Updated: Oct 23, 2020
You have an endless number of options for investing your money in real estate these days.
One of these options - one that has invested a lot of money in getting your attention - is Cardone Capital.
In this Cardone Capital review, we'll look at what the business is all about and whether it should warrant serious consideration for you as a real estate investor.
Let’s dive in.
What Is Cardone Capital?
Cardone Capital is a syndicate or a crowdfunding platform for Real Estate investors led by The CEO & Founder Grant Cardone.
Grant has 35 years of experience in the Real Estate game, and his team has around 1.5 billion dollars worth of assets under its management umbrella.
He started as a sales guy. From cars to corporate sales courses, and then Real Estate later in his career.
Some of his clients throughout his early sales career included Futrune 500 companies. Grant is a preferred borrower with Life Insurance Co’s, Fannie Mae (The Federal National Mortgage Association), and Freddie Mac.
He is also a New York Times bestselling author (twice), and an Axiom award winner for one of his other books. He is a world-class sales trainer, and an internationally renowned speaker on leadership, real estate investing, entrepreneurship, social media, and finance.
Grant appeared on Fox News, Fox Business, CNBC, and MSNBC, and contributes to Entrepreneur.com, and Huffington Post. Forbes named Cardone #1 of the "25 Marketing Influencers to Watch in 2017".
Cardone Capital LLC operates as a Real Estate investment company. The company basically identifies, acquires, manages, and exits highly profitable Real Estate properties. They let their investors collect cash flow distributions and enjoy the appreciation of the assets.
Last month (May 2020), they had distributed 1.4 million dollars in checks to investors.
It is unclear exactly how many investors they actually work with.
On the technical level, Cardone Capital is in the Finances industry (Asset Management sub-industry), and is located in 18909 Northeast 29th Avenue Aventura, FL 33180 United States.
Cardone Captial’s CFO is Susan Schieman, and the COO is Sheri Hamilton.
But who is Grant Cardone, really?
Who Is Grant Cardone?
Grant grew up in Louisiana, in a middle-class family. I had working-class parents and was very much close to his father.
When Grant was a little kid, his father passed away due to a heart attack. He always says that his father was the provider for the family, and had a very strong work ethic.
Later on, his older brother passed away when he was only 20 years old.
These two deaths affected the family greatly. Grant keeps saying to this day, that he saw how scared his mother was of catching up to the bills, and he goes into shameful details such as how she would clip coupons for the grocery store to save a few bucks.
This is where Grant’s life went south.
He started using drugs constantly, being unproductive at home, and a burden to the marketplace, being unable to keep a steady job for more than 3 months.
He said his life was a wreck at the time, and he didn’t find any meaning for his life, working dead-end jobs.
He has some heartbreaking interviews where you hear him saying with a shaking voice about how much he wanted to quit using drugs, swearing to stop time after time, only to go back doing them 5 minutes after. He felt ashamed, worthless, and pretty much a lost cause.
It got so bad, that one rainy night in Luisana, one of his friends at the time set to rob him inside his house. If that’s the kind of people and friends you hang out with, you know you screwed up.
Grant was lured to open the door, was beaten with a pistol to an inch of his life, and got his house robbed, and his dignity, or what left of it, stolen.
He was beaten up so bad, his mom couldn’t recognize him.
At that point, his mom had enough of his drug addiction and problem-causing and kicked him out of the house. She forced him to go to rehab, and at age 24-25, Grant spent 30 days at a rehab institution.
After completing the 30 days, his personal counselor told him that he will never amount to anything, will never achieve any goal, and that he has a destructive, addictive personality.
Boy… was the counselor wrong.
At age 25, Grant landed a job in sales, selling used cars. He claims to this day that he hated the job, but he decided to prove everyone wrong, and to himself that he can be good at something.
He was very good at it, making some serious money in commission. He says he was obsessed with work because he was afraid to be bored and go back to drugs.
Later on, Grant started a consulting company in the sales sector, focused on automobiles. He was cold calling, knocking on doors, old school sales. Additionally, he started writing and publishing books.
Here are the main published books Grant wrote:
Sell to Survive - 2008
The Closer’s Survival Guide - 2009
If You’re not first, You’re last - 2010
The 10X Rule - 2011
Sell or Be Sold - 2012
Be obsessed or be average - 2016
How to Create Wealth Investing In Real Estate - 2018
He always claimed that even though he has an accounting degree, he thinks the education system is broken, and what he learned in 5 years in business he wasn’t able to learn in 17 years in high school and college.
In one of his Real Estate YouTube shows, Cardone revealed that a lot of his education, like understanding NOI, what a Pro Forma is, and what a good market looks like - came from studying different deals, and meeting agents, rather than from school.
In fact, Grant claims he has never read anything on real estate investing: He replaced the knowledge that can be found in books with the knowledge that can be attained by actually looking at listings in different markets.
At 29, he signed his first-ever Real Estate deal. It was a single-family home in Huston TX.
That deal didn’t go his way.
He claims his tenants left, and he had to sell quickly to break even and avoid losses.
5 years later, the 2nd acquisition came to be. In 1987, after accumulating lots of cash, he put a down payment of 350K on a 1.9 million dollars 38 unit complex in San Diego.
Cardone continued to purchase more complexes - one at a time, though the pace later picked up.
In 2012, Cardone Capital had dubbed a portfolio of 1,016 apartments spread over five apartment communities for a total of $58 million.
More recently (2019), he had some bad press on YouTube, mainly from a guy named Kevin, from a channel named Meet Kevin. It revolves around exposing some of Grant’s methods and a restraining order against Kevin.
Kevin went on the Wolf of Wallstreet show on YouTube, hosted by the famous Jorden Belfort (another sales master), better known as the Wolf of Wallstreet to talk about the incident.
Grant himself was also interviewed on Jordan’s podcast on YouTube, in it went really bad for Grant from a PR perspective. It is all over the internet. The Wolf of Wallstreet made Grant look like a novice salesperson.
Today, At the age of 62 in the year 2020, Grant Cardone is famous. He sells out huge arenas in Las Vegas & Miami for his 10X conferences - sharing the stage with celebrities like snoop dog, Dana White, Kevin Hart, Floyd Mayweather, and more.
So, from someone who hit rock bottom with drug addiction, to today flying around the world on his private jet - that’s as much proof you need to know that anyone can make it.
Now, let’s see if its Cardone Capital is what they claim they are, and if it is worth it for you.
Cardone Capital Review: Should You Invest?
According to online customer reviews, Cardone Capital is an above board business that does what it says it does. While Cardone's training products have the usual assortment of mixed reviews, Cardone Capital would appear to be in good standing.
In fact, as of September 2019, Cardone Capital had 1,860 Google reviews with a perfect 5 out of 5-star rating.
With that said, should you invest with Cardone Capital?
To answer that question, we really need to look at a bit closer at crowdfunding.
Real estate crowdfunding is similar to equity investing, since an investor can buy into a property and become a shareholder.
And there are risks in any type of crowdfunding investment.
That’s why the SEC has imposed investment limits for non-accredited investors. It explains the difference between those who make more or less of 107,000 USD a year. Here the official link to the SEC page.
To be eligible to invest with Cardone Capital, you need:
To be at least 18 years old
Have a minimum deposit of $5,000
Be an accredited investor for specific investments
You need to have the following information on hand when opening your account:
Social Security number
Government-issued ID number
If you’re an accredited investor, have this additional information on hand:
Investment account statements
A third-party confirmation from an accountant or broker
Cardone Capital’s minimum investment is $5,000 USD across all funds.
This might seems high initially to a novice investor, however, it is actually comparatively low. Other real estate syndications start at around $25,000.
The upside of a deal like this is steady cash flow without worrying about the overhead and logistics. Additionally, larger investment deals tend to carry a bit less risk than individual home or office purchases. Most people can't access these types of deals outside of crowdfunding.
The downsides are a bit more numerous:
You can't withdraw your money once invested for 10 years
You don't get a say in choosing the properties
You are foregoing alternative, higher-margin investment opportunities
The true downside to crowdfunding is opportunity cost.
When your money is tied up in Cardone Capital, you are making a much lower return than what you could make doing your own deals.
Granted, it's hands-free, but even compared to other hands-free investment opportunities, Cardone Capital comes up short.
Part of this is due to how big of a chunk Cardone Capital takes:
1% fee on the Deal (buying the property)
1% fee managing fee (managing the sites managers if we’re being honest)
1% fee on the exit (selling the property).
3% off the top is nothing to turn a blind eye to. There is a reason that most stock investors will tell you to choose the 0.05% cost index fund over the 2% cost managed fund. When we are talking about compounding and wealth building over time, every percent is massive.
Additionally, Cardone Capital has a ton of direct competition in the Real Estate crowdfunding arena:
Let's look at Fundrise for a short comparison VS Cardon Captial:
Some stats about Fundrise:
130K + Investors
4.9 Billion USD in total asset transactions value to date
79 Million USD in total dividends paid to investors
8.7-12.4% Historical Annual Returns
Investing through an LLC vs a trust boasts a lot of tax advantages.
The basic difference between those two investment vehicles is the tax form you will receive. With eREITs you are going to receive a 1099-DIV form.
This form is used to declare any dividends you receive.
This negates the one key advantage of investing in real estate vs stocks: taxation.
Since a fund holding real estate operates as a company it can declare profits and losses. The depreciation of a property and any other maintenance or improvement costs and thus be deducted from earning.
Why Real Estate Crowdfunding Isn’t The Best Option For Most Investors
Cardone Capital promises you a minimum 6% return with an upside of 15%.
These are acceptable numbers for a retirement investment strategy.
The problem, however, is that most people don't get into real estate investing to have a comfortable retirement.
Most people get into real estate investing to reach a new, life-changing level of wealth.
90% of billionaires made the majority of their wealth through real estate.
It's the preferred investing option for people who are willing to embrace some risk in order to tap into life-changing financial rewards.
When you invest in something like Cardone Capital, you are bankrolling financial rewards for Grant Cardone... not yourself.
This is one of several reasons that crowdfunding isn't the best choice for most investors:
High Fees: Depending on the platform you choose, there could be annual fees of 1% to 3%
Illiquid Assets: You won’t be able to withdraw the cash or sell when you need cash. Long periods of wait.
Untested platforms: A flashy website doesn’t mean anything. RealityShares was founded in 2013 and shut down 5 years later due to a funding issue. Some of these companies have never survived a financial downturn.
Accreditation: Mostly the hurdle for big yields investment opportunities. It means you actually need to be rich already to get the best deals with Real Estate crowdfunding.
There are numerous ways to grow your wealth through real estate, but the method that we feel is mot reliable is called wholesaling.
Wholesaling allows people who don't already have access to a ton of capital to make incredible wealth leaps in a short amount of time.
The reason for this is that we are in brief window in real estate history where the old methods of doing things are being flipped on their head through technology. 10 years ago, you couldn't compete with people who had more money than you.
Today, you can make power moves that the old guard of real estate could only dream about thanks to the power of the internt.
If you want to learn more about how to build your own wholesaling business, check out our free case study where Astroflipping founder Jamil Damji walks you through how he built the 3rd biggest wholesaling business in the US.