passive investor is giving someone else control. The difference between a fund and a one-off investment like we do, is the funds/returns can be blended between deals, if you invest in a fund you may not know the specific properties that will be acquired, and it's just less known. On a one-off deal you are still passive, no control, but your money is for that specific deal, it ends when that deal does, and theres less mixing of things around. There's pros and cons to both, you just have to understand what is right for you.

Hope that helps!

Well, as a real estate developer since the late 70's and accumulated over 400 units that are all paid off I can tell you one thing.. "A fool and his money are soon parted"

But, hey, what do I know. I am just a guy from the Bronx.

 

I think you probably know more than most lol

 

@Calvin T. He is very flashy you’re right. It’s kind of his shtick cuz he stands out and his style gets him lots of attention. Maybe you don’t need his investments however he helps sales teams at Fortune 500 companies grow. If he can teach sales at google he can help you grow your company. Look into his sales material.

Remember to push the the obnoxious nature of his in search of the gold nuggets he has.

Putting money into funds like Cardone Capital is just about a place to grow money a few percentages a year. When you watch his videos the majority of the checks are under $100 or a few hundred. Rarely does he mention a check going out that is over $1k. 

Grant is a small player when it comes to syndication. There are funds out there by the big players that are in the billion dollar level. 

You can get better returns by investing in other funds but at the end of the day Cardone Capital exists to make Grant money and he does well at it. 

Originally posted by @Joshua Howaniec :

@Calvin T. He is very flashy you’re right. It’s kind of his shtick cuz he stands out and his style gets him lots of attention. Maybe you don’t need his investments however he helps sales teams at Fortune 500 companies grow. If he can teach sales at google he can help you grow your company. Look into his sales material.

Remember to push the the obnoxious nature of his in search of the gold nuggets he has.

Respectfully, you are mistaken. I have nothing against his flashiness.  If that's what he wants to do, that's his choice.  However, he's a snake oil salesman.  In time, all will see.  I've seen his type in the 80's, 90's and 2000's.  They are either broke, dead or in jail.  He's already been broke twice, so we'll see what happens.  @ 90% leverage on 500 million + in real estate, he must be doing monkey double backflips with the fed dropping .25 basis points yesterday.

Oh, he never taught sales at Google.  I am pretty sure Google is doing fine without him or his gimmicks.  Not exactly sure where you got this information. I do not need GC's help, as several can attest here at BP, my team and I are getting by just fine. It's tough, but we're getting through it..  

Thanks for the chuckle though... It made my night... LOL.

Originally posted by @Chris Grenzig :
Originally posted by @Calvin T.:
Originally posted by @Chris Grenzig:

@Calvin T. @Ron Vitkun

I've never looked at a GC deal, but I think I can make some pretty good educated guesses just based on our business model and deals we've done and how he structures his deals.

From my understanding he claims to close the deals with his own money and then sells his interest post closing. Nothing wrong here, although I am curious if there's any mark up (probably not is my guess)

Since he is raising money for a fund and not a one-off deal, they are usually structured with mandatory capital calls as money is needed for new deals (mentioned in earlier posts of this thread). This is not uncommon because it means your money isn't tied up in no assets until a deal is found and needed. Some people do the capital call structure, others don't.

I would definitely look at his fees, for deals of his size and considering they are low management intensity, a 1% acq fee and 1% asset management fee on Net revenue would be close to what I would expect.

Considering these are Class A a 6% pref seems fair, a 65-35 split over that seems a bit high, but nothing too aggregious (saw it mentioned earlier not sure if true).

As far as if he keeps money in, I would expect he will, 5-10% of total equity is normal and fair considering the size of the fund.

As far as the length of the investment, usually funds will have a pre-determined expected length (seems like 10 years), but will have clauses to extend that if the manager (Cardone) deems it necessary for a "wind down" period I believe its called, again nothing uncommon about that.

At the end of the day being a passive investor is giving someone else control. The difference between a fund and a one-off investment like we do, is the funds/returns can be blended between deals, if you invest in a fund you may not know the specific properties that will be acquired, and it's just less known. On a one-off deal you are still passive, no control, but your money is for that specific deal, it ends when that deal does, and theres less mixing of things around. There's pros and cons to both, you just have to understand what is right for you.

Hope that helps!

Well, as a real estate developer since the late 70's and accumulated over 400 units that are all paid off I can tell you one thing.. "A fool and his money are soon parted"

But, hey, what do I know. I am just a guy from the Bronx.

 

I think you probably know more than most lol

 

Thank you for the kind words.  However, that's mostly due to dumb luck and experience over the years.  Experience is our best teacher.  As long as we listen and learn from it.  

 

Originally posted by @Jonathon Weber :

Putting money into funds like Cardone Capital is just about a place to grow money a few percentages a year. When you watch his videos the majority of the checks are under $100 or a few hundred. Rarely does he mention a check going out that is over $1k. 

Grant is a small player when it comes to syndication. There are funds out there by the big players that are in the billion dollar level. 

You can get better returns by investing in other funds but at the end of the day Cardone Capital exists to make Grant money and he does well at it. 

Not too sure, but in my conversations with his sale rat, the distributions are not 100% tax advantaged, can be just redistribution of one's own capital (I.E. some of the dividend is coming from your own fund investment. No appreciation), You have no ownership or right to the property. And CC has the right to do basically whatever they want with your funds.  It can even be invested blindly.  I swear, I thought I was talking to one of Jordan Belford's boiler room guys from The Wolf of Wall Street.

Again, rather than go with CC or GC, for 6% and some sort of upside and possibly less risk. I would suggest considering Blackstone Group, Simon Properties, Blackrock, Vanguard REIT. Blackrock is up 30% this year, but that's partly due to the corporate structure change from an L.P. to a Corp. Yes, I own all these funds as well. I've owned them for many years (disclosure).