The Four Quadrants of Real Estate

I’m going to show you what I call the four quadrants. The four quadrants of investing.

I used to use this in car deals to help people buy a car. They would always focus on one thing – the wrong thing. They would tell me, “I need the best price on a truck.” And I would say, “Of course. I can get you the best price on a truck. No problem. But there’s more things involved in a car deal than just the best price on the truck.”

In a car deal, there’s the price you paid for the truck. There’s also the down payment you put on it. Then there’s a monthly payment and also the trade-in.

Those are the four parts of a car deal. And they’re the same in real estate. Price, down payment, cash-on-cash and NOI.

In real estate, you have price. You’ve got a down payment. And, by the way, there’s no such thing as no money down. Zero is money down because zero is enough. If you don’t respect zero, you don’t respect dollars.

Zero money down means there’s an obligation to something. And if he gives you or she gives you something for no money down, there was something paid in one of these other quadrants, okay?

When one of these numbers goes up or down, if it influences the rest of the quadrants.

All the quadrants matter. Don’t make the mistake that they don’t.

And speaking of mistakes, when people are starting to invest in real estate the first mistake they make is that they don’t know their market. And number two, they get fixated on one of the quadrants.

These investors say, “I can only buy so much. I only have so much money down. I must have this. And I have to have this cash-on-cash.”

In investing, the cash-on-cash return is the ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage. It is often used to evaluate the cash flow from income-producing assets.

Some of the best deals I bought had the lowest cash on cash. I’m looking at deals right now that might only pay me five percent, but there’s a reason I’m buying that deal. Trust me because I think somewhere down the line I’m going to make a lot of money off the property.

Why? Because I took less in a specific quadrant. When one quadrant goes down, something else has to be adjusted. That’s called the market. The market will adjust. Something goes down here. Something’s got to go up there. Unless everything’s terrible on the deal – then you wouldn’t do it anyway.

So first quadrant is price. I’m not going to negotiate the price. If you have to negotiate the price to buy the deal, it’s the wrong deal. I’ve said this over and over again.

Pay attention to the cash on cash quadrant. I call it the super box because even when the market pulls down, when there’s a recession that hits. The number of units are still the same. During a recession, no one is building anything. Those units become more valuable and are still paying you.

Another important factor is Net operating income. NOI is a calculation used to analyze real estate investments that generate income. Net operating income equals all revenue from the property minus all reasonably necessary operating expenses

You gotta know your market, know your market, know your market, know the comps, know what’s in the neighborhood. Know what a good deal is. Know what a bad deal is. Know your four quadrants. Keep it simple.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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8 Reasons to Buy Real Estate

If you look at the top ten percent of the wealth in this country, over half of it is because of real estate. So why is real estate so lucrative for people? Why do people love investing in it?  Here’s eight quick reasons why.

Cash Flow.

The number-one reason you would want to invest in multifamily apartments or any kind of real estate, , is to provide cash flow. Again, this doesn’t pertain to owning a home. The dumbest move people make, by the way. Owning a home doesn’t make you any money. It doesn’t provide you with monthly cash flow. People would try and argue that you can have equity in a home, but that value is locked to your home. You can’t get it out and use it for yourself unless you sell your house.  Taking a home equity loan is just that, a loan. A scam by the banks to make more money off the dream of home ownership that they sold you in the first place!

Multiply Your Money.

Number two, you want to multiply your money? Buy real estate. Investing in real estate is the only time that you can buy something of greater value without putting all your money down. For example, if you want to buy a million dollars in stocks, you have to have the entire million dollars to do that. Buying a million dollars of real estate, you only need four hundred thousand to do that – or less!

Low Cost to Debt.

Commercial real estate, property owned to produce an income, has access to amazing funding opportunities. Many times, you can get interest only loans and other incentives that you can’t get when asking for a residential loan.  Your loan on multifamily is based on the income the property produces instead of the income you produce like what is used to qualify you for a primary residence mortgage.

A Hedge Against Inflation.

Money sitting in a bank is basically decomposing. It’s not making you anything, and in fact is costing you. It costs you because the paltry amount that it earns in interest is far outpaced by the current rate of inflation which makes your money worth less than it is now. The goal of money is to get rid of it as soon as possible. Convert it to something that is a real asset and can appreciate in value.

Physical Asset.

Real estate is real. It’s not a piece of paper. It’s not gambling on something that may or may not happen. It won’t disappear or be destroyed. It’s tangible.  Even if the property on top of the land is gone, the land will be worth something.

Tax Benefits.

There are so many benefits. When you sell your property and reinvest the proceeds your tax is deferred. You can keep doing this for all time.  The amount of deductions and depreciation you can claim is also astronomical. The commercial real estate deductions are far superior to what you can deduct on your taxes for your one mortgage.

Asset Appreciation.

There is a chance that these assets will go up in value. Now, the way, the reason I believe multifamily is the best investment in the world today is because I think rents will continue to appreciate and if they continue to appreciate what that means is the value of the property will go up.  Again, this is very different from a home appreciating in value because that is dependent on neighboring homes, not the income the property produces.

Ownership.

You actual own something. It is yours to control. When you buy stock in the company,  you don’t control how they run the company, what they set their pricing at, how they market it – you are at the mercy of the board of directors and the CEO. When you buy real estate, you run the show. You decide the rental price, you decide on what improvements you want, you decide all of it.

You should be investing in real estate. Everybody should be doing this thing. It’s going to be the best investment in the next 25 years. Everybody should be in the game. Take the time to do it. Set your money aside. Don’t give that money to the bank. Prepare for that money to grow.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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Walking Through the Deal

We’re talking about multifamily real estate. We’re talking about the best real estate investment theory –multiple doors, two units, four units or eight units, 12 units, 16 units. We’re not talking about single-family homes. We’re not talking about renting your house out. That is not what I’m talking about. I’m talking about scaling out. Scaling out multifamily.

I made the mistake with single family residence and trying to rent them out. Look, we all start in this same place – usually where you go out and buy a single-family house and you think you’re going to make a lot of money. The problem is the economies of scale. They just don’t work because you buy one house and then you want to buy 20 houses – and most of the time you can’t buy that scale.

Having a single-family or a small number of units mean that you are doing all of the management yourself and being hit with all the tenant problems and repairs. The dog that urinated on the carpet and you got to change that. You’re not counting the fact that somebody has got a mow the grass. So at the end of the day, you had to do everything and you can’t do it 100 times that. You need scale so it makes it affordable to hire a management company.

The first deal I did was 38 units the next deal with 48 units and next it was 92. It’s the same energy to close a small deal as a bigger deal. It doesn’t require anything more to go bigger.

That’s why I tell you guys leave four alone. Leave the eight alone. Leave the 12 alone. 16 units is what your minimum first purchase should be.

You get enough scale to where the plumber’s not going to rip you up, or the manager that hires the plumber won’t steal from you.

So what do you do when you find a deal? First you need to want the deal. Are you willing to pay full-asking price? That’s a great indicator if you want it.

Then you need to sell the real estate agent on the fact that you’re super, super excited about the deal. You do not negotiate on price at this step.

Your first job is to know the market. Your first job is to know real estate, to understand real estate, to know you want multifamily, lots of units producing revenue. You got to be looking at deals every day to make this happen, to build upon the great deals, you got to be looking at every single deal.

You got to have a commitment. I make the time to find the deals because I know this is a way for me to get something real for my future and my family.

Once you get into making your offer, you’ll want to create an LOI. An LOI is a Letter of Intent. A letter of intent basically just tells someone you want to buy their property, who you are, some basic terms and how you are going to pay for it. I’m not worried about the bank right now. I am not worried about the lawyer. I’m not worried about all this other stuff. I’m not worried about operating agreements or a LLC. Don’t worry about any of that. You don’t need a lawyer, you don’t need to do a title search. There’s going to be a bank involved in your deal and they do a lot of that anyway so don’t worry about all that.

Make sure you love the deal and then sell yourself. You’re selling the whole time. Don’t be negative. When you call you as a buyer, why do you want to immediately knock the value down? But that’s what we do.

Change people’s attitudes. Once you get somebody positive, then you can deal with them. It is difficult to deal with negative people. Once you attack price, then the seller has to defend his price. This position is terrible.

In my LOI I would say that there is no financing contingency and that the purchase agreement will become not fundable. That means that you can’t back out. Yeah, if you can’t get financing you can’t back out. You don’t need money to make money. You need confidence to make money.

That’s basically all that I put into an LOI. I always look for a property that I can improve.

If I can improve the property enough in 18 months or whatever it is and go back to the bank and get another long-term loan. I might of used a bridge loan to get the deal done. A Bridge loan is a short-term loan. You go to your bank and you’re basically signing your name. If you can’t do that right now, find somebody that can.

After I fixed the property, I went back to the bank and said I raised the rents, I fixed the property. Everything’s good. How much money will you give me now?

And today it’s worth maybe $10,000,000 based on the numbers.

So what do you take away from this? Number one, you need to be all in on real estate. You need to be committed. You got to be committed. You have to understand there’s a mental game. First mental, and then mechanical. First you’ve got to know multifamily, not single family, not shopping centers, not storage. You got to focus on some product. Multifamily. Focus on one product. Understand the game. Number two, you got to be looking every day. If you’re not making time to look every day, you’re not committed.

Once you’re committed to real estate, once you know it’s a good deal, you’ll find the money. If you’re not sure, you won’t find the money.

You need to be in this real estate game. Don’t worry about the price. Don’t worry about the loan and do not worry about the legal until you get the deal. Don’t worry about spending a little bit of money. Don’t worry about it. Get rid of your money because it’s going down in value.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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5 Ways to Add Value to a Deal

I’m going to show you the different ways you can build value in a real estate deal. You need the find the value in order to create and increase income. Approach each deal with the question: Where’s it at? Where’s it at? You can add value many ways and today I’ll show you five.  You can always add value the hard way, which is yourself – sweat equity, or you could actually manage the value add and actually have a game plan.

A salesperson has to add value. If you’re selling something, selling a product, there’s got to be a value add. Otherwise you’re just stuck on price.

For example, if you want to build a phone, a great phone, what value add would it need?  It would have apps on it. It would have a camera, great camera and it will be able to shoot video and do slow motion. It would have to have improvements constantly. It would be a value add.

How do you keep people shopping your product? You add value.

How do you add value to your career? You add value to the person you’re working for. Let’s say you’re a receptionist. How do you add value? Well, you know what, you know everything that’s going on. You know about all the products.

How do you do that in an apartment? I’m going to walk you through five ways to add value

1. Rent Disparity

Now, the first thing I look for in any market is what’s called rent disparity. Rent disparity means a difference. Rent disparity is if you can find a market that’s got $800 rent but has the potential to go to $4,000. Basically, it’s an economic explanation for the process of gentrification (creating improvements to raise value). It describes the disparity between the current rental income of a property and the potentially achievable rental income. You’re looking for the middle ground.

My sweet spot is that I want to be in multifamily, not shopping centers, not storage, not houses. So, when you buy four units and you’re at a thousand dollars a month, where’s the rent disparity? Where’s the value that can be added? How are you going to add value to exit? How are you going to add value to raise the rents? So, one thing to look for is markets where there’s rent disparity.

2. Timing

If I know there’s a bunch of product around being built around my property at significantly higher prices per door – again, rent disparity. But it’s also timing. I got people that are investing (banks and investors) that are investing a bunch of money around my property – It’s a timing play. How do you know about the timing? You got to be in the marketplace. You got to be in the marketplace to know when the timing’s right…

3. Amenities (Kitchens, floors, Garages, VIP Parking, Washer and Dryers)

Amenities are going to get you more rent. You fix a pool because it makes the place easier to rent.

People viewing the property will say, “Oh God, you’ve got ellipticals. Oh God. Oh, my gosh. You have nice people here. Oh, you got grills outside!” That only makes for a higher closing ratio when people visit your property. So, you captured them. Amenities make it easier for the management company to close the deal. For example, let’s say washers and dryers cost $600 per unit but by installing them I can increase the rent by $65 per month. That’s roughly $800 per year. Would you invest $600 to get back $800 a year? Uh, Yes, I would.

Here’s a value add example: We’re going to get another $65 a month for washers and dryers, we think we’re going to get another $25 per VIP parking. We think we’re going to get another $17 a month for VIP trash. We pick up your trash. You don’t. That’s another$100 to $150 a month! Multiply that by 200 units per month, which is $30,000 and 12 months would be $360,000 a year!

That’s called value add. invest something to get something back. And investment means you put your money at risk in order to get more money back. What will people pay for is value.

4. Income

You need the property/deal to be producing income. When you buy one of these deals, the bank is not going to give you a loan if you cannot substantiate that this deal will produce income immediately.

5. Reducing Expenses

If I’m buying a property and I have another property in the same city I can have the same management company do both properties. There will be savings based on economy of scale.  I can reduce my trash expenses, or other property maintenance expenses – again using the economy of scale.  And that’s going to lower the expenses on the portfolio. Another way to lower my expenses is to get preferred financing or use debt to my advantage on the deal. I could get an interest only terms or great debt which is going to return my investment, return my cash flow to investors, etc.

This is about value add. It’s about where’s the value add in the deal. There’s times where I paid all the money for a deal or over because I know there’s value add based on timing, based on pricing, based on debt, based on opportunity.

Add value to your deal and you’ll always have a buyer and appreciation when you exit.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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Cash Flow

Only invest in real estate that cash flows. You need to understand the importance of investing for cash flow and how to use it to your advantage.

Cash flow is one of the most important things to understand in real estate. By understanding cash flow, you can calculate the value of a property, know what debt it can hold, the CAP rate and more. All this will help you determine if you should do the deal or not.

Cash Flow Definition: Total amount of money being transferred into and out of a business – especially affecting liquidity.

Cash flow Calculation: Gross Income Less Expenses Equals NOI (Net Operating Income) less Debt Equals Cash Flow.

Cash flow is the holy grail of any investment transaction.
And, remember when investing look for the following and keep these three things in mind:

1. DLM. Don’t Lose Money!
2. Cash Flow. Invest for cash flow.
3. Long Term. Be in the investment for the long term.

And when you are ready to invest you need to do your homework.

You need to know your market. You need to know the property and location – and the difference between markets. What is good in one market, is not necessarily good in another. Austin, Texas is a very different market than say Orlando. Pay attention to this.

Never invest in a house, duplex or small property. A house traps your equity. In fact, during the market crash of 2008, over ten trillion dollars of equity was wiped out overnight.. A small property cannot generate enough cash flow to cover the debt, your time or generate any kind of cash flow.

Do your background on your debt partner – your bank. Besides knowing the terms and what they will do in the deal, you should know what that particular strength of that lending institution is – what’s their specialty? You wouldn’t hire someone without seeing a resume, why would it be any different with your bank?

You gotta think long-term. How much will the investment pay you with cash flow? How much will it appreciate? And this is something that you shouldn’t look at in the mindset of months, but in years…

Remember to plan your exit. What do you want and need when you sell. Who are you selling to? What do they look like? When you know these answers, it helps you plan the length of investment and how to market your investment for maximum return.

These points are general categories. Each one has a tremendous amount of information you need to know and be knowledgeable about so you can make the best investment.

Investing in real estate is the single most important financial investment you’ll make in your lifetime after investing in yourself.

Cash is continually going down in value. Cash is not KING. Cash sitting in the bank does nothing.
Use that cash to own an asset that appreciates in value and produces cash flow.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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Are You Ready to Crumble

Are you ready for the next recession? Is your portfolio “recession-proof”?

Think… in the last recession, I’m talking 2008 here, we woke up to find that the American people lost $10.2 TRILLION in wealth…

Wiped out from our economy…  That’s a fact according to Business Insider.

Besides the initial fallout and scrambling to stay afloat, eventually people started to think about how to protect themselves from next time – the next recession.

So what have people done to protect themselves and their retirement accounts and savings? What have people done to grow their wealth?

Not much it turns out…

To add insult to injury, saving and not spending money goes against human nature.  According to a NBC News sponsored study, we are programmed to make BAD choices when it comes to money and investments.

We spend too much money on instant gratification purchases and un-needed things that make sure to not leave enough for saving for retirement or investing.  In fact, the more cash-strapped and tight your budget is, the more you psychologically want instant gratification. The same NBC study shows people making under $30,000 spend more money on going out to eat and on lottery tickets than they do saving or on life essentials.

So let’s say you’re not one of those people and you’ve saved your money and have a stock portfolio.

Think you’re ahead of the game?

You’re not…

According to The Motley Fool the average investor has earned total returns of just 2.5% over the past 20 years. The S&P has done better with an average return of 9.5%

How about cryptocurrency investors? They are now face seeing 90% of their profits and principal wiped out in just 12 months.  In 24 hours the market plunged $15 BILLION and is at the lowest level of the year according to CoinDesk.

So how are these investments going to make you recession-proof?

How are you NOT going to crumble?

My investments have made an average of 15-20% or more for me.  They also do something that Wall Street can’t – they produce monthly CASH FLOW for me and will appreciate over time.

Real estate investing is the way that many of the wealthiest people on this planet have created indestructible, generational wealth.

And not just any real estate. Not houses, where your money is trapped in a lie called equity. No, the true creators of wealth, learned to buy property that generates income, is scalable and appreciates over time. Multifamily apartment complexes with units in the hundreds are a unique opportunity that exist in real estate.

But you need to know how to find the deals, how to get the deals and what to do with them.

I’ve spent 25 years perfecting how I approach my real estate investments. You can take advantage of what I’ve learned through my courses and programs and tackle it on your own. OR you can invest with me through Cardone Capital.

Many retirement funds can be self-directed now, so I urge you to do your due diligence, learn what is going to create wealth for you consistently, and for sure. The first rule of investing is NOT TO LOSE MONEY.

Don’t gamble or speculate on your future. That’s exactly what you’re doing when you play the stock market.

Get your portfolio invested in something that will pay you monthly and appreciate given enough time – REAL ESTATE.

Be great,

GC

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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Private Equity Funds Versus The Stock Market

Who comes out on top?

I read a research paper recently that compared private equity fund performance to stock market returns. They found that since the recession or the great financial collapse (GFC) as they refer to it, private equity performed better and recovered quicker than stocks.

This is just another expert reinforcing what I believe – that investing in real assets like multifamily apartments that produce positive monthly cash flow and have the ability to appreciate is a great wealth-building tool.

Private Equity Definition:
Private equity is capital that is not listed on a public exchange. Private equity is composed of funds and investors that directly invest in private companies. Investors provide the capital for private equity, and the capital can be utilized to fund new technology, make acquisitions (like real estate) or expand working capital.

Public Equity (Stocks) Definition:
Public equity is an asset class where individuals and/or organizations can buy ownership in shares/stock of a company through a public market such as the New York Stock Exchange.

JPMorgan Asset Management estimates that from 2002 to 2017 private equity generated a 14.4 percent net annual return versus 8.8 percent for the MSCI World equity index (Wall Street).

Not only does private equity investments beat Wall Street they also have low downside risk.
Research from JP Morgan states that two-fifths of stocks experience a “catastrophic loss” which they define as a seventy percent or greater drop from peak value, with little to no recovery.

Compare that to less than three out of one hundred private equity funds suffer from a similar loss.

That makes stocks thirteen times riskier than private equity funds.

Now consider this. We are almost a decade in from the global financial meltdown. We’ve had nine years of economic expansion. Investors everywhere are starting to talk about, and are preparing for a downturn.

Where do you want your money to be when the bubble bursts?

Now consider this. Not all private equity firms are created equal. Some invest in technology or are used to take a company private. Some firms are diversified and into a little bit of everything. And when you really dig into it, the experts believe that while large equity funds are still generally better than the stock market, smaller funds may be even better prepared to outperform in the event of a recession.

And those same experts say that today’s retirement accounts are so heavily invested in public equity (Wall Street) that they are extremely vulnerable in regard to being recession-proof.

Why don’t more people invest in private equity funds like real estate?

Because public equity has made it extremely difficult to invest in private equity. They don’t want to give up your money when they are making so much off it.

Think how much control you give up and the risk you take when you hand over your money to Wall Street. You have no control.

Take the recent Sears and Mattress Firm bankruptcies. As a regular, everyday investor, you’d have had no control over how they ran their companies and your money would have gone down the toilet with them.

The investment deck is stacked against you.

What can you do? What should you do?

First you need to educate yourself. Study the wealthy. Study what they do and how they create wealth and make it grow into indestructible, generational wealth. Study their investments. What are they doing?

I studied Warren Buffett, Rockefeller, Ford, Kroc, and many others. I looked at how they created and grew their wealth.

It was through real estate. They bought land that produced income right away and that would appreciate in value over time.

Second, you need to decide if you can do it alone. Can you learn all that you need to make good investments? And do you have the capital to go against the big firms to get the big deals that will weather during a recession?

I’ve spent twenty-five years investing and have found that large multifamily real estate deals are what works.

I don’t expect you to change your investment strategy after one blog post, but if you’ve been reading or watching any of my real estate posts you are probably interested in what I’m doing and see the value.

Learn more, watch more. My real estate podcasts are available on iTunes and Stitcher. My real estate show is on YouTube. Read more of my blog posts here. Dig deeper and study CardoneCapital.com

I’m here to help. I have a ton of free information out there for you and am posting more each day. If you are serious and want more insight or information, look at some of my programs and courses here.

You’ve worked incredibly hard for your money. You should work just as hard turning that money into indestructible wealth.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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Five Things to Know About a Letter of Intent

Today I’m going to be talking about your letter of intent. What has to go in this letter of intent? If you don’t know what that means, a letter of intent means your intent to purchase a property.

Who’s the letter going to go to? How are you going to write it? What should it say? What won’t it say? What will you include? What reinforcements?
I’m going to share with you today, the five things you must say on this letter of intent to get everybody’s attention, to get you the deal and make you top of the seller’s list.

The most important question is not how much. How do I make sense of it? Where do I get the money? How do I get financing? How do I get a return? How do I manage it? Those are not the most important questions. The most important thing in buying real estate is how do I even find the deal? Once I find a deal, how do I get them to sell me the deal?

These are the two most important things with apartment investing, multifamily, multiple units. Can I find a deal? Once I find that deal, can I get them to sell me that deal?

The reason this is a problem today is because there’s a shortage of great product.

You’re going to look around and going to be like there’s no shortage of this stuff. It’s everywhere. You say there’s no shortage. I say get on the phone then and see if you can get a deal because nobody wants to talk to you. They want what’s called a letter of intent. The intent to purchase.

The letter of intent is going to include who I am, how I’m going to close, the date. It’s the terms of the deal without getting into a purchase and sale agreement.

The bank is going to help you lay out the legalities of your transaction. If you’re doing a four-unit, eight-unit, twelve-unit, thirty-units, or three-hundred-unit deal.

That’s one of the reasons why loans are good – because the bank will lay out exactly how they want that agreement.

So, in my first few deals, I didn’t know anything. Nothing. I knew nothing. I did not get a lawyer. I did not go buy an LLC. I didn’t hire somebody to walk me through it. I did not go to a school, nor did I read a book. What did I do? I got a partner. The partner was the bank.

Again, what is a letter of intent? A letter of intent is a written document suggesting the intent to purchase something. I could use the letter of intent to buy a business. I could use the letter of intent to get a job. I could use the letter of intent to buy an apartment.

But first, you need to find a deal. Then you commit to the deal. See, most of you try to find out where the money is first. I don’t need to figure out the money first. Without a commitment, you’re not going find the money anyway.

The letter of intent needs to include your bio and your wealth situation. If you don’t have one, you need to hook up with somebody that has one. You need a story. Everybody likes a story.

You also need to include terms – price, closing date, financing, and if you need any due diligence.

You also need to include the deposit amount. How much money am I giving? If you got big cajones, maybe you give him a check right now and get their attention.

These are the five main things, but before you do the five main things, sell yourself with your bio.

Use it to talk about your experience. How many properties do you own? Include everything that’s positive. Come up with a list of things that you love about yourself. This is where my books come in, Sell Or Be Sold, Be Obsessed Or Be Average. The 10X Rule…

Your bio can include your bank partners and how much property you have. It would include that you’ve never gone bankrupt. I’ve never gone bankrupt or gone bad on a loan. The fact that you’ve never renegotiated the loan package. No lawsuits going on, having great credit.

A quick word on due diligence. All I need is about 21 days. Keep it short. The more you add time, the more you show the lack of the assurance to close and commitment.

And the last thing is the deposit. Don’t be so scared of the deposit. And by the way, I haven’t gotten a lawyer involved…

Remember, find the deal and commit. Create a great letter of intent to stand out from the crowd and sell yourself. Make sure you have a bio, and your LOI has terms like price, closing date, financing, due diligence and deposit in it.

Invest every penny, every penny into income-producing real estate. As long as you can hold on for a long period of time, I promise you your money will become worth more money – as long as you pick the right properties in the right locations, manage them correctly and can hold on.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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Four Ways to Buy Real Estate

We’re talking about real estate. How to make it simple, why you should do it. We’re talking about income investing. Multifamily apartments, apartments. Thirty-two units, sixty units, one hundred units, two hundred units, three hundred units. These are deals that I’m looking at every day.

I started and bought one house. I learned from that one house that that was not investing. That was just me investing in a piece of real estate on a budget. When you invest in real estate, it has got to have a lot of doors and a lot of windows. The more doors and windows, by the way, the better. Of course, that holds true only up to a point. You have to be careful with any investment because you could have too many units in one place and that would put to high of risk on your investment.

People need to be involved in real estate. Start investing your extra money in real estate. Invest in real estate that produces income. I’m not talking shopping centers here. We’re buying apartments. We’re buying something indestructible, something people will have to live in.

For example, someone moves from Houston to Miami, Miami to Oakland Park, to Orlando. The first thing they do is not buy a house. The first thing they do is they rent a place to live.

So if you’re interested in real estate, there are four ways to buy real estate.

Number one, you can do it yourself.

If you attempt to buy multifamily real estate on your own, you need to know the market, know the deals, have your financing in place, know who is managing it. You do not want to invest in anything smaller than 16 units. 32 units would be your ideal first deal. Why? Because anything smaller than that won’t weather any kind of market downturn, won’t give you the scale to appreciate, leverage debt, won’t be large enough to have a management company to take care of the day to day and vacancies or produce positive monthly cash flow. How much time do you think you need to do it yourself? A lot, it’s a full-time job.

Number two, wall street.

This is the simplest, easiest way to do it. And the dumbest! You can buy stocks in companies like Equity Residential. Which is a publicly traded real estate investment trust that invests in apartments. You aren’t actually buying property or realizing any of the tax benefits that go along with it. You don’t get the benefits of real estate. You’re getting stocks. That is an investment in a stock that is not an investment in real estate. Your returns on a stock are dictated by the market. Not something I would recommend at all.

Number three, syndication.

You could call somebody up and say, “Hey, I want to syndicate into your deal.” What a syndicator means is they basically, let’s say they’re going to buy a deal that takes $5,000,000. They raised all $5,000,000, okay? They raised all $5,000,000 from people like yourself. It’s called other people’s money. And then they go buy a piece of real estate and they make money on the fees of running that piece of real estate.  I can pretty much guarantee your money’s going to go away. These people are buying a deal. They won’t buy with their own money. Here’s another way to look at it. It’s like the first time I got on the plane, I said, to the captain, do you feel good about the trip? If he’s willing to get on the plane, I’m willing to get on it.

Basically, you give the syndicator your money. They go buy real estate that you didn’t have the courage or intelligence to by yourself. They run it, they manage it, and they charge you for that.

Number four, the anomaly. Investing with someone.

There’s a fourth way to do it. This is what I do. I backfill a deal so we can control the property, own the property. We do the deal, and then I allow accredited investors to come into the deal.

I basically buy property. We look at property every day. We buy it, we own it, we closed on it, we get the financing on it, and then we allow accredited investors to come back into the deal. We have a fund that can do that. If you’re an accredited investor and you want to invest with us, we know what we’re doing. We have the time, we have the money, we’re buying the property. I’m putting my own money in a deal saying I’ll buy this deal whether we raise the money or not. I don’t care because I know that the property that I’m buying will be worth more money 30 years from now than it is today.

I do what I can to make real estate investing made simple.

Be great,

GC

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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Earned Income vs Investment Income

Commit to creating wealth, not making money. Here are for steps for creating wealth.

1. Commit

You will never become wealthy if you don’t commit to becoming wealthy. There are people that become rich by accident, but no one becomes wealthy by accident. Wealth is intentional. Before you can achieve wealth, you have to know that it’s attainable.

2. Job/Income

You have to have a job that pays you income. Get a job that pays you income on a regular basis then make sure you are valuable in your role. Don’t just sit around waiting to collect a paycheck.

3. Increase

You have to increase your income. You want to get it as high as possible. People always ask me what was the most important money that I’ve ever made — my first increase from $3K to $4K was. Why? Because I learned that I was in control of my income. I started to believe in myself and my ability to increase my income in short bursts and in surges. When you prove to yourself that you can make moves, then moving up gets easier.

The same thing happened to a guy that I mentored from India. A year ago, I showed him how he could go from making $30K to $1,000,000 a year. A year later, he did that and came back to sit down with me again. Now I gave him a plan to go from the $1 million to $10 million. Now he knows it’s possible. The same thing will happen for you — the first income increase will prove to your that you are in control of your financial situation.

4. Investment Income

What’s the difference between earned income and investment income? Earned income comes from your job and the small increases and surges. It’s tied directly to your ability to produce. What’s the problem with it? If you stop working, there’s no paycheck. It ends when you don’t go to work. It’s also the most heavily taxed form of income. In most states, it’s approximately 40%.

Investment income, on the other hand, is a multiplier, is taxed differently, and keeps coming whether you work or not. This is how people become wealthy. You want to avoid the things that don’t make you wealthy.

The thing to avoid is keeping the money you earn and not moving in into the investment column that will pay you. Why do you think real estate is the most common asset class with all the wealthy? Because it has numerous advantages and is passive income. Moving your income over to income producing properties like offices, apartments, or storage facilities is what creates wealth.

Why the wealthy invest in real estate:

  • Income – monthly checks
  • Appreciation – this is tied to the job marketplace in the area
  • Depreciation – write down the value of the property to save
  • Leverage – spent $1 get $3 – Use debt, but be extremely disciplined
  • Tax Advantages

When you purchase real estate, don’t go looking for a discount. It you can’t make sense of overpaying for it, then it doesn’t make sense to purchase it. If you are willing to pay more, that’s a good indication that someone else will pay more too. In real estate, the bigger you go the better off you’ll be. That’s what we do at Cardone Capital. We go after big deals that pay every month and appreciate over time.

Want more information on investing? Explore Cardone Capital’s website for programs, courses and funding opportunities.

 

Our offerings under Regulation D Rule 506(c) are available to accredited investors only.

For our Regulation A offering:

Until such time that the Offering Statement is qualified by the SEC, no money or consideration is being solicited, and if sent in response prior to qualification, such money will not be accepted. No offer to buy the securities can be accepted and no part of the purchase price can be received until the offering statement is qualified. Any offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time before notice of its acceptance given after the qualification date. A person’s indication of interest involves no obligation or commitment of any kind. Our Offering Circular, which is part of the Offering Statement, may be found at www.cardonecapital.com/offering

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