Grant Cardone / Cardone Capital

Multi-Family and Apartment Investing
8yFollow

Grant Cardone / Cardone Capital

Calvin Thomas
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?

8Reply
1,128 views

Most Popular Reply

JD MartinBusiness Member
Moderator
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. 

Podcast Guest on Show #243
Skyline Properties
View Page
33Reply
See this reply in the discussion

170 Replies

Jump to latestLatest
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

    5Reply
  • Jonathon Weber
    Member since 2018 · 110 posts · 109 votes
    7y

    At the end of the day, if you want to make it big you have to do it yourself. A few percentage here and there off of $100k or whatever you want to use for such funds will never set you financially free. Sure it starts to make a big difference when you are using over $1M, but they don't let you do that for obvious reasons. 

    2Reply
  • John Corey
    London · Member since 2019 · 722 posts · 386 votes
    7y
    Originally posted by @Jonathon Weber:

    At the end of the day, if you want to make it big you have to do it yourself. A few percentage here and there off of $100k or whatever you want to use for such funds will never set you financially free. Sure it starts to make a big difference when you are using over $1M, but they don't let you do that for obvious reasons. 

    Following from the above, it might make much greater financial sense to use the $100K for marketing and company operations than invested in a building. You will not make it big a deal at a time when starting with $100K. While you can make a great profit off individual deals, going big requires scale and a lot of OPM. 

    0Reply
  • John Corey
    London · Member since 2019 · 722 posts · 386 votes
    7y

    Cool, tells us more about how you can handling a SEC filing. I could not pass up asking given you put your hat in the ring. 

    0Reply
  • John Corey
    London · Member since 2019 · 722 posts · 386 votes
    7y
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

    A good filing will definitely be a CYA exercise. So the investors are really put off if they are concerned about risks. Those who do invest will know they have been warned. 

    0Reply
  • John Corey
    London · Member since 2019 · 722 posts · 386 votes
    7y
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

     The law firm listed: "Trowbridge Sidoti LLP is providing legal services relating to this Form 1-A"

    0Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    7y

    Idk jack squat about GC offerings although I imagine top shelf syndicates never need to advertise, much less have boiler room sales. Proven syndicates already have more on waiting list I think as the track record speaks for itself. GC aggressive noobs investors marketing is a bad sign imo. One BP dude said it before " Grant is a stone cold hustler" not necessarily bad and is what it is. 

    3Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Matt R.:

    Idk jack squat about GC offerings although I imagine top shelf syndicates never need to advertise, much less have boiler room sales. Proven syndicates already have more on waiting list I think as the track record speaks for itself. GC agressive noobs investors marketing is a bad sign imo. 

    They see his celebrity and perceived wealth and all they envision is all the money they will make. Fact of the matter is money is mostly made in your own transactions.  Yes, once you get to a certain point, you can place the funds in the market and do very well too.  However, the intial million, as they say, is the hardest.  After that, you parlay that into other investments and income producing vehicles.  There isn't an exact science to this, however, it's best to have five separate avenues of income.  Therefore, if one or two go south, the other three can support you, your business and your reserves. 

    2Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @John Corey:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

    A good filing will definitely be a CYA exercise. So the investors are really put off if they are concerned about risks. Those who do invest will know they have been warned. 

    There are only two entities making money on this deal, GC and the attornies.  It's garbage.  I've invested in plenty of preferred stocks, private offerings, convertible notes and commercial paper; so I actually know what I am reading.  However, these are UNDERWRITTEN by major firms and have insurance.  Or, at the very least, back buy the full faith of the entity (GSE bonds) or corporation (ExxonMobil, Goldman Sachs, General Motors, etc.).  There is no CYA analysis needed.  I just pointed out a few items which are completely one sided; there are plenty more.  

    The issue is, the people with wealth and experience would touch this with a 10 foot pole.  The only one's who would are the newbie's or people w/o much experience.  This is not GC showing you the ropes.  This is you giving GC your hard earned money with little chance of making a fair return. Yea, it's buyer beware, but how anyone can offer this to the public knowing it's complete garbage is unbelievable.  When enough people get taken to the cleaners, I see a class action law suit and an SEC investigation in the coming future.  Sorry to say, but most lawyers are not worth the paper this is written on.  What a racket.  

    0Reply
  • Jonathon Weber
    Member since 2018 · 110 posts · 109 votes
    7y
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

    A good filing will definitely be a CYA exercise. So the investors are really put off if they are concerned about risks. Those who do invest will know they have been warned. 

    There are only two entities making money on this deal, GC and the attornies.  It's garbage.  I've invested in plenty of preferred stocks, private offerings, convertible notes and commercial paper; so I actually know what I am reading.  However, these are UNDERWRITTEN by major firms and have insurance.  Or, at the very least, back buy the full faith of the entity (GSE bonds) or corporation (ExxonMobil, Goldman Sachs, General Motors, etc.).  There is no CYA analysis needed.  I just pointed out a few items which are completely one sided; there are plenty more.  

    The issue is, the people with wealth and experience would touch this with a 10 foot pole.  The only one's who would are the newbie's or people w/o much experience.  This is not GC showing you the ropes.  This is you giving GC your hard earned money with little chance of making a fair return. Yea, it's buyer beware, but how anyone can offer this to the public knowing it's complete garbage is unbelievable.  When enough people get taken to the cleaners, I see a class action law suit and an SEC investigation in the coming future.  Sorry to say, but most lawyers are not worth the paper this is written on.  What a racket.  

    Yep. That is why he pitches Cardone Capital to lower income folks and not the super rich. Get them to believe they need to earn more (they do) but the avenue to making more is to use his tool - Cardone Capital. It's simply a legal sales pitch he does like his Cardone University. 

    I know what the guy is doing and don't hat him for it, but there are plenty of people out there that don't realize that the $50M plane was a tax move paid by the company, not himself. Smart people like Ben Mallah will rent out a private plane for a thousand dollars for a real estate deal, not spending $50M as a tax move. 

    I have my doubts Grant even uses 1031, but he might. 

    I've ran the numbers on what giving him $400k would do for me. It's doubtful it would even make me $24K a year. I can make more than that by buying a single note and for $400k I could make a lot more than $24K in one year. 

    4Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Jonathon Weber:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

    A good filing will definitely be a CYA exercise. So the investors are really put off if they are concerned about risks. Those who do invest will know they have been warned. 

    There are only two entities making money on this deal, GC and the attornies.  It's garbage.  I've invested in plenty of preferred stocks, private offerings, convertible notes and commercial paper; so I actually know what I am reading.  However, these are UNDERWRITTEN by major firms and have insurance.  Or, at the very least, back buy the full faith of the entity (GSE bonds) or corporation (ExxonMobil, Goldman Sachs, General Motors, etc.).  There is no CYA analysis needed.  I just pointed out a few items which are completely one sided; there are plenty more.  

    The issue is, the people with wealth and experience would touch this with a 10 foot pole.  The only one's who would are the newbie's or people w/o much experience.  This is not GC showing you the ropes.  This is you giving GC your hard earned money with little chance of making a fair return. Yea, it's buyer beware, but how anyone can offer this to the public knowing it's complete garbage is unbelievable.  When enough people get taken to the cleaners, I see a class action law suit and an SEC investigation in the coming future.  Sorry to say, but most lawyers are not worth the paper this is written on.  What a racket.  

    Yep. That is why he pitches Cardone Capital to lower income folks and not the super rich. Get them to believe they need to earn more (they do) but the avenue to making more is to use his tool - Cardone Capital. It's simply a legal sales pitch he does like his Cardone University. 

    I know what the guy is doing and don't hat him for it, but there are plenty of people out there that don't realize that the $50M plane was a tax move paid by the company, not himself. Smart people like Ben Mallah will rent out a private plane for a thousand dollars for a real estate deal, not spending $50M as a tax move. 

    I have my doubts Grant even uses 1031, but he might. 

    I've ran the numbers on what giving him $400k would do for me. It's doubtful it would even make me $24K a year. I can make more than that by buying a single note and for $400k I could make a lot more than $24K in one year. 

    Ben is a good guy. He has a Youtube channel following his life in Real Estate.  I believe it is called Koncrete.  As for Crapdone Capital, that 6% is not necessarily a min.  You may get at least 6%, but that is gross of his management fees or any other fees being charged.  In addition, it could also be just return of your capital.  Return of capital just means that he's returning a portion of your investment with zero gain, but you may also invoke a tax consequence.  You also can receive nothing.  Finally, you receive zero depreciation on the real estate asset; yet he does.  No deal as Howie Mandel says.  

    6% straight on an insured bond, not bad at all though.  Good luck finding that these days...  You can get some tax-free munis @ 3% - 4% or high grade corps @ 3% - 5%.  Of course, there are some risks there too.  Nothing is 100% safe.  Though, I must say, the more I read and dive into the Crapzone Capital, the more I am just amazed of the facade.

    0Reply
  • Jonathon Weber
    Member since 2018 · 110 posts · 109 votes
    7y
    Originally posted by @Calvin Thomas:
    Originally posted by @Jonathon Weber:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

    A good filing will definitely be a CYA exercise. So the investors are really put off if they are concerned about risks. Those who do invest will know they have been warned. 

    There are only two entities making money on this deal, GC and the attornies.  It's garbage.  I've invested in plenty of preferred stocks, private offerings, convertible notes and commercial paper; so I actually know what I am reading.  However, these are UNDERWRITTEN by major firms and have insurance.  Or, at the very least, back buy the full faith of the entity (GSE bonds) or corporation (ExxonMobil, Goldman Sachs, General Motors, etc.).  There is no CYA analysis needed.  I just pointed out a few items which are completely one sided; there are plenty more.  

    The issue is, the people with wealth and experience would touch this with a 10 foot pole.  The only one's who would are the newbie's or people w/o much experience.  This is not GC showing you the ropes.  This is you giving GC your hard earned money with little chance of making a fair return. Yea, it's buyer beware, but how anyone can offer this to the public knowing it's complete garbage is unbelievable.  When enough people get taken to the cleaners, I see a class action law suit and an SEC investigation in the coming future.  Sorry to say, but most lawyers are not worth the paper this is written on.  What a racket.  

    Yep. That is why he pitches Cardone Capital to lower income folks and not the super rich. Get them to believe they need to earn more (they do) but the avenue to making more is to use his tool - Cardone Capital. It's simply a legal sales pitch he does like his Cardone University. 

    I know what the guy is doing and don't hat him for it, but there are plenty of people out there that don't realize that the $50M plane was a tax move paid by the company, not himself. Smart people like Ben Mallah will rent out a private plane for a thousand dollars for a real estate deal, not spending $50M as a tax move. 

    I have my doubts Grant even uses 1031, but he might. 

    I've ran the numbers on what giving him $400k would do for me. It's doubtful it would even make me $24K a year. I can make more than that by buying a single note and for $400k I could make a lot more than $24K in one year. 

    Ben is a good guy. He has a Youtube channel following his life in Real Estate.  I believe it is called Koncrete.  As for Crapdone Capital, that 6% is not necessarily a min.  You may get at least 6%, but that is gross of his management fees or any other fees being charged.  In addition, it could also be just return of your capital.  Return of capital just means that he's returning a portion of your investment with zero gain, but you may also invoke a tax consequence.  You also can receive nothing.  Finally, you receive zero depreciation on the real estate asset; yet he does.  No deal as Howie Mandel says.  

    6% straight on an insured bond, not bad at all though.  Good luck finding that these days...  You can get some tax-free munis @ 3% - 4% or high grade corps @ 3% - 5%.  Of course, there are some risks there too.  Nothing is 100% safe.  Though, I must say, the more I read and dive into the Crapzone Capital, the more I am just amazed of the facade.



    I would rather finance the entire development costs of a low income home for $115K and split 50-50 with the developer for a sale price of $175k and bank that money and repeat it with several homes a year.

    0Reply
  • Niv Levi
    Rental Property Investor · FL · Member since 2019 · 9 posts · 5 votes
    7y

    @Calvin T. He is not for everyone. I think experienced investors do not need him nor like what he offers. He fits the ultra passive investor who just wants to be part of something. Newbies also seem to like him because he motivates, teaches etc. He is all over the place but it works for him I guess. His leverage is way above anything I personally believe in nor would get into, he makes the money I would assume on fees and the exit.

    0Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Jonathon Weber:
    Originally posted by @Calvin Thomas:
    Originally posted by @Jonathon Weber:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:
    Originally posted by @Calvin Thomas:
    Originally posted by @John Corey:

    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.

     Here you go Mr. Corey. 

    https://www.sec.gov/Archives/edgar/data/1741665/000147793218003316/cardone_1a.htm#RISK%20FACTORS

    I love these few snippets:

    1)We are an emerging growth company organized in May 2018 and have not yet commenced operations, which makes an evaluation of us extremely difficult. At this stage of our business operations, even with our good faith efforts, we may never become profitable or generate any significant amount of revenues, thus potential investors have a possibility of losing their investment.

    2)This offering is a blind pool offering, and therefore, Members will not have the opportunity to evaluate some of our investments before we make them, which makes investments more speculative.

    3)Our Manager will have complete control over the Company and will therefore make all decisions over which Members will have no control.

    4)An investment in the Interests is highly illiquid. You may never be able to sell or otherwise dispose of your Interests.

    5)Rising expenses could reduce cash flow and funds available for future acquisitions.

    6)Our properties may not be diversified.

    7)The failure of our properties to generate positive cash flow or to sufficiently appreciate in value would most likely preclude our Members from realizing an attractive return on their Interest ownership.

    Everyone else can read the offering if they wish. It basically a junk bond or junk commercial paper. Junk in terms of, as it reads, highly speculative (Wall St. terminology).  

    A good filing will definitely be a CYA exercise. So the investors are really put off if they are concerned about risks. Those who do invest will know they have been warned. 

    There are only two entities making money on this deal, GC and the attornies.  It's garbage.  I've invested in plenty of preferred stocks, private offerings, convertible notes and commercial paper; so I actually know what I am reading.  However, these are UNDERWRITTEN by major firms and have insurance.  Or, at the very least, back buy the full faith of the entity (GSE bonds) or corporation (ExxonMobil, Goldman Sachs, General Motors, etc.).  There is no CYA analysis needed.  I just pointed out a few items which are completely one sided; there are plenty more.  

    The issue is, the people with wealth and experience would touch this with a 10 foot pole.  The only one's who would are the newbie's or people w/o much experience.  This is not GC showing you the ropes.  This is you giving GC your hard earned money with little chance of making a fair return. Yea, it's buyer beware, but how anyone can offer this to the public knowing it's complete garbage is unbelievable.  When enough people get taken to the cleaners, I see a class action law suit and an SEC investigation in the coming future.  Sorry to say, but most lawyers are not worth the paper this is written on.  What a racket.  

    Yep. That is why he pitches Cardone Capital to lower income folks and not the super rich. Get them to believe they need to earn more (they do) but the avenue to making more is to use his tool - Cardone Capital. It's simply a legal sales pitch he does like his Cardone University. 

    I know what the guy is doing and don't hat him for it, but there are plenty of people out there that don't realize that the $50M plane was a tax move paid by the company, not himself. Smart people like Ben Mallah will rent out a private plane for a thousand dollars for a real estate deal, not spending $50M as a tax move. 

    I have my doubts Grant even uses 1031, but he might. 

    I've ran the numbers on what giving him $400k would do for me. It's doubtful it would even make me $24K a year. I can make more than that by buying a single note and for $400k I could make a lot more than $24K in one year. 

    Ben is a good guy. He has a Youtube channel following his life in Real Estate.  I believe it is called Koncrete.  As for Crapdone Capital, that 6% is not necessarily a min.  You may get at least 6%, but that is gross of his management fees or any other fees being charged.  In addition, it could also be just return of your capital.  Return of capital just means that he's returning a portion of your investment with zero gain, but you may also invoke a tax consequence.  You also can receive nothing.  Finally, you receive zero depreciation on the real estate asset; yet he does.  No deal as Howie Mandel says.  

    6% straight on an insured bond, not bad at all though.  Good luck finding that these days...  You can get some tax-free munis @ 3% - 4% or high grade corps @ 3% - 5%.  Of course, there are some risks there too.  Nothing is 100% safe.  Though, I must say, the more I read and dive into the Crapzone Capital, the more I am just amazed of the facade.



    I would rather finance the entire development costs of a low income home for $115K and split 50-50 with the developer for a sale price of $175k and bank that money and repeat it with several homes a year.

    Certainly an option. However, just remember, diversifying is key. We do development, property management, self storage, NNN leases and residential. In addition, we offer others hard money and purchase insured bonds and commercial paper from blue chip companies and US municipalities. I cannot stress enough for everyone to be diversified.

    1Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Niv Levi:

    @Calvin T. He is not for everyone. I think experienced investors do not need him nor like what he offers. He fits the ultra passive investor who just wants to be part of something. Newbies also seem to like him because he motivates, teaches etc. He is all over the place but it works for him I guess. His leverage is way above anything I personally believe in nor would get into, he makes the money I would assume on fees and the exit.

     Agreed.  I am just trying to warn others to read the fine print; that is all.  I hate seeing good people fall down the rabbit hole in business because they just didn’t know.  While this is real life monopoly, there are also real life consequences for not doing your own due diligence...  Sadly, some people are just in awe of the guy and think he will guide them risk free to easy money.  Doubtful.

    1Reply
  • Bryston Wisekal
    Charleston, SC · Member since 2014 · 52 posts · 14 votes
    7y

    @Calvin T.

    He’s likely making a minimal AM fee, I’m sure 100bps on committee equity and I’d guess he’s just banking on the carry/promote when the asset sells. It’s just the typical Private equity/syndicator model.

    0Reply
  • Adam Mazhar
    Member since 2017 · 13 posts · 28 votes
    7y

    GC is very responsive, I have talked to him couple of times and exchanged emails with him, he is very helpful and advised me to not waste time or money on smaller deals (20 units) as I am new in this field and he suggested that there will be much higher and faster returns on the deals if I participate in the deals that he is doing due to the size and scale. I did the calculations and it works out about the same going with him vs going on my own as he plans to return all the capital upon exit which might happen within 3 to 4 years from refinance and then there will be infinite return on that deal. He offers 6% preferred return to accredited investors plus 65/35 split on returns above that. He does all the work, takes the debt, finds the deals, manages the deals, he is an asset manager and that is who I was looking for. I have invested with him, let’s see how it goes, from my interactions with GC and his team, I find them trustworthy and very organized and hard working folks, I will let everyone know how things progress.

    1Reply
  • Jonathan Nixon
    Rental Property Investor · Fort Lauderdale, FL · Member since 2018 · 86 posts · 33 votes
    7y

    To address what $$ GC is taking out of these deals...

    The last time I looked.

    1% acquisition fee.

    1% annual fund management fee.

    1% fee at sale.

    35-50% of any net profit from proceeds of sale.

    First rights to manage the property and whatever fees/payment structure he deems fair for that.

    So, win/lose/sideways investment it’s a win-win-win for GC. If it goes bad, then he makes a little money. If it goes well he takes a huge chunk of the profits.

    There are certainly better investments out there. As others have stated, its a great investment for GC probably not as great for the investors. He’s in the deal for 0$ after they’re funded as far as I know

    3Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Adam Mazhar:

    GC is very responsive, I have talked to him couple of times and exchanged emails with him, he is very helpful and advised me to not waste time or money on smaller deals (20 units) as I am new in this field and he suggested that there will be much higher and faster returns on the deals if I participate in the deals that he is doing due to the size and scale. I did the calculations and it works out about the same going with him vs going on my own as he plans to return all the capital upon exit which might happen within 3 to 4 years from refinance and then there will be infinite return on that deal. He offers 6% preferred return to accredited investors plus 65/35 split on returns above that. He does all the work, takes the debt, finds the deals, manages the deals, he is an asset manager and that is who I was looking for. I have invested with him, let’s see how it goes, from my interactions with GC and his team, I find them trustworthy and very organized and hard working folks, I will let everyone know how things progress.

    I wish you the best of luck.  The main problem in your numbers is that when you do it, you actually OWN THE REAL ESTATE.  Here, you OWN NOTHING.  Son, I've been doing this for over 40 years and have grown my company from an apt in the Bronx to a portfolio across six States all owned 100% outright.  Believe who you want.  However, I am not asking for any money from you.  I am just laying things on the line.  It may work out very well and you will be off to the races.  However, I wouldn't give this guy nor anyone else 100k with that prospectus.  You have ZERO OWNERSHIP.  NO TAX ADVANTAGES.  

    You know, I learned something years ago and I will share it with the community free of charge.  Pipedreams are nice, but tend not to be reality.  One only learns a costly lesson after the house of cards they've built has cratered in on to itself.  When the dust settles, you need to build back up.  With that knowlede you will then hopefully know not to trust in fake promises, gurus or pipedreams.

    I wish you luck my friend, and hope I am truly wrong about this "deal" (somehow, I fear I am not. consider it advice from someone who has been around the block a few million times).

    1Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Jonathan Nixon:

    To address what $$ GC is taking out of these deals...

    The last time I looked.

    1% acquisition fee.

    1% annual fund management fee.

    1% fee at sale.

    35-50% of any net profit from proceeds of sale.

    First rights to manage the property and whatever fees/payment structure he deems fair for that.

    So, win/lose/sideways investment it’s a win-win-win for GC. If it goes bad, then he makes a little money. If it goes well he takes a huge chunk of the profits.

    There are certainly better investments out there. As others have stated, its a great investment for GC probably not as great for the investors. He’s in the deal for 0$ after they’re funded as far as I know

     So, he's making, at a minimum, 3 million dollars off of a 100 million dollar offering.  Sweet deal for Mr. Cardone.  He's a business man, I'll give him that.

    0Reply
  • Michael Gansberg
    Investor · New York City, NY · Member since 2015 · 388 posts · 563 votes
    7y

    @Calvin Thomas - thanks for pulling that from Edgar. I've been enjoying this thread for 15 minutes now; between investing in one of Cardone's offerings, or putting cash in an index fund, REIT, CD, investment property, or on black at the roulette table, I'd choose any of the latter over the former. I can't imagine putting my money into a black box investment vehicle without any control over if/when it ever becomes liquid. Yeah, I'm a skeptical, cynical New Yorker, and it's served me well.

    2Reply
  • Adam Mazhar
    Member since 2017 · 13 posts · 28 votes
    7y

    @Calvin Thomas

    @Calvin Thomas thanks for feedback. Grant does provide the same tax benefits that he gets, he is very similar to the other asset managers I have talked to. There are several on BP that I have done research on and all syndicators have similar offerings. Some were offering less than him and others offered 1 point more than him but nothing on the upside, so I liked his offering better. The biggest deduction would be depreciation and Grant offers that to the members in the fund based on the percentage they invested so that write-off will apply. I understand that I am relinquishing control of my money to Grant's judgement, and I don't physically own the property but I legally own a piece of the LLC that bought the multiple properties as I own units in that LLC as I invested to become a member of it. I would like to do the way you have done it but I am very new to the field so I talked to a few asset managers to learn from them, and they all do syndications. I will try to connect with you as many aspects you cover in your posts are excellent points.

    0Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Michael Gansberg:

    @Calvin Thomas - thanks for pulling that from Edgar. I've been enjoying this thread for 15 minutes now; between investing in one of Cardone's offerings, or putting cash in an index fund, REIT, CD, investment property, or on black at the roulette table, I'd choose any of the latter over the former. I can't imagine putting my money into a black box investment vehicle without any control over if/when it ever becomes liquid. Yeah, I'm a skeptical, cynical New Yorker, and it's served me well.

    Just breaking down the facts.  I am very skeptical too on anything that seems way too good to be true.  If this was Warren Buffett, Jamie Dimon, or Larry Fink backed; hey, I'd give it the company the benefit of the doubt.  This is a new entity formed in 2018; it states that in the document.  Yes, GC has been in the market since the crash.  Fine.  Anyone with a half of brain can buy at the bottom and make bank.  He has zero track record in the bad times.  Now, if he owned the properties outright and was sharing in the net proceeds, okay, that gives a buffer.  However, everthing is 90%+ leveraged.  I cannot imagine any seasoned investor giving 100k to this guy.  Again, maybe I am just too skeptical and he may be the Houdini of Real Estate.  I really do not know.  I just wanted to give my .02 cents and break down what I am looking at.  

    I will state I can be incorrect and Mr. Cardone has done nothing at all to be considered a fraud or a Ponzi scheme.  However, his offering is highly speculative; as stated in the prospectus provided by Cardone Capital.

    2Reply
  • Kevin Miller
    Realtor · Columbus, OH · Member since 2019 · 83 posts · 62 votes
    7y

    @Calvin T. He's too cocky for me most of the time but he know his stuff. But he's killing his investors in the fees he collect. The front, back and the middle. But hell if you got it you got it if your doing all the work you might as well get paid for it. I basically listen to him on how to make and keep your money. If I had the money I would do it myself instead of paying somebody to do it for me

    3Reply
  • Calvin Thomas
    OP
    Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes
    7y
    Originally posted by @Adam Mazhar:

    @Calvin Thomas

    @Calvin Thomas thanks for feedback. Grant does provide the same tax benefits that he gets, he is very similar to the other asset managers I have talked to. There are several on BP that I have done research on and all syndicators have similar offerings. Some were offering less than him and others offered 1 point more than him but nothing on the upside, so I liked his offering better. The biggest deduction would be depreciation and Grant offers that to the members in the fund based on the percentage they invested so that write-off will apply. I understand that I am relinquishing control of my money to Grant's judgement, and I don't physically own the property but I legally own a piece of the LLC that bought the multiple properties as I own units in that LLC as I invested to become a member of it. I would like to do the way you have done it but I am very new to the field so I talked to a few asset managers to learn from them, and they all do syndications. I will try to connect with you as many aspects you cover in your posts are excellent points.

    Adam, check with your accountant on that tax deduction. I hope you had legal counsel review this document as well. With 100k, you could had easily gone into a 500k property. I'd call them today after business hours. If you get an okay from both your accountant and legal counsel, then it is what it is. If either question it, you should go over your legal options in requesting your money back. I do not deal with partners, never have aside from the Federal Government, State Goverments and banks. More than one chef in the kitchen, something will eventually fail. Yes, you will own a piece of that LLC. You and all the other members who live outside of Florida. It would cost you more in legal fees than anything else to get your pennies on the dollar back should something blow up.
     

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free