Cardone Capital...anyone looked into this?

Investor · Evans, GA · Member since 2015 · 190 posts · 103 votes

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.

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John Nachtigall

Santa Rosa, CA · Member since 2017 · 325 posts · 701 votes

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.

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Andrey Y.
Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes
6y
Originally posted by @Paul B.:
Originally posted by @Andrey Y.:

I am a student in Brad Sumrok's program and the deals that his students offer tend to be more investor-friendly (in terms of structure) than many big-name syndicators. I have invested in these deals for as little as $25,000, but the minimum is typically $50,000.

That's true. Even as a physician, and I'm not sure I want a medical student or resident doing trauma surgery or open heart surgery on my loved one ;)
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Pierce W.
Member since 2020 · 18 posts · 4 votes
6y
Thanks @Jade.
I was wondering the same about them.
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Account Closed
Developer · Maplewood, NJ · Member since 2019 · 56 posts · 30 votes
6y
Anything less than a 15% annual return on a real estate deal is subpar. There are SFR and multi-families all around that average 20-30% annual returns. Why would you invest in a deal you have no control over? Sounds like the beginning of an American Greed episode. You are basically getting someone else rich.
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Amit M.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
6y
Is this for realz? Cardone bankruptcy video recently circulating on YouTube. Deep fake, marketing stunt, or sad truth?

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Brian Garrett
Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
6y
Originally posted by @Account Closed:
Anything less than a 15% annual return on a real estate deal is subpar. There are SFR and multi-families all around that average 20-30% annual returns. Why would you invest in a deal you have no control over? Sounds like the beginning of an American Greed episode. You are basically getting someone else rich.

SFR and Multifamily “all around that average 20-30% annual returns” you say? Where exactly are these unicorns?
4 Reply
Andrew HoganPro Member
Rental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
6y
@John Stanley

If you're looking to take a passive approach alongside a sponsor, reviewing their fees is an important step in your DD. However, I believe by far the most important step is to underwrite the sponsor themself, their team and its ability to execute, and their track record.

After narrowing down a few sponsors that you're reasonably confident won't lose your money, you can begin to see who will grow your money at a faster rate than the others which is where fees come in.

But never forget the first and most important rule as an investor according to Warren Buffett: NEVER lose money.
Happy hunting :)
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Andrew HoganPro Member
Rental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
6y
@Brian Garrett Agreed! Makes me wonder how much RISK is associated with those high projected terms.. or how small those deals are. Somebody could invest $100 into the stock market today, get lucky and gain 30% in one day.
But when we're talking solid real estate investments, it's another game.
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Amit M.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
6y
Is he really already bankrupt?!? There is a short self shot video Posted 4/15 on YouTube (just google it) Cardone bankruptcy. It’s either 1- a deep fake, 2- a slimy marketing prank by him, 3- the sad truth

Not sure which is reality, but at any rate I’m sure Grant is already on to his latest and greatest marketing ploy. Given the times, perhaps extreme contrition can yield him books/seminars/coaching/etc., aptly titled: Failing 10X!
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Sam Josh
Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
6y
@Amit M.
In his own words he did it as a publicity stunt to gain attention. He thinks bad news sells and it’s the best way to make noise and get people to listen to him. I personally think that is very bizarre to put it politely. Behind the scenes there are many factual conversations about how he has laid off staff and suspended investor payments. His videos on YouTube are getting 5x more (will soon be 10x) more desperate. He is in trouble.
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James Ma
Burnaby, BC · Member since 2017 · 282 posts · 268 votes
6y
It was a stupid publicity stunt. To be pretend bankrupt after laying off his own employees and when he has investors that probably were stressed out about it... also pretty insensitive considering many business owners and citizens are struggling with their own financial troubles and makes light of it a bit by saying just kiddin I am still rich!

Scummy tactic and wouldn't invest with him to make him more money. Plenty of other people or ways to get rich without working with people who like to dip into the unethical side of things.
2 Reply
Austin Mudd
Real Estate Agent · Los Angeles, CA · Member since 2015 · 149 posts · 75 votes
6y
Originally posted by @Haydn Zeis:
@Paul B. you're right, the terms @John Stanley mentioned are good terms and contrary to popular belief there are groups who offer deals without acquisition fees. Pref return is good because it aligns the interest of the General Partner and Limited Partner; but like you said, this can be debated. All the terms in the PPM should be considered. There's not one right or wrong way of doing things.

@Andrey Y. these types of terms are out there, (albeit 15% is hard to come by). Though, putting up $1M or becoming a GP isn't necessary. Again, like Paul mentioned, depending on the company, you could put as little as $50,000 down.

Those terms not great terms for an investor and it's why you will never see an institutional investor or family office accept that kind of investment structure. Doesn't mean that kind of structure is wrong... it's more suited for "friends & family" kind of money.

The OP also forgot to mention what the preferred rate of return is. Who wants to bet it's 6%?

Those terms are great for the Sponsor!

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Victor Ong
Developer · Los Angeles, CA · Member since 2020 · 90 posts · 50 votes
6y
I think 65/35 promote without waterfall would be fair in the following conditions:

1. The sponsor has to take the project from entitlement to stabilized (ground ups)

2. The sponsor has to completely gut out and rehab the distressed properties

In both instances, sponsor has to invest a huge amount of time to stabilize the project. You'll start to grow white hair during the process, especially entitlement/land use/gut-out rehabs.

However, if the sponsor only buys and performs cosmetic rehabs, then I believe 2/20 or even 2/10 structure makes more sense. The risk is lower and the effort is less. You just have to be fair on how much effort the sponsor has to invest in and compensate them accordingly.
0 Reply
Michael Barnhart
Rental Property Investor · Cambridge, UK · Member since 2020 · 203 posts · 95 votes
6y
@Brad Park thanks for sharing your experience!

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Leigh Lommen
Member since 2017 · 5 posts · 1 vote
5y
I would never invest with him. He is a brilliant salesman, but think of all the multibillion dollar investors that have better terms.
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Robert Ruschak
Real Estate Broker · IN · Member since 2017 · 65 posts · 12 votes
2y
How will his syndication deals work out for his investors when he is forced to refinance at whatever ballon payments he financed the deals for?
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Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
2y
Quote from @Robert Ruschak:

How will his syndication deals work out for his investors when he is forced to refinance at whatever ballon payments he financed the deals for?
Not saying they will do this but we are seing sponsors raising money for as a "Debt fund" which is really a capital call but not from current investors. So this allows them to use this money as mezzanine financing.
As an example they had 65% financing and now are getting 45%. They will raise that other money to bridge the debt vs equity and pay that new debt at interest only to keep the payments lower.
all this is doing is kicking the can down the road.
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Account Closed
Member since 2024 · 2 posts · 0 votes
2y
Grant Cardone, Tyler Deveroux, Ryan Woolley, are immitation Dave Lindhals, and all the other scammers....

When you meet anyone trying to sell BS multifamily "education," you need to ask yourself one simple thing..... why?

Why would they need your uninformed and uneducated self when they have all of these "experienced" coworkers?

Why would they not just take the deal from you and cut you out even IF you found one?

Why do you think you bring something to the table?

Why in the hell would an investor invest with you with when they could invest with a company that has actual experience and education from accredited sources?

The answer is they don't really have all this experience.

They don't care about you and they just hype you up to take 30-40,000 of your gullible *** by giving you lip service and blowing smoke.

They can try to cut you out of any deals they have made and HAVE tried with past clients.

Don't fall for it.
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Account Closed
Member since 2024 · 2 posts · 0 votes
2y
Why would an educated and experienced person believe this crap?

It's a scam. I've seen it over and over again with these people. You want the easy way our and easy money and you fall for it.

From those I know as an investor and broker for over 20 years, the way you get going is to buy a 2-4 plex. When it goes up in value either forced or organically, sell and buy an 8 when it goes up sell buy a 16 and then a 40 then 100 extra and you need no partners.....

All this BS they push is exactly that...BS.

To many testimonials showing they blow smoke.

Don't fall for it and lose 35,000 on a ******** program. That is actually how they are making money to buy their multifamily properties....by scamming YOU out of the money they need for a deposit.
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