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
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.
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.
I also have been very curious about this.
Two of those links are from CrowdStreet and RealCrowd. You can sign up for free to see the offerings, they each have about a dozen or more active at any time. Each one has a waterfall and a PPM. They also have a webex that runs about 30-50 min each where sponsors talk about the deals. Each site also has a learning tab with lots of info. I would suggest starting there.
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.
Interesting perspective, Meghan. Although I have felt that the equity return on investment from GC’s offerings seemed a bit more “thin” compared to several deals I’ve been looking at via my wealth advisor, the angle of basically selling an investment he had to investors at a large premium is rather interesting! Opening up to non accredited investors is another interesting move. He makes it sound like he is “helping the average Joe” get into deals previously only available to accredited investors, and I think that could have resonance with many who want to get into multi family investing. After all...it’s the “sexy” asset class everyone wants, yes? (Another reason I have moved into investing in flex industrial properties)
I personally don't like the Class A aspect because those get hurt the most in a recession. Plus I never invest in someone who has the best marketing.
My guess is he is racing to build a portfolio to sell to a REIT which means he'll walk away with a **** ton. especially if he sells it to himself and then he sells it to a REIT.
Like exit strategy when it worked so well on the way in.
Buyer beware and read all 200+ pages of his PPM
So I was about to pull the trigger on 100K. I did all the paperwork and everything, but then I looked at the numbers. GC takes 35% cut but and they take a 1% fee going in a 1% fee management and a 1% fee going out. That would be fine, but the killer is the 35% fee because you really have no Idea how much GC has in the deal. It's not like he keeps 35% of his money in the deals. I think he is just cashing out his positions and taking a 35% cut. It's genius on his part. GC is making a killing.
Basically, you are paying a 35% management fee plus and 35% on the appreciation of the asset.
On top of that...If the ship sinks, good luck getting your money back. It could turn into a nightmare.
I may be wrong on this, but when I was asking about how much money GC was leaving in the deals, I didn't get the right answer. I assumed he was keeping 35% of his cash in the deal. Not the case.
He’s going to fleece the non-accredited investors in that fund. I wouldn’t touch it. I wouldn’t even touch the accredited fund and that’s a better deal. He says he’s paying north of $200,000 a door and charging like $1,600 a month. That’s not going to kick off a ton of cash after fees and investors only get 65% of that despite very likely putting in the vast majority of the equity.
yes, Grant does a good job.
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.
@Stephen Fahey
Are you looking for deals in Huntington Beach? If so, it will be tough to find deals that can deliver a 6% Preferred Return, much less anything beyond that. The reason being that yields are extremely compressed in coastal markets.
@Enrique Huerta
No mate. I am looking out of state.
Which markets are you looking at?
We're seeing opportunities yielding 6%+ COC in the Mid-western states
Im pretty new so I started broad and narrowed down my search as I started to understand places a little more. Started looking in my area and quickly realized I was wasting my time. The places I like at the minute are north side of fort worth, Indianapolis and kansas city MO. Im not against any state. TBH I love researching real estate, the areas, demographics, history etc. I wish I could do this full time.... and actually get started in real deals, not just theoretically working on them.
following
@Charles LeMaire thanks for commenting here. I’m in my first syndication and learning as I go - would love to connect with you if you’re amenable. TY
Good thread. I've been looking at GC's non-accredited fund and hadn't considered some of the things that have been mentioned previously. I'm inexperienced in real estate funds (though I've been involved in other crowdfunding)... what do you guys consider to be the worst case scenario with him? He's pretty transparent in saying that investors should expect to be in the deal for 10 years with a 2x or greater exit at the conclusion. The exit could be much earlier than that and he has given some examples of that. On the exit and the cash flow, it doesn't seem like he's overpromising anything. Do you guys really think people end up losing money on the deal? Seems like it would be a pretty major hit to his brand and from looking at his previous funds, it doesn't appear like that has happened before. I kind of figured the downside risk is that the fund under performs, the cash flow doesn't meet expectations, and that the exit ends up being at least what was put in. Like I said though, not really experienced in this realm, so interested to hear your guys thoughts.
On a separate note, what other options for RE crowdfunding should non-accredited people look at?
- James
Good thread. I've been looking at GC's non-accredited fund and hadn't considered some of the things that have been mentioned previously. I'm inexperienced in real estate funds (though I've been involved in other crowdfunding)... what do you guys consider to be the worst case scenario with him? He's pretty transparent in saying that investors should expect to be in the deal for 10 years with a 2x or greater exit at the conclusion. The exit could be much earlier than that and he has given some examples of that. On the exit and the cash flow, it doesn't seem like he's overpromising anything. Do you guys really think people end up losing money on the deal? Seems like it would be a pretty major hit to his brand and from looking at his previous funds, it doesn't appear like that has happened before. I kind of figured the downside risk is that the fund under performs, the cash flow doesn't meet expectations, and that the exit ends up being at least what was put in. Like I said though, not really experienced in this realm, so interested to hear your guys thoughts.
On a separate note, what other options for RE crowdfunding should non-accredited people look at?
- James
I think he absolutely intends to deliver and will do his absolute best. Cardone is a slick salesman, but I don't think anyone is saying he is a con. The properties are real and he is doing this the right way with SEC registered investments and such. And the PPM, like all PPM, explains the risks. He has and will continue to succeed in the future.
That said, sponsors absolutely lose money in deals like these. I am in a multifamily deal right now that will probably lose money because the property flooded and the sponsor did not have insurance. There is a whole host of reasons it can lose money. Additionally, Cardone has never been through a downturn. Ask about the success rate of deals bought in 2007 vs 2010 to understand how factors outside sponsor control can effect the outcome. This is why traditionally they only let the rich participate, no one cares when millionaires lose the 2nd home because of bad investments.
For non-accredited we are in uncharted territory. Frankly they have not been allowed to participate until now. More and more sponsors are offering unaccredited investors a chance. CrowdStreet has had a few deals that allow it, but just a few. If you like this better than a public REIT then Cardone may be your guy. Just understand the risks are proportional to the rewards.
Good thread. I've been looking at GC's non-accredited fund and hadn't considered some of the things that have been mentioned previously. I'm inexperienced in real estate funds (though I've been involved in other crowdfunding)... what do you guys consider to be the worst case scenario with him? He's pretty transparent in saying that investors should expect to be in the deal for 10 years with a 2x or greater exit at the conclusion. The exit could be much earlier than that and he has given some examples of that. On the exit and the cash flow, it doesn't seem like he's overpromising anything. Do you guys really think people end up losing money on the deal? Seems like it would be a pretty major hit to his brand and from looking at his previous funds, it doesn't appear like that has happened before. I kind of figured the downside risk is that the fund under performs, the cash flow doesn't meet expectations, and that the exit ends up being at least what was put in. Like I said though, not really experienced in this realm, so interested to hear your guys thoughts.
On a separate note, what other options for RE crowdfunding should non-accredited people look at?
- James
I think he absolutely intends to deliver and will do his absolute best. Cardone is a slick salesman, but I don't think anyone is saying he is a con. The properties are real and he is doing this the right way with SEC registered investments and such. And the PPM, like all PPM, explains the risks. He has and will continue to succeed in the future.
That said, sponsors absolutely lose money in deals like these. I am in a multifamily deal right now that will probably lose money because the property flooded and the sponsor did not have insurance. There is a whole host of reasons it can lose money. Additionally, Cardone has never been through a downturn. Ask about the success rate of deals bought in 2007 vs 2010 to understand how factors outside sponsor control can effect the outcome. This is why traditionally they only let the rich participate, no one cares when millionaires lose the 2nd home because of bad investments.
For non-accredited we are in uncharted territory. Frankly they have not been allowed to participate until now. More and more sponsors are offering unaccredited investors a chance. CrowdStreet has had a few deals that allow it, but just a few. If you like this better than a public REIT then Cardone may be your guy. Just understand the risks are proportional to the rewards.
All good points. Thanks for your insight on it!
- James
I listen to his stuff because it entertaining, funny and motivational but would I put my hard-earned money into one of his deals. NOPE. I want a sponsor that is spending the majority of their time working on managing the assets under their control, finding good deals and minding their fiduciary responsibilities. Not marketing themselves, running courses/mentorships and making videos. Just my 2 cents.
I am invested in Cardone Capital Equity Fund III (Murano/Woodway Square). Send me a message and I'd be happy to discuss my experience with CC.
Cardone knows how to make money for himself. He built a cult like following and a lot of excitement around his brand that people are willing to take smaller returns to be in his deals. There are plenty of other syndicators out there offering better returns then him. Do your due diligence.
I have just invested as a non-accredited. We will see how it goes.
I’ve been very happy with CC. After looking at other investments on my own I decided to add to my position with Grant and Ryan. I’ve continued to receive excellent returns on Fund II. I invested in fund IV last fall and the return is lower, but it’s a brand new property. Overall I’d highly recommend CC.
I’ve been very happy with CC. After looking at other investments on my own I decided to add to my position with Grant and Ryan. I’ve continued to receive excellent returns on Fund II. I invested in fund IV last fall and the return is lower, but it’s a brand new property. Overall I’d highly recommend CC.
Brad...could you share some of the preferred equity returns you are seeing on the funds? Also, what hold times are expected on those investments? I’ve been considering other private equity investments myself as a way to diversify my own investments.