Cardone Capital...anyone looked into this?
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Santa Rosa, CA · Member since 2017 · 325 posts · 701 votes
9yI 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.
177 Replies
- New York City · Member since 2018 · 43 posts · 13 votes8y
quite interested , myself..
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes8y
Originally posted by @Account Closed:
whats to follow Cardone is a master raiser of money. The more he raises the more he makes.
What's wrong with that Chimpo? Are you here as an investor to make more money...or to tear down other investors?
- Winthrop Harbor, IL · Member since 2015 · 28 posts · 15 votes8y
Whats the cold hard truth thats so bad? He raises money, makes X% from money raised while buying and managing assets with raised money for others who in turn make X% return. What a bad bad man.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes8y
What bothers me about the GC method of purchase is the buy it for whatever price and sell it for more later no matter what model. Doesn't seem like he strives for purchasing at a discount or for distressed seller situations. As long as it's large enough to have a pool and a gym. LOL
Just from listening to some of his REI podcast, haven't analyzed any DD docs or anything deep.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Account Closed:
Another product im not a FAN of- Whole LIFE insurance policies? Im not against the person its the product.
Another one-Arthur Fonazarelli n Tom Selleck pushing reverse mortgages. Not a big fan.
what about Poncherelly selling CAL Pines.. how many lots do you own there.. ???
- Flipper/Rehabber · Los Angeles, CA · Member since 2009 · 1k+ posts · 732 votes8y@Brad Park Did you get any updates since your post ? There is no phone number to call ? Seems strange to have people invest over $100k and not have a way to contact someone on the phone . I imagine even if you could you wouldn’t be getting Cardone on the phone . Since it’s just been one year 11% return sounds decent as I’m assuming there hasn’t been a sale of property /exit yet . Although I don’t know how the deals with Cardone are structured . Best of luck
- Homeowner · Milwaukee, WI · Member since 2014 · 11 posts · 4 votes8y
@Jade S. It seems lean, but as @Omar Khan mentioned, he's got such a huge following that he can get investors at those terms whereas others may have to offer more. It also comes down to a comfort level that you feel like you know him and when you are giving someone $100K+, comfort can play a big role in that decision.
I personally enjoy listening to his shows on Mondays and think he's great. Thanks for posting this topic, I really enjoyed the responses.
- Rental Property Investor · Salem, IL · Member since 2018 · 18 posts · 3 votes8y
While I like Grant in a unique way, remember his is an expert SALESMAN. Last I knew it took 100K to get it, but he said he was trying to lower it and still stay legal under SEC laws.
- 8yJade S.Investor · Evans, GA · Member since 2015 · 190 posts · 103 votesOP
Originally posted by @Dan Romnek:
@Jade S. It seems lean, but as @Omar Khan mentioned, he's got such a huge following that he can get investors at those terms whereas others may have to offer more. It also comes down to a comfort level that you feel like you know him and when you are giving someone $100K+, comfort can play a big role in that decision.
I personally enjoy listening to his shows on Mondays and think he's great. Thanks for posting this topic, I really enjoyed the responses.
Dan, I couldn’t agree more. GC does have a large following of “hustlers” who wanna be “ballers” one day. I also occasionally listen to his podcasts on real estate when I’m on the road. His pumping of Cardone Capital has certainly increased significantly over the past 18 months, and a proportion of that large podcast following has almost certainly been willing to invest with him.
- Rental Property Investor · Dallas, TX · Member since 2011 · 62 posts · 77 votes8y
@Jade S. Thanks for creating this thread. I’ve really enjoyed reading it. I’ve listened to CG’s podcast and read multiple books of his. He is a machine and is due respect; however, as a syndicator I believe there are better investing options. Listening to his podcast he indicates he overpays for his assets because he believes he’s going to make money as markets increases in value. This may be true, but as a syndicator, you should have a fiduciary responsibility to your investors and it doesn’t seem like he has this mindset with his comments. Additionally, timing of market cycles or when his note becomes due could eventually bite him in the butt.
@Brad Park – 11% return is a healthy return in one year, but it’s really scary now that he’s not continually updating you or you can’t contact him. We provide our investors with monthly financials and an email explaining the financials and what occurred during the month. We have quarterly and yearly meetings to discuss the investment in depth and how to improve operations thus increasing income. If you have not received yearly financials how do you provide the information to your accountant? Do you only receive a K-1?
@Omar Khan is a bright savvy investor. Luckily, I’ve spoken with him on multiple occasions and he knows real estate and the underwriting process. I recommend everyone listen to his advice especially if you are a newbie.
This is the first time I’ve heard GC wanting to bring in sophisticated (non-accredited) investors into his deals. It is a simple process and requires a different filing with the SEC. The SEC will allow 35 non-accredited investors in a deal depending on the filing. This is surprising he would bring in non-accredited investors since he preaches he will not accept people who have filed lawsuits against someone. Statistically, non-accredited investors are far more likely to sue than accredited investors if a deal goes south.
One thing that has not been mentioned in this thread is GC buys properties in high quality areas. Since he is buying higher class assets than many syndicators his returns should be lower. Beginner finance teaches us that the riskier an investment is the higher returns the investment should achieve. Since he is dealing with less risky investments (better tenant profile, better location, etc) his overall return should be lower. If he is producing double digit cash on cash, IRR, or annual ROI on a consistent basis kudos. A newbie or a person who is more risk averse could feel more comfortable investing in this type of a project than a deep value add or a project in a less desirable area.
- Investor · Charlotte, NC · Member since 2017 · 791 posts · 479 votes8y
@Jade S. I know several sponsors and have worked with some that can offer you better returns. Feel free to reach out if you want some suggestions!
- Member since 2018 · 3 posts · 2 votes8y
@Jade S.I agree with @Dan Romnek As an investor myself, Its better to sit down with a Real Estate investor and get to meet each other. What I do is that I take out private lenders out for a coffee or a lunch. If a lender doesn't feel comfortable with the RE Investor, the lender will continuously contact the RE investor where his money is at. That why when dealing with lenders, their has to be a trustful relationship. I am sure GC has great returns, but sometimes dealing with local RE Investors, you could get higher ROI because we want our private lenders to come back and refer us to their friends. Relationships are meant to help eachother out and trust. 100k is a chunk of money, so what I would do is find local REI and fund their deals. Contracts will protect both of you. Hope this helped.
- Specialist · Fort Lauderdale, FL · Member since 2016 · 187 posts · 128 votes8y
@Omar Khan is totally correct. First GC is a legit guy doing legit deals. They are snoozers that in my opinion would not be the first choice of a sophisticated investor. Over the last few years you could have thrown darts at a dartboard and likely made money in MF. That is not to say he isn't adding value or there is anything wrong with it. I also think his payout structure is not something that an experienced investor would find appealing. Having said all that, if you wanted to throw your money and try to learn backwards, that would be fine. As for the crowdfunding platforms, I used to represent one and all I can tell you is just because someone puts a 9 instead of 6 where the return is, does not make it better. In fact, I would be immediately suspect of someone claiming a 9 right now. At least GC's 6 is plausible.
- Rental Property Investor · DFW TX · Member since 2018 · 179 posts · 260 votes7y
I had the pleasure to hear Grant Cordone speak at AIMNATCON (Apt Investing Mastery Nat Conv - a Brad Sumrok event). GC is one heck of a speaker!
I had not heard of GC until about a month before the event when an investor friend's son mentioned him. So I googled.
* 5000 doors and $1B in assets. So that sound a lot like $200K a door. Not the arena I intend to play in.
* On his website he listed a couple dozen example deals and what the intend to distribute, around 10% plus or minus. He did not list any big money from a sale, so no idea where that goes.
To put that in perspective, I am a passive investor in MF syndications. I have invested passively in 35 deals, 10 of which have sold. Currently, I am in 3850 doors in the remaining 25 deals (a small percentage of each - it sound pompous, but that is the way we express it). The average annualized (investment weighted) yield has been 30.9% (This is like the bank CD's APY). This includes the distributions and the sale of the property. The normal Cash-on-Cash seems to be about 8%-10%, so the big lump is at the sale.
As I see in, in GC system, Grant gets rich and the investors do OK. I work with Brad Sumrok. He teaches folks to be Sponsors - they can get rich pretty quick. As a passive investor, I am constrained by what I have to invest. There have been about 60 millionaires created in the group (including me) in the last several years. Brad is not a charity; he charges a fee for training and mentoring; like all GYM memberships, if you don't use it, it wasn't worth it.
BTW, I have not had a down deal yet.
Regards,
Charles LeMaire
- 7yJade S.Investor · Evans, GA · Member since 2015 · 190 posts · 103 votesOP
Originally posted by @Charles LeMaire:
I had the pleasure to hear Grant Cordone speak at AIMNATCON (Apt Investing Mastery Nat Conv - a Brad Sumrok event). GC is one heck of a speaker!
I had not heard of GC until about a month before the event when an investor friend's son mentioned him. So I googled.
* 5000 doors and $1B in assets. So that sound a lot like $200K a door. Not the arena I intend to play in.
* On his website he listed a couple dozen example deals and what the intend to distribute, around 10% plus or minus. He did not list any big money from a sale, so no idea where that goes.
To put that in perspective, I am a passive investor in MF syndications. I have invested passively in 35 deals, 10 of which have sold. Currently, I am in 3850 doors in the remaining 25 deals (a small percentage of each - it sound pompous, but that is the way we express it). The average annualized (investment weighted) yield has been 30.9% (This is like the bank CD's APY). This includes the distributions and the sale of the property. The normal Cash-on-Cash seems to be about 8%-10%, so the big lump is at the sale.
As I see in, in GC system, Grant gets rich and the investors do OK. I work with Brad Sumrok. He teaches folks to be Sponsors - they can get rich pretty quick. As a passive investor, I am constrained by what I have to invest. There have been about 60 millionaires created in the group (including me) in the last several years. Brad is not a charity; he charges a fee for training and mentoring; like all GYM memberships, if you don't use it, it wasn't worth it.
BTW, I have not had a down deal yet.
Regards,
Charles LeMaire
Good write up, Charles. It seems like GC’s deals are a bit thinner than I would like myself. I’ve been doing some due diligence on a few syndicated deals recently, but haven’t pulled the trigger just yet. No doubt GC has created his “Baller Following” that aspire to eight and nine figure net worths.
- Investor · Huntsville, TX · Member since 2015 · 43 posts · 65 votes7y
My understanding you don't get depreciation on many of the deals on CS or RC. Your just investing in the debt. Grants deals you also get the depreciation.
- 7yIan WalshBusiness MemberLender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
It's more important to learn about the underwriting process of a company like this rather than worry about the name on the cover. The underwriting process will tell you if this is going to be a company that is fast and easy to work with or just a bank that slapped a fancy name on the sign outside.
- Specialist · CHICAGO · Member since 2015 · 680 posts · 650 votes7y
I was in his mentorship program last year. I paid attention. If anyone is thinking about investing w GC passively...you just need some better exposure to deals. I have a large number of friends and high level business partners that would NEVER go a quarter without an investor update. A conscientious operator will often give monthly updates...even if its just pics, plans, or promises. It's an investors kind of HGTV...we want to see our beautification. It also help comfort people. If I took 100K off your hands wouldn't you be just slightly uncomfortable...just a little?
It seems like he let his plan slip and another friend of mine who is syndicator caught it too. He bought a property with HIS cash then sold it for a $25M premium to his investors. He DID not disclose this...when I realized what he did...and yes...gave 7% with his 35/65 split I was floored.
He broke his word throughout the program, when things would fail he'd laugh it off and make another rule like, "No Negativity". Well, that good and all...but...then anyone who expresses any discord with his message he'd put down. Never engaged in conversation. Controlled every second he could. It was sad that by day two of his conference I realized that he had been near me so many times and I didn't care to turn around.
His conference did have value...but not in his conference, or message, or investment ploys.
The people that follow him are passionate! Many have become great friends of mine. But, if you love being sold constantly, then being high pressured into EVERYTHING.
After studying him it was often that I saw him do and say things that lead me to seeing that he has a scarcity mindset. The same for the guys who talks about all the units he controls (when its really a company you work for...owned by a number of people you've never met).
We are about to see a **** show in multifamily investing. I know people who are COACHING syndications and have never done one. They are speaking at conferences. People are also investing in their projects.
Grant is opening up his investments to non-accredited investors because (I'm hoping) the accredited AND sophisticated investors are the ones are walking away. People trust what they know. But, the trend is personalization, connection, and balance. This is where business is going in the next 3-5 years. If you are looking to invest, find someone who will allow you to get to know them, who communicates with you (I raised a measly $45k and the borrower was instructed to give us monthly reports because we know what our investors want, he almost ruined the relationship when he didn't follow through and raised his voice at me telling me that my investors don't know what he knows). My investors are normally other real estate investors who want a better deal, with better treatment, cause no one should be reduced to being a faceless number unless they want to be. Some syndicators are inviting the investors to learn along their investment.
Moral of the story, take your time finding the right operator. The right team can raise a diamond from the dirt, a **** team could ruin Rodeo Drive.
Note the factual number of posts removed. Most likely inappropriate, but NUMEROUS. That's not normally a good sign. Maybe, just maybe...they were expressing...negativity?
Unless you like NLP being used on you.
- Specialist · Huntington beach, CA · Member since 2018 · 9 posts · 8 votes7y
Hey, I am pretty new to multifamily and how syndication works but I have a question since I am a little confused.
How does Cardone cap give back 6% of an investors money each year? I get they look for deals but the deal would have to be phenomenal. Unless I am doing something wrong.Lets say there is no loan and just one investor for arguments sake.
the property is $1mil from what I have seen average NOI for a $1mil property is about 50k a year.
6% of 1 million is $60K
so clearly I am misunderstanding something or just being completely stupid.
Could someone explain this to me? - Santa Rosa, CA · Member since 2017 · 325 posts · 701 votes7y
Originally posted by @Stephen Fahey:
Hey, I am pretty new to multifamily and how syndication works but I have a question since I am a little confused.
How does Cardone cap give back 6% of an investors money each year? I get they look for deals but the deal would have to be phenomenal. Unless I am doing something wrong.Lets say there is no loan and just one investor for arguments sake.
the property is $1mil from what I have seen average NOI for a $1mil property is about 50k a year.
6% of 1 million is $60K
so clearly I am misunderstanding something or just being completely stupid.
Could someone explain this to me?So in real estate syndication the distribution is called a "waterfall". Each deal is different, there is no set "standard" but there are things that tend to be the same. Links below to articles that explain some of the possibilities. I will explain some of the basics here. These are just made up numbers, just to let you see how it works. Each deal is different and small changes make big differences, this will be a simple example.
Lets say you invest $100,000 into this deal. And the total invested by the limited partners is $1,000,000, so there are 10 limited partners. That keeps the math simple. The waterfall on this deal is a 6% preferred and 65/35 on everything after that.
So now lets imagine that after year 1, after they pay the sponsor fees, taxes, expenses, any reserve fund etc., the total net income for the entire property is $200,000 for the year
You will get your preferred first, so 6% of your 100k investment is $6000.
Now remember there are 10 limited partners so you each get $6000 x 10 = $60,000 paid out to the preferred. 200,000-60,000 = 140,000 left.
the limited partners get 65% of the remaining. So 140,000 x 65% = 91,000. That is divided 10 ways since you are all equally invested, so 9,100 each. The sponsor gets the other 35% of the 140,000 = 49,000
So after year one, you would have 6000 + 9100 = $15,100 (for each partner). The Sponsor gets $49,000. That would be a pretty awesome return after 1 year on 100k invested BTW.
Now what if year 2 the property only makes $60000 net income. Again you get your 6% preferred, so 6,000. After all 10 partners get paid there is nothing left so the sponsor gets $0.
They call it a preferred because it is the first profit paid after all the expenses. The idea is that you get first crack at the money and the sponsor only gets paid if the deal performs very well.
https://origininvestments.com/2017/12/28/what-are-...
https://www.crowdstreet.com/what-sponsor-promote/
https://www.realcrowd.com/blog/2017/08/podcast-ope...
Hope that helps
- Specialist · Huntington beach, CA · Member since 2018 · 9 posts · 8 votes7y
Thank you for the links John.
So I was correct then. They get 6% of their original investment based on the NOI each year.
So far I havent found any deals that would pay investors 6% and leave anything afterwards. I guess I am not looking hard enough.
I like to do research and run everything as if I had investors etc. Im not ready to jump in yet but I want to be well versed when i am ready.
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