Cardone Capital...anyone looked into this?

98 Replies

Hey Folks...just curious if any of the accredited investors lurking on BP have looked into Cardone Capital.  I see he touts this particular arm of his company quite a bit lately, offering preferred returns during the "hold" phase and returns on invested capital on the exit side with multi family acquisitions.  

I was so curious I had to sign up. I figured it would put me on a mailing list forever, but what the heck

I saw the PPM for Reserve at Ormond Beach. 

They offered 6% preferred and a 65/35 split for everything after on returns and full capital back then 65/35 during disposa fees 1% asset management, 1% acquisition, and 1% disposition.

A basic deal on a crowdfunding site (like RealCrowd or CrowdStreet) is 8-10% preferred and 80/20 or 70/30 split. 3-5% fees?  Also lower minimums on crowdfunding sites and more experienced general partners. 

Other points

  • Basic value add deal to a multifamily
  • It was actually hard to get the link, the email to sign up bounced every time I tried, I ended up using the website form.
  • I was assuming I would get the "hard sell" considering Cardone's reputation, but it sold out 2 days after I got approved to view the deal so never contacted
  • $100,00k minimum
  • Interesting that I have not been contacted since either, I was expecting to be on the mailing list for everything he sells but I have gotten no spam at all so good for him
  • However, the email that announced they were funded was sent over CC, not BCC so all the emails were in the open (about 200 from what I can tell). They apologized about 2 hours later and said it was an automated system problem.

Overall, my opinion is that it is inferior to most any deal you will see on CrowdStreet or RealCrowd. I do watch his real estate show every Monday, he teaches basics of commercial investing. It is not bad, you just have to filter out the stupid stuff like "retail is dead" and "any other syndication is stealing your money" He says he has a large percentage invested in every deal but if I am reading the PPM right then he has exactly 0% invested once it is fully funded. He sold 8,330,000 million worth of shares and that is the full equity stack. But he teaches the basics like NOI for people just learning. And he is entertaining to be sure.

Hope that helps satisfy your curiosity.

@John Nachtigall ...I appreciate you sharing your experiences thus far with the Cardone Capital platform.  I've also listened to several of his podcasts, and he has touted the heck out of his "crowdfunding" business.  I've been wary of jumping into the crowdfunding game, but I think I wanted to assess whether his approach had specific advantages that would prove more attractive.

@Jade S.

I was super wary of crowdfunding also.   But this is not Kickstarter or even Prosper.   These are the same syndication available to any accredited investor.   The JOBS act allowed people to advertise (it was a federal crime before).  

I only play in the "kiddie pool".   I stick to RealCrowd and CrowdStreet as they weed out the really risky sponsors and use only the highest quality people.   They also offer all commercial real estate, not just multifamily.   Things like office, self storage, retail, etc.   There are other sites, but after looking at a dozen or so I decided there was more than enough deals on those 2 sites to satisfy me and I didnt need to take any additional site risk (in addition to deal risk).   I would check them out as a comparison.   Sites do go bad.   iFunding was one of the originals, and it just went bankrupt.  

Syndication is risky regardless, people lose money in them all the time.   And they are illiquid, you are giving up your money for 3-10 years.  I am putting about 20% of my wealth in it total, not everything.     So just an option to look at.  As far as Cardone, they are not bad, but I think there is better available.

Good Luck

I’m currently invested in the Ormond Beach 272 property and so far I’ve had a wonderful experience. I plan on doing my own investing moving forward, but have been very happy with the monthly checks. 

Originally posted by @Brad Park :

I’m currently invested in the Ormond Beach 272 property and so far I’ve had a wonderful experience. I plan on doing my own investing moving forward, but have been very happy with the monthly checks. 

I am very interested in the three crowd funding options listed. 

Do all of them provide real estate tax benefits including depreciation like the one that Cardone Capitol offers?

@Brad Park I’d love to sit down sometime and hear your experience. I’ve been thinking about supplementing my investing with something like this in the near future.

I know it's not listed here either but is AHP something you guys would consider? I need to research all 4 and compare fees, interest rates, and tax benefits. 

@Jade S. As @John Nachtigall has provided ample evidence, a lot of syndication (GC included) rely more on marketing than quality. Not talking about all of them, just the vast majority. 

As described in @John Nachtigall, the terms are not amazing especially the low preferred return and waterfall. The other fees are often included by most syndicators. GC has a lower cost of capital relative to the average syndicator due to his social media presence. Hence, a lot of investors clamor to invest with him based on his brand name. He has had some good projects (or so I've heard) though. But nothing spectacular and IMO if you do multiple deals esp. during the last 5 years, you would've had a few deals. 

For many investors, their first multifamily experience might be through GC. Hence, they might be feeling great about their investment (relative to their other investments). Nonetheless, multifamily, like all other asset classes, will have its ups and downs. Currently, it's on an upswing. Hence, everyone and their dog are preaching the benefits of multifamily. But the market is getting over heated and it will be interesting to see how operators fare out over the course of the business cycle as they exit their opportunities over the next few years. 

@John Nachtigall I agree that most of us charge a more "market rate" set of fees than GC.

Realcrowd is a strong platform.

@Filbert Archuleta most deals out there pass through all tax benefits on a prorata of ownership but beware some divvy up the depreciation differently.  One thing for sure; thanks to the new tax plan accelerated depreciation is about to get materially even better!

@Omar Khan great points! The best way to get educated on what an actual good deal looks like (minus the sizzle) is to learn to underwrite on your own and evaluate 100 offerings. #educationthroughexperience

@Ivan Barratt Underwriting is the only way to learn. Sometimes, it's a great way to go to sleep :)

Thanks for sharing the PPM @John Nachtigall

In one of his videos, he mentioned that he buys the asset first then syndicates it afterwards but I am unsure of this for this PPM. Pretty slick presentation.

Originally posted by @Jade S. :

Hey Folks...just curious if any of the accredited investors lurking on BP have looked into Cardone Capital.  I see he touts this particular arm of his company quite a bit lately, offering preferred returns during the "hold" phase and returns on invested capital on the exit side with multi family acquisitions.  

Hey Jade - Looks like you got some good feedback in this post. In addition, tou may also want to look around for third party reviews on the company. A third party site that conducts these types of interviews on real estate investment companies is InvestorMint.

Hi @Johnson H. Here comes a newbie question:

What is the strategy behind Grant Cardone buying the asset first and then Syndicating it afterwards?

I am always confused on how GC credits no more than 2% of his portfolio to outside investors, but then raises money to purchase 100% of his deals?

I am new to all this so I figure I am just missing something. Thanks!

Thanks for asking this question. Learned so much! Glad I fund CrowdStreet! Looking to invest now and try my luck in that area. 

Does anyone in this thread have a good acquisitions contact at Cardone Capital? 

An update as an investor.....in year one I ended up receiving about an 11% return.  I have not seen any financials or updates beyond the monthly check in over a year. I was hoping to see quarterly, or at least a year end, financial statement.  I’m a little disappointed in that regard. 

Their website states you can login any time to see this info but there’s nothing there.  

following....

Great comments, everyone! Seems Cardone is in overdrive mode pushing the “soon to be“ open to non-accredited investor crowd as well soon.  After looking at other private offerings, the 6% equity return that Cardone Capital offers is a little more lean than I like.  

Originally posted by @Jade S. :

Great comments, everyone! Seems Cardone is in overdrive mode pushing the “soon to be“ open to non-accredited investor crowd as well soon.  After looking at other private offerings, the 6% equity return that Cardone Capital offers is a little more lean than I like.  

 I found this thread after watching his Facebook Live about the new approval to accept non-accredited investments as well. 

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