Investing in Your Business vs. Real Estate

There’s a place where all real estate investment deals live.

They are divided into the land of the scalable and non-scalable business investment.

Larger deals tend to be scalable… real scalable.

Since we are all about 10x’ing here, we’re going to go with the scalable deals.

After all, why settle for a small deal that doesn’t allow itself to grow?

You can try to force the appreciation on small deals by fixing them up, but then you’re getting close to your competition. Which has way nicer units with a lot more to offer for only an extra $200.

Cardone Capital wants you to join us on the scalable side in order for you to get the passive income you deserve. Here we’ve got you covered with investing in a business vs investing in real estate.

The Internal Revenue Service eats up the taxes on earned income and barely touches the tax on passive income. Therefore, it simply makes sense to invest in passive income.

I encourage you to use your current cash flow to invest in passive income that is going to grow without hurting you.

All wealthy people understand how amortization, depreciation and appreciation work. These are words most people are scared of, but when you invest in Cardone Capital, we educate you on what you’re doing with your money and make it grow at the same time. Our deals are transparent so that you can trust us without fear, no middleman here. We are genuinely inviting you to the land of the scalable.

Want to know who lives in the land of the scalable? People like Jared Kushner for example; he has more than $4.34 billion in transactions, which are all in multifamily portfolios and hotels. How? By extending his network of partners and lenders.

If you’re working hard for your earned income, let us take care of your passive earnings. One day, your passive income will outgrow your earned income and then you will really be scaling.

 

*Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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-1

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Double Down on Your Investments

The “Rule of 72” is a way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, you can know how many years it will take for you to double down investment.

The problem with a house is it’s going to take a LONG time for your money to double.

The rule of 72 used to show that putting your money in the bank was a great thing to do.

Compound interest rates were higher back when I was growing up, but today if you gave 100K to Bank of America, it would take 72 years or longer for your money to double.

In Japan, it costs you money to keep money in the bank.

For these reasons, you need a new vehicle to invest in. (this is why I created Cardone Capital)

Forget about shoving your cash over to Bank of America, and don’t be fooled into thinking that a house is much better. Any good investment should allow you to do the following:

  • Protect your capital—Investing shouldn’t be gambling. You don’t want to lose the original stash of cash that you put into something.
  • Give you at least a 6-10% return—Anything less than that is just not very good. You don’t want average investments, you want good to great investments.
  • Give you the possibility of appreciation—The best investments don’t just give you regular cash flow back, they grow in value over time.
  • Give you tax advantages—The tax man takes enough from you already, especially if you live in the Soviet state of California. You need to take advantage of every tax relief you can by finding investments that let you legally keep your dough.

The truth is, the bank is used for people who don’t trust in themselves.

They hand their money over to someone to give them small returns because they don’t want to take the responsibility of real estate investment for themselves.

Don’t wait until you are 90 years old for your money to double!

rule of 72

 

I’m warning you, if you buy a house, you may get “rich”, but not until you retire. Who wants to wait that long?

Be great,

GC

 

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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-1

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Multi-Family Real Estate is the Best Investment

I own nearly 5,000 apartments, THIS is why multi family real estate investment is the best investment I’ve made.

In my humble opinion, real estate is the best way to grow your wealth. If you want to get super rich (think billionaire) get involved in real estate — but I’m not talking about just any kind of real estate.

For example, a home is not an investment, because it doesn’t pay you each month — you have to pay it.

It’s a liability to me, not an asset. Not only does a house leave you less mobile, it ties up your money so you can’t use it for real assets.

There are many indications that multi-family real estate investments will continue to be great looking into the 2020’s and beyond:

  • 75 million Baby Boomers are retiring
  • Many of today’s apartment complexes may be converted to retirement communities in the future
  • Many millennials aren’t buying homes
  • It’s getting more expensive to build new apartment units

Your first challenge is simply getting a down payment. Once you do, it’s easier to get a loan on a multi-family unit than any other piece of real estate. Multi-family is the easiest way to get rich once you’re in the game!

Let’s say you can find a 49-unit property priced at $35,000 per unit with an 8% cap (the return on investment based on the income a property is projected to create) for $1,750,000.

If you pay cash for this deal at $1,750,000, you would make $140,000 free cashflow per year after expenses. With $450,000 down and financing $1,300,000, the debt payment would be $78,000 per year. This would make you $62,000 cash flow per year. This cannot be done with a home, period.

For the vast majority of people, college never leads to riches, nor does a home. If your goal is to build up $300,000 of equity over 30 years, then buying a home is a way to park your money the same way you would in a savings account or under a mattress. If you want to leverage your money and grow wealth, buying a home is not the way to go.

If you go into multi family real estate investment the right way, over the next decade it could be the best investment strategy of your lifetime — and I put my money where my mouth is. I currently own almost 5,000 apartments and will soon have over 10,000. They are not building enough multi-family apartment buildings to keep up with demand.

If you want to get involved in multi-family real estate, start with a minimum of sixteen units, avoid single family residences and condos, and only buy multi-units at one address.

If you struggle with producing enough income to save enough for a significant down payment, you can partner with me in smaller amounts.

Be Great,

GC

 

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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-1

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Commercial Real Estate Vs. Stocks

Would you rather have $100 million in real estate that cash flows OR would you rather have $100 million in a stock?

That begs the question, what stock and what real estate are we talking about here?

How long is the investment period for?

Go to Google and there’s not one data report on commercial real estate vs stocks. But I’m here to tell you that if you take one of the best stocks, an Apple or a Google, and compare it to a good piece of property like an apartment building, there are 3 main reasons you should go with the real estate OVER the stock.

#1 Control

You have more control in real estate than you do with stocks. When you buy a stock, you don’t control what happens to the business—you just hope it goes well.

#2 Leverage

You can spend $30 to get $100 in real estate, but to get $100 in stock you need to spend $100.

#3 Cash Flow

Stocks don’t give you a monthly check!

No matter how you look at it, the bottom line is that commercial real estate gives you more control, leverage, and cash flow than stocks give you.

That’s why I don’t invest in stocks, I invest in real estate. But you have to make the choice for yourself. It’s the red pill or the blue pill.

Do you want something with more control, more leverage, and more cash flow, or do you want something that has a higher potential to moon but also a higher potential to crash? I hope you got your answer to commercial real estate vs stock market. So invest in it and make money in real estate.

Learn more about what we do here at Cardone Capital and register HERE to find out how you can potentially invest with me in cash flow positive real estate!

Be Great,

GC  

*Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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 by 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

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Analyzing the Rent Roll

Are you doing a rent rolls and lease audit before you buy a property?

There are 7 things Cardone Capital looks for in rent roll in real estate:

  • Gross Potential Income — what’s the maximum amount you can achieve?
  • Effective Rents — what’s the gross potential minus vacancies?
  • Market Rents — what are your neighbors renting things for?
  • Occupancy — how many people are actually living there?
  • Lease Term — how long tenants are there for?
  • Other Income/Utilities/Concessions/Etc. — what are the tenants paying for?
  • Unit Type (# of 1bd/2bd/3bd/etc.) — how big are the units?

These are just some of the things you must be asking when looking into a new property! Rent roll analysis is an important stream under the study of real estate.

When did the tenant agree to the lease?

When does it terminate?

What are they paying?

Who lives there?

What do they do?

Did they make a deposit?

How are they paying each month?

Remember, buying a property requires a lot of due diligence. Don’t rush into something.

At Cardone Capital, we take our time before investing in a property, and we only pull the trigger when we know everything about the property and know it’s a good deal.

Be Great,

GC

 

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING,  NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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 by 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

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3 Kinds of Debt

With $422 billion in credit card debt, $1.27 trillion in auto debt, and mortgage debt of $9.1 trillion, America is drowning in debt.

But what’s worse than debt?  Dead money! Here we’ll discuss top 3 kinds of debt people fall in.

Yes, there are good debts and bad debts, which one are you in?

Dave Ramsey won’t teach you this, but America is drowning in not only debt, but dead money. From the $9.1 trillion in mortgage debt, over $5 trillion of that is stuck in equity. That’s dead money, and that’s the biggest problem.

Here are 3 things about types of debt to remember:

#1 All debt is not created equal. 

There is a difference between credit card debt and borrowing money to get an apartment building that cash flows. There is good debt and bad debt!

#2 You can’t grow without debt.

Sorry, but if you want to grow a business, borrow money. Apple and Google do it. Just about every growing, successful business borrows money to grow faster.

#3 Income is senior to debt.

The question isn’t about how much debt you have, but rather, how much income do you have? When you have more income than debt, you don’t have a debt problem.

If you’re looking to get some GOOD debt in your life, register with Cardone Capital. I use big debt to make big income—and you can join me.

Be Great,

GC

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING,  NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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 by 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

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7 Signs You Have a Great Deal

The numbers of units are the single most important yet most overlooked thing in all of real estate tips. The number of units multiplied by the rent increase will determine the appreciation of a property in the future.

How many units are you looking to buy? The more, the better.

Real estate is a business sitting on a property—and the more units you have, the bigger your business will be.

Top 7 Signs You Have a Great Deal – Grant Cardone Capital

In addition to the number of units you’ve got, what else signals a good deal?

Here are 7 signs you have a great deal:

#1 Positive Income

Look for cash flow above operating expenses! Does your deal provide positive cash flow each month?

#2 Banks need to be interested in your deal

You shouldn’t have to talk your bank into it, they should be eager to partner with you on the deal. Why? Because banks want to partner with good businesses—and they avoid bad ones.

#3 Your manager needs to be happy about the property and well paid

If you can’t pay your manager, your property is worth less and likely not worth investing in. An unhappy manager will steal from you either directly or from being careless. Does your property pay enough to give you the ability to support a quality manager?

#4 Unsolicited buyer interest

You’re not listing it, but people want to buy it. That’s when you know you’ve got a great deal. I have many people calling me, texting me, asking if I’m willing to sell my deal in the Galleria in Houston.

#5 Stable and growing job growth in your market

That’s why I look at Tampa, Houston, and Orlando. I like jobs coming into a market. Markets that are losing jobs will soon bring trouble to property owners in that contracting area.

#6 Salaries 3X or greater than the rent

The higher the salaries compared to the rents, the better your deal is. You want a place with tenants who have a lot of disposable income.

#7 Location

Everyone should feel good about where your property is, that there’s no doubt about it being a good, desirable area.

There you have it — 7 signs you have a great deal to show you if you have a winner on your hands. If you lack one or two of these things on this list, consider NOT buying it!

Be great,

GC

 

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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 by 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

 

 

 

 

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The Truth About Monopoly

Did you know the popular Monopoly game had leftwing, communist origins? Here’s the real truth about monopoly trade.

In 1903 a feminist named Lizzy Magie didn’t like what she saw as problems during the latter half of the 1800’s with income inequalities.

She wanted a board game to play that would reflect her political views.

True Story of Monopoly – Grant Cardone Capital

Believing the system of “land-grabbing” had bad consequences, she named her new board game “The Landlord’s Game”.

The version Magie originated did not involve the concept of a monopoly tricks; for her, the point of the game was to show the potential exploitation of tenants by “greedy” landlords.

Here’s what it originally looked like:

Luckily, a man named Charles Darrow sold a similar version of the game rebranded to “Monopoly” in the 1930’s to Parker Brothers, and it became a phenomenal success, eventually making him millions.

In fact, Monopoly became the best-selling privately patented board game in history.

But would this game have been successful if the goal of the game were to redistribute the property and the money to less fortunate players?

Could you imagine… playing the game where your properties got seized if you got too rich, or paying ridiculous high taxes so that all your income got redistributed among the other players?

Nobody would play that, because nobody likes to work hard only to let others enjoy all the benefits of their labors.

This is why all board games have a winner, it gives players a goal to shoot for.

You want to win, right?

And here’s the deal— sometimes life isn’t all that different than a board game.

If the object of your game right now is to accumulate wealth, then good for you.

That’s a noble ambition.

Play to win!

Some people will criticize you for it, but last I checked, we live in a capitalist society in the United States.

There’s nobody stopping you from getting Park Place or Boardwalk.

In the game of Monopoly, if someone lands on this spot late in the game, when you have a hotel, the rent is $2,000.

Game over.

There’s a reason why places like Baltic Ave. are cheap—it’s a low level property and you cannot set your winning strategy around it.

It’s a simple concept and everyone can understand:

Expensive properties yield higher rents, cheaper properties yield lower rents.

The more expensive a property is, the more valuable it is.

What gives a property value? Cash flow.

Do you want to own the Boardwalk or Baltic Ave.?

That’s why at Cardone Capital we go for high end, luxury, multifamily apartment buildings.

Because we’re not playing with Monopoly money—we’re playing with our own money, and we’re playing to win.

And when you invest with us, you can win too. Because your monthly distributions won’t be sent to others—that monthly check will come to YOU.

Every month, you just pass GO and collect your money.

Find out more how you can invest at Cardone Capital HERE.

 

Be Great,

GC

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING,  NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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 by 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

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How to Earn $50,000 a Year in Dividends?

My entire life I have been fascinated with the idea of earning passive income. I once read a quote by Warren Buffet, saying, “If you don’t find a way to earn money while you sleep, you will work until you die.” This really hit home for me because my dad died when he was only 52 years of age. When he died so did the income from his job.

I have spent years of my life researching the types of investments that would provide passive income for my family, charities and myself even if I wasn’t working. I wrote the characteristics of the investments so I could hone down to something I was comfortable with. The first requirement was to…

(1) secure the money I had earned,

(2) provide passive monthly income, and lastly

(3) increase in value over time.

I started studying stocks, dividend stocks, bonds, bank CDs, real estate, and other alternative investments. I quickly found most didn’t provide 1 and 3.  I am a coward when it comes to investing and just simply can not handle the idea of losing what I have worked so hard to get.

And this is what got me so interested in real estate.

When you invest in cash flow producing real estate it is very difficult, almost impossible, to actually lose your initial capital because someone will always want to purchase the cash flow.

Unlike a home you live in, commercial real estate’s future value is determined by its ability to provide cash flow to investors. The future value of a stock is dependent upon many more conditions: politics, technology disruptions and developments, economics, market conditions, and more.

As long as you pick real estate in markets where rents continue to grow, the value of the property should do the same. Unlike stocks, real estate can provide monthly distributions to its investors. The best-known dividend stocks in the world: Coca-Cola, Walmart, & AT&T, pay quarterly, not monthly.

So, let’s do some real practical math to compare investing in stocks vs real estate. You can do the same math with bonds and bank deposits. Let’s say you want to earn $50,000 a year in passive income and want to know how much you would need to invest to do so.

Here is the math – Take your desired annual dividend passive income amount and divide by the dividend percentage.

Desired Income / Dividend Yield = Amount of Investment Required

Let’s say you want to know how much Apple stock you would need to buy to earn 50,000 in dividends.

Take the $50,000 and divide by the .0171 dividend yield to get $2,923,976 of Apple stock. Call your buddies at Merrill Lynch and send them a wire for 2.923,976 and cross your fingers and wait for the stock to go up.

Compare that to how much would you need to invest in real estate to earn the same $50,000?

At CardoneCapital.com we offer myself and accredited investors a 6% preferred cash on cash return.

To determine how much money you would need to invest with Cardone Capital to earn 50000 in dividends, simply divide the $50,000 by 6% = $833,333.

This is what hooked me on real estate, but it gets better than that.  An even bigger benefit is that your $833k investment buys 3X the real estate or $2.4M. Because real estate provides stable cash flow, banks are willing to provide investors with leverage allowing you to buy 3-4X the real estate.

The bank knows the debt will be paid off by the real estate’s income paid by tenants. You typically can’t borrow money from the bank to buy stocks.  You can buy on margin, but this is very risky. It’s crazy to think I can get a loan from Bank of America to buy real estate but not to buy Bank of America stock. (Let that sink in.)

When I realized I could buy three times the real estate through leverage, earn monthly returns and reduce my risk of loss of capital I made real estate my investment of choice. Warren Buffet also says, “Invest in what you know, nothing more.”

Clearly, real estate—like stock—can go down in value due to cycles or economic troubles, but if you don’t over leverage (borrow too much) and are still paid monthly from cash flow you can wait out the cycles.

During 2008, during the housing collapse, the cash flow from my apartments went up, not down, and got me through 2008-2009-2010.

Real Estate will be still be there when stocks can go to zero or the businesses are no longer relevant. Remember Circuit City, ToysRUs, Sears, Kmart, Lehman, Blockbuster, and on and on.

Now let’s do a little more math. That $833,333 you invested over ten years would have paid you 60% on your investment. 6% x 10 years assuming the rents never went up. And if the rents go up then the value of the property goes up.

My first serious real estate investment was $350k and I bought a property that was worth 1.9M at the time. I earned 12% per year and owned it for four years. By year four, the property had earned almost ½ of my investment in cash flow. A buyer came along and offered me $6M for the property that I had paid 350K for. My partner and I made more money on that one deal that we had ever made from my main job, but the thing I was most excited about…

I was paid passive income while I waited. This took the fear out of investing for me.

Let me know what your take-aways are or where I might have missed something. Certainly, if you had bought Google, Netflix, Amazon, or Bitcoin when they were first coming to market you would have made a lot of money, but this article isn’t about making money, it’s about how you can create passive income of $50,000 a year.

CardoneCapital.com is now open for accredited and non-accredited investors whereby we buy institutional quality real estate and allow the average investor to get access to extraordinary real estate typically owned by major financial institutions. For more information go to CardoneCapital.com

Grant Cardone

CEO, CardoneCapital.com

Grant Cardone is a New York Times bestselling author, and an internationally renowned speaker on leadership, real estate investing, entrepreneurship, social media, and finance. His 5 privately held companies have annual revenues exceeding $100 million. Forbes named Mr. Cardone #1 of the “25 Marketing Influencers to Watch.” He currently resides in South Florida with his wife and two daughters.

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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 by 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

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Why Private Equity Real Estate Funds are Superior to Private REITs

Real estate investing is an increasingly favored method of wealth-building, and there are multiple ways today to invest in private real estate.

Investors who don’t want the responsibility of managing tenants, toilets and termites themselves choose either private equity funds or real estate investment trusts (REITs).

High net worth individuals holdings in PRIVATE real estate hits record highs. A Tiger 21 reported by Bloomberg of high-net-worth investors showed they had an average of 33% of their portfolios in private real estate investments.

Traditionally, private equity real estate opportunities have only been available to institutions.

Early on I founded Cardone Capital to allow my wealthy family and friends to invest alongside me. Today, we have opened this opportunity of providing institutional-grade commercial real estate properties available to both my wealth “accredited” investors and all my friends who follow me on social media who are non-accredited.

My personal success investing in real estate over thirty years now is a testament that private equity real estate funds are smart investment vehicles for those who want to protect their wealth, create passive income flows for themselves and their estate while they patiently wait for appreciation through rent growth.

Just this year we created two funds for our investors, one which produced a 121% return to investors in under 42 months and the other did 3.45 X return on capital invested. That’s 345% over a four year time period.

Over my career investing in a very specific real estate type I have achieved well over the 15% annualized net returns we promote in our offerings.

While I can’t guarantee this level of success, I believe for many reasons the private equity real estate fund will almost always out achieve the private REITs for a variety of reasons.

1. Fees to Promote Funds.

Private REITs have been notorious for their high fees—with many sharing 10% with brokers. This upfront expense becomes almost impossible to recoup and offers no value to the properties or investors.

In fact the Financial Industry Regulatory Authority (FINRA) now requires private REITs to provide statements to investors showing this drop immediately. This disclosure and public awareness apparently had a negative impact with the public, with private REITs raising almost eighty percent less in funds.

Meanwhile, more cash is flowing into private equity real estate, like Cardone Capital. I refuse to pay any fees or commissions to brokers, reducing ALL the cost of middle men.

My company uses social media crowd funding to create awareness of the deals we are investing in. That way ALL of the investors dollars are invested in the properties.

2. We Buy, Then You Invest.

With a REIT you invest money upfront before the properties are purchased and most of the time you don’t know what property you are invested in.

With the REIT the theory is you buy a diversified pool of properties, but in practice, REITs don’t start off with a pool of properties and they must start paying dividends to their investors— so, REIT managers have the propensity to invest in properties to generate dividends to pay the investors.

Instead, an entrepreneur-run private equity real estate fund seeks property that provides all the conditions of a great investment; cash flow, location, job growth, rent growth and view of the future so you can exit with a profit.

3. Tax Advantages.

With a Real Estate Investment Trust the investor is invested in a convertible stock certificate unlike the private equity investment that makes the investor a partner in the property, with the full backing of the real property.

In a private equity fund you are a partner in the property rather than a holder of a piece of paper.

The tax implications provides a massive benefit to the investor of a private equity fund over REIT.

4. Monthly Cash Distributions.

Private REITs typically pay every quarter whereas a good private equity firm who manages cash flow and is personally invested in the properties is motivated to pay investors out monthly as they are motivated to pay themselves.

As a real estate operator investing in a property I want to be paid monthly. If there is cash flow I demand we distribute monthly to the investors.

5. Private Equity Mentality vs REIT Mentality.

The mindset of of private equity fund manager is about investing in real property, not the day to day value of a piece of paper created by Wall Street.

In REITs profits take a back seat to Fees. REITs generate most fees through transactions and the SEC warns that deals can be struck just to generate fees.

The private equity fund manager is driven by finding the right real estate assets that can produce cash flow over long periods of time and create appreciation for the fund manager and the investors.

Whereas the REIT mentality is fee driven whereby they get to keep their jobs and fees are based on trades not the asset itself.

The mindset between the daily value of a piece of paper and the long term operation of a property changes everything. As an asset operator and manger, I am interested in maximizing the growth potential of the property through rent growth and then finding the right buyer at the right time to exit to accomplish our targeted internal rate of return.

6. Taxes.

One of the great benefits of real estate investing is the number of tax advantages provided through depreciation and long term capital gains.

REITs do NOT share these tax advantages with its investors and instead each year send you a 1099 form, as though you work for them.

The private equity firm passes all tax benefits on to its investors, including depreciation and capital recapitalization, while REIT payouts are taxed at an investor’s higher ordinary income rate and no depreciation deductions are passed on.

Lastly, The Journal of Wealth Management points out REITs have underperformed the market over the last 10 years.

How To Get Started

Although most private equity real estate funds are available only to institutional investors, there are a number of crowdfunding real estate websites but very few of which offer partnerships to both accredited and non-accredited investors.

While it can be overwhelming to separate the good real estate managers and investments from the bad, investors should do their homework. When doing your research ask about the Deals you are investing in, not just the terms.

Lets face it, your upside in real estate is determined by the real estate.

At Cardone Capital, I personally look at a hundred deals to put a few under contract. And when I do, I assume I am invested in this asset whether anyone invests alongside with me. Look for funds that are investing in the products they are promoting.

Also, the more transparent and available the executives are the better.

Pictured above, Stella at Riverstone—Cardone Capital’s most recent acquisition.

Always choose investment firms that provide transparency and availability regardless of the size of your investment. When discussing fees, be interested in how the fund manager is compensated.

Are the fund managers driven by fees or compensated by profits?

It has always served me to pay the fund manager on profits!

Be great,

GC

 

Our offerings under Rule 506(c) are for accredited investors only.

FOR OUR CURRENT REGULATION A OFFERING, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR ANNUAL INCOME OR NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(D)(2)(I)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO WWW.INVESTOR.GOV.

For our anticipated 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 by 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

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