Are you looking for a Cardone Capital review? If you are interested in investment, you might have heard of Cardone Capital. But you may wonder if it is a scam.
Among the many possible investments, real estate is often cited as one of the best bets. It is already profitable to own land, whether it is an undeveloped plot, a farm or a residential property.
After all, barring unforeseen circumstances, the value of your property should increase over time. Although the increase in value is slower compared to other properties, you can count on it being quite stable and almost never decreasing.
In addition, there are numerous ways to build significant wealth in the real estate industry. From adding land to an existing portfolio to “selling” land for a profit.
Given this, it is easy to understand why some people, especially financiers, find the real estate market attractive.
For most people, however, getting into the real estate market is difficult. It works just like any other type of investment strategy.
Even if you do not have a lot of money to invest, Cardone Capital says they can help.
As a disclaimer, I’m not affiliated with Cardone Capital. It means I’m not paid to write this review. So you can be sure that my words are unbiased.
At the end of this review, I’ll also tell you a better alternative that has enabled me to make a full-time passive income online.
In this Cardone Capital review, I’m going to cover the following.
What Is Cardone Capital?
If you want to invest in real estate, you usually have to buy the property outright. In doing so, you can expect a high price, especially considering the current market value of real estate.
Cardone Capital’s platform is designed to make investing easier for the average person.
One or more people can pool their money to buy a property through this method, known as “real estate crowdfunding” Moreover, they do not have to pay the full price for the property.
In real estate crowdfunding, multiple people pool their money to buy a single property from a seller. Simply put, when you invest with Cardone Capital, you and a group of other people pool your resources to purchase a multifamily property (e.g., a flat building)
The most obvious benefit is the ability to diversify your holdings by purchasing property. Regardless of whether you can afford the property outright or not.
Investors have never suffered a loss while holding funds at Cardone Capital, another point of pride for the company. And they deal mostly with multifamily properties because those types of properties have historically been among the safest.
Also, Cardone Capital has lower investment criteria than other real estate crowdfunding websites.
However, keep in mind that the barrier to entry into the world of real estate investing is still quite high. While it is advertised that “minimal capital” is required, not everyone has the several thousand dollars needed to get started.
The Founder of Cardone Capital: Grant Cardone
Grant Cardone never thought he would be where he is now. At the age of 25, Grant hit rock bottom and became addicted to drugs.
However, with dedication and self-control, he turned his life around and is now recognized as a leading expert in the real estate industry.
Previously, Grant was not only terrible at sales, he downright hated it.
He eventually improved to the point where he owns a real estate portfolio worth an estimated $350 million. The premise of his book and his approach to life is that you are either a seller or a buyer. Clearly, he has acquired some selling skills.
His bio on Cardone Capital’s website also states that he is a New York Times best-seller, the world’s leading sales trainer and a world-renowned speaker on leadership, real estate investing, entrepreneurship, social media and finance.
His business interests include Cardone Acquisitions, Cardone Enterprises and The Cardone Group.
In addition to his extensive real estate business, he also tours the world as a motivational speaker known for his “10X Attitude”
How Does Cardone Capital Work?
As mentioned earlier, Cardone Capital provides a place to invest in real estate without actually buying a building.
Simply put, it’s a lot like investing in the stock market. When you invest in this market, you are essentially buying a stake in a company. Your financial well-being is thus tied to the success of that company (depending on how much you have invested).
Cardone Capital’s crowdfunding method for real estate works in a similar way. In this case, you invest in an existing property offered by Cardone Capital.
Among funds now accepting investments, real estate in the southern and southeastern United States predominates. Grant Cardone has stated on several occasions that real estate markets in the South and Southeast of the United States are the most promising due to growing populations and the number of jobs available.
The focus is on upper middle class to luxury residential listings. These are the most sought-after investments because multifamily properties offer higher and more consistent returns on invested capital compared to single-family homes, especially during periods of low occupancy (sometimes only one)
The website also presents three pieces of data that may seem irrelevant at first glance, but could prove very informative to an investor. These are the following data:
- Total Units/Total Square Feet – Although this may seem like a small element, it is important. If you know the occupancy size of the property in question, you can better assess its profitability by determining how many people can rent it.
- IRR Target (Internal Rate of Return)
- Multiple of the targeted equity capital
Is Cardone Capital Legit?
Although Grant Cardone has a long track record in the residential real estate market, the lack of transparency in Cardone Capital’s finances raises eyebrows.
When I see numbers like his, I almost want to believe that everything is financially stable.
You can find data on a variety of issues, and if you can believe them…
Over at Cardone Capital, they manage a residential real estate portfolio of over 7,700 units valued at over $1.7 billion. That is really outstanding.
Moreover, Cardone Capital is committed to acquiring assets that generate stable returns for its shareholders. And why? Because there’s a chance those cash flows will increase over time!
If you avoid risky investments like startups or long-vacant homes, your money is safe.
Now we come to the million-dollar question: is Cardone Capital a scam?
In the strictest sense of the word, no. While it is definitely possible to make money using this method, you should know that it is not as easy as it sounds.
As with any other business, there is an overwhelming amount of upfront work involved, with no guarantee of the eventual payout.
In addition, the profit margins are often quite small. Please do not get me wrong: I am all for putting in more effort today to profit later. But when I do, I expect a very high return on my investment.
How Does Cardone Capital Make Money?
Do not get your hopes up that you will discover the magic ingredient. We regret to inform you that your hopes have been disappointed. Cardone Capital uses all the usual channels, including public listings, brokers and private transactions, to acquire properties.
However, you can rest assured that your investment is not at risk.
Cardone Capital has begun reinvesting its profits in properties owned by Cardone. The best part is that a significant portion of the real estate assets are already owned by Cardone Capital, which has already gone through all the appropriate formalities.
For what reason do you think this is a good idea?
By sharing profits and losses with their investors, they have ensured that everyone’s interests are aligned.
However, not everything is rosy and unicorn-like. Cardone Capital’s investment strategy could result in a potential conflict of interest due to one aspect of its approach.
Investments in Grant Cardone’s minority holdings currently represent the majority of Cardone Capital’s assets.
While it is fantastic that these assets have survived due diligence, Grant Cardone is technically your manager and the seller of the property in which you have invested.Still, it’s not hard to understand why some people are reluctant to give up their power.
On the contrary, Cardone Capital owns 35% of the shares in the funds. Your trust in Grant Cardone and Cardone Capital to manage your money wisely is a given, whether you like it or not.
Putting money in someone else’s hands is risky for obvious reasons. You should weigh the possible advantages against the possible disadvantages.
Requirements For Investing In Cardone Capital
Cardone Capital’s investment requirements are somewhat less stringent than other real estate crowdfunding sites (such as FarmTogether).
Investors with and without appropriate accreditation are welcome at Cardone Capital. When it comes to investments, SEC defines “accredited investors” as those who meet the following criteria:
- An annual income of more than $200,000 for the past two years ($300,000 per household), with the intent to maintain that level of income this year.
- A net worth of more than $1 million (individually or jointly), excluding the value of the primary residence.
- Invest as a bank, insurance company, registered investment advisor, business development company, or small business investment company.
- Invest as a company in which all shareholders are accredited investors.
- Invest as a retirement plan, trust, charitable organization, partnership, or corporation with more than $5 million in total assets.
An investment of $100,000 is the lowest amount accepted by accredited investors. Investors who are not accredited can get in for as little as $5,000.
It is worth noting that non-Americans are welcome on this platform and can participate as investors. However, they must be “accredited investors” as defined by the Securities and Exchange Commission. Foreign investors who are not accredited cannot invest with Cardone Capital.
What I Like About Cardone Capital
- Grant Cardone has an impressive track record that spans many decades, and Cardone Capital claims to have never lost money for its investors.
- Many of the properties managed by Cardone Capital’s investor funds are co-owned by the company.
- Beneficial payouts for certain transactions: Several of the funds offer a 6% preferred yield, putting them ahead of all other investors in terms of profits.
- New investment opportunities are constantly available, as there is always at least one fund that is currently raising capital.
- Multifamily residential real estate is a low-risk investment that offers stability through various market changes.
What I Didn’t Like About Cardone Capital
- While asset management and acquisition fees are acceptable, Cardone Capital takes a 35% stake in the funds without making a capital contribution of its own.
- High initial investment required: funds typically require a minimum investment of $100,000 from accredited investors and $5,000 from non-accredited investors. For both types of investments, these are the highest amounts ever.
- Increased potential for leverage: up to 80% of funds can be raised in debt to finance purchases. For commercial real estate, a leverage ratio of 55% to 60% is generally considered prudent.
- There is no system for secondary purchases: Real estate transactions of this type are often long-term and illiquid, but Cardone Capital’s deals are especially so. The fund offers only a vague time frame for investment of “up to ten years” with no early withdrawal option. Many exchanges offer secondary markets and have repurchase programs in place, opening up the possibility of bringing their products to market in the near future.
- Divided loyalty: Grant Cardone, the company’s founder, also has interests in other companies, all of which bear his name.
How Much Does The Cardone Capital Investment Platform Cost?
There is no cost to participate in the Cardone Capital platform. Although there are costs associated with the investment capital itself, there are also other fees.
Cardone Capital charges the following additional costs for each investment made.
- Acquisition Fee – Cardone Capital charges an acquisition fee of 1%. This means that your investment will be reduced by 1% of the purchase price of the property being acquired.
- Disposition Fee – Cardone Capital also charges a 1% disposition fee. This means that when a property you have invested in is sold, 1% of the sale price is deducted from your return.
- Asset Management Fee – Cardone Capital charges an asset management fee equal to 1% of the total principal invested. Consequently, Cardone Capital charges an annual fee of 1% on the total invested capital for the first three years.
In addition, all of Cardone Capital’s investments are profit-sharing. This means that Cardone Capital has a share of the money you earn from the investment, whether through rental income or when you sell the property.
The share can change. However, typically the income share is 65% for accredited investors and 35% for non-accredited investors. The investor gets 65% while the company keeps 35%.
The individual amounts may not seem like much, but when added together, they can significantly reduce your return. Because of these additional costs, the 65/35 profit split, which is not great for real estate, can end up being more like 60/40 or 55/45.
To put it another way, it’s going to cost a lot of money and there’s a chance you will not make as much money as you had hoped.
Cardone Capital Returns
Based on its track record, Cardone Capital claims that its investors have never lost money.
It expects a 6% inflow of funds and a 15% internal rate of return for investors per year from their respective funds. Accredited investors can receive a 6% preferred return.
There is no set time for withdrawal from Cardone Capital’s funds. Do not invest money that you may need in the near future; this is a long-term investment.
Cardone Capital Review: Final Verdict
For an inexperienced real estate investor, waiting five or ten years to see a significant return on their investment can be challenging.
Giving money to a real estate tycoon with a net worth of $1.7 billion is risky, but it can be worth it if you can wait ten years for a return. My point is that you could do a lot worse with your money.
This fund is also a good choice for those looking to supplement their passive income, as it is managed by Grant Cardone.
However, we believe that there is a more effective way. Let me tell you in the next section.
Better Alternative to Cardone Capital to Make Passive Income
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