Grant Cardone / Cardone Capital

Grant Cardone / Cardone Capital

Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes

My office received a call from one of his reps today. I thought the pitch was a pie in the sky type of deal.  Anyone hear of this guy on Youtube,  Grant Cardone?  He boasts a half a billion dollar real estate empire in Florida and Texas.  I believe he get's around 90% financing, plus he also takes in money from investors.  Something doesn't seem 100%.   He also does these seminars and other marketing stuff.  He seems all over the place and also trying to raise capital from others.  Just some basic math, if he's financing 90%, paying out at least 6% to investors, and locking in a 3.5% mortgage from Fannie Mae; because he's a preferred client, there doesn't seem much leeway for him to make money.  I understand the cash flow portion of it, as that is what we do.  We just do not raise capital or borrow money that much anymore.  However, my concern is that when the recession hits and the evictions start, that cash flow will dry up.  He seems to be working on extremely thin margins.  He's also in very lofty areas of Miami; which were the first to go in the last recession.  He reminds me of the Polka King (https://en.wikipedia.org/wiki/Jan_Lewan).

Am I reading into the numbers incorrectly?

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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
8y
Originally posted by @Account Closed:
GC is legit. He was a guest on the Bigger Pockets podcast 3 years ago.

Originally posted by @Calvin Thomas:

My office received a call from one of his reps today. I thought the pitch was a pie in the sky type of deal.  Anyone hear of this guy on Youtube,  Grant Cardone?  He boasts a half a billion dollar real estate empire in Florida and Texas.  I believe he get's around 90% financing, plus he also takes in money from investors.  Something doesn't seem 100%.   He also does these seminars and other marketing stuff.  He seems all over the place and also trying to raise capital from others.  Just some basic math, if he's financing 90%, paying out at least 6% to investors, and locking in a 3.5% mortgage from Fannie Mae; because he's a preferred client, there doesn't seem much leeway for him to make money.  I understand the cash flow portion of it, as that is what we do.  We just do not raise capital or borrow money that much anymore.  However, my concern is that when the recession hits and the evictions start, that cash flow will dry up.  He seems to be working on extremely thin margins.  He's also in very lofty areas of Miami; which were the first to go in the last recession.  He reminds me of the Polka King (https://en.wikipedia.org/wiki/Jan_Lewan).

Am I reading into the numbers incorrectly?

 I don't want to comment on Cardone one way or the other but I wanted to note this post - everyone always needs to make sure they do their own research and due diligence. BP works hard to have good podcast guests but one should never assume that just because someone was on the radio they're real or worthwhile. Question everything - make no assumptions. Cardone is famous, but Bernie Madoff was famous too. 

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  • Investor · Indianapolis, IN · Member since 2018 · 1k+ posts · 756 votes
    7y

    @Calvin Thomashave 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. 👀

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Justin Goodin:

    @Calvin Thomashave 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..

  • Investor · Indianapolis, IN · Member since 2018 · 1k+ posts · 756 votes
    7y

    @Calvin Thomasyes, there is a lot for everyone to learn no matter what level you are at. 👌

  • Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    @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.

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
  • Syndication Expert and Investor · Indianapolis, IN · Member since 2016 · 591 posts · 808 votes
    7y

    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/...

  • Member since 2019 · 5 posts · 9 votes
    7y

    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! 

  • Rental Property Investor · Hoboken, NJ · Member since 2014 · 65 posts · 64 votes
    7y
    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%? 

  • Member since 2019 · 5 posts · 9 votes
    7y

    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. 

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    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. 

  • Member since 2019 · 5 posts · 9 votes
    7y

    Calvin,  

    Thank you!  We are now considering other investment options. 

    Take Care Ron V. 

  • Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
    7y

    @Calvin Thomas @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!

  • Member since 2019 · 5 posts · 9 votes
    7y

    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. 

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Chris Grenzig:

    @Calvin Thomas @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.

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
  • Property Manager · Orlando, FL · Member since 2016 · 479 posts · 277 votes
    7y
    Originally posted by @Calvin Thomas:
    Originally posted by @Chris Grenzig:

    @Calvin Thomas @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

  • Contractor · Indianapolis, IN · Member since 2016 · 267 posts · 144 votes
    7y

    @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.

  • Member since 2018 · 110 posts · 109 votes
    7y

    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. 

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    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.

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Chris Grenzig:
    Originally posted by @Calvin Thomas:
    Originally posted by @Chris Grenzig:

    @Calvin Thomas @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.  

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    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).

  • Atlanta, GA · Member since 2019 · 4 posts · 2 votes
    7y

    @Calvin T.

    I just saw Grant Cardone speak last weekend at the National Achievers Congress with Tony Robbins. He was one of the headliners with ************* and Daymond John. Grant was advertising Cardone University.

  • Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Rachel NA:

    @Calvin T.

    I just saw Grant Cardone speak last weekend at the National Achievers Congress with Tony Robbins. He was one of the headliners with ************* and Daymond John. Grant was advertising Cardone University.

     Not saying GC doesn't have name recognition. However, that's not a person showing their work in terms of success. Here are some other speakers who promised riches and stole from others:

    Bernie Madoff (Jail)

    Mark Stanford (Jail)

    Jordan Belford (Rat & Free)

    Don Lepre (Suicide because he was going to go to jail)

    Lou Pearlman (Jail)

    Scott Rothstein (Jail)

    All did public speaking tours and promised others riches.  Please note, I am not at all saying in any way, shape or form that GC is or has any part of one.  However, going from zero to have a billion dollars in a few years..  Hmm, not too sure.  Anyone who does the math, he's living and working off of 100% credit.  Everyone knows he's leveraged up to 90% (he's disclosed this many times) because he gets "special rates".  I am just concerned members and visitors of BP will see GC, watch his videos, believe in his pitch, lay down tens of thousands of dollars (which most don't have) and be left up sh--ts creek without a paddle.  I've been here for a while and I've been to various group functions around NYC.  I've always suggested people start slow and low.  This, of course, is completely opposite of what GC suggests with a minimum of 16 units.  Even 16 units in the worse areas of NJ or CT would be over a million dollars.  It's just not feasible; let alone logical for anyone to risk.  Real Estate is not supposed to be a casino.  Yes, more properties = more leverage.  However, that doesn't mean they are making money.  

    Here's a short story that I was involved with years ago.  I know this developer in Queens, NY.  He bought buildings up during the craziness of the 2004 -2008 market.  Didn't care about the price, because everything keeps on going up.  He'd actually refinance quite often in order pull out the new value.  Right before the crash, he had near 30 million in real estate investments.  When the recession hit, he had no reserves, no credit lines, rents were late, etc.  All in all, he lost every one of those buildings and was near bankruptcy.  It also cost him his marriage and family as well. I see this happening again. Stick to the numbers.  Stick to slow and low.  Have ample reserves (GC's reserves are these funding vehicles where he raises money. They are backed by nothing.)  It's basically unrated commercial paper.  This Cardone Capital is very risky and anyone with any experience in real estate; especially the bad times, would tell you to stay far away.

    I am just here posting logic and reason. If Cardone Capital and Grant Cardone were such good investments, he'd have them rated by Standard & Poors, SIPC or Moody's.  However, no outside agency has reviewed these offerings.  It's buyer beware.  An investor is not even covered by SIPC if he goes bankrupt.

    This is not a wise investment. If it was, he'd be pulling in much lower loan rates from Wall Street where the hedge funds and brokers would buy in.  Simon Property Group just raised 100 million at a little less than 2%, yet Cardone Capital is offering between 6% - 15%.  This is considered high risk and highly speculative.  It's basically junk commercial paper.

    Stay away.

  • London · Member since 2019 · 722 posts · 386 votes
    7y

    For any deal with Cardone Capital, read the SEC filing. All the info you need will be in the specific filing.

    The lawyer who handle one or more of the SEC filings is a BP member.

  • Specialist · San Antonio, TX · Member since 2012 · 865 posts · 351 votes
    7y

    @John Corey The lawyer that handle one or more of the SEC is BP member ;)

    I’m a BP member as well ;) LOL  I couldn’t pass that one up. 

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