I recall a month ago, people were talking about real estate. Anyways this is a third party analysis of grant cardone. brief summary on cardone. 300m net worth at 58, made his money teaching corporations how to sell. now manages a 750m real estate private equity fund that purchases apartment complexes. he his the epitome of bsd. he optimizes leverage!
Typical Structure of deal:
Cardone is General Partner and investors are limited partners.
35% investor money. 65% borrowed from banks.
6% preferred return first to investors that drop money. mortgage is typically about 6%.
fees: 1% acquisiton, 1% management fee, 1% disposition
During disposition, there is a 65/35 split, with 35 going to cardone capital.
https://www.youtube.com/watch?v=7hHI6kYz9So
anyways this is from what i found out. grant typically targets premium properties with 200+ units and 90% to 95% occupancy rate charging below average rates with a ltm cap rate of 8%+. his goal is to push the rent by an additional 20%. Investor returns net of management fees is typically 10%-15%. Once it has appreciated enough, he sells the properties adn this is the majority of his profits.
His First Deal
At 29, Cardone finally put his more than 14 years of real estate studying into practice. He bought a single-family property in Houston that initially did well. However, after a few months, the tenants left, and Cardone’s cash flow dried up. He often jokes about the experience saying, “My occupancy rate moved from 100% right down to 0%.” He hated the fact that he had to lessen the focus on his main business in order to find new tenants. Afraid that this situation would recur, Cardone quickly sold the property, broke even and swore that he would never purchase single-family residential real estateas an investment ever again.
Subsequent Acquisitions
Cardone’s second acquisition did not take place until five years later. During that time, he continued to accumulate cash as well as increase his property investing knowledge base. His first multifamily-property deal was a 38-unit complex in San Diego. Cardone acquired the property for $1.9 million, making a down payment of $350,000. Just over a month later, he acquired another complex.
Cardone continued to purchase more complexes – at first, one at a time, though the pace later picked up. In 2012, Cardone Acquisitions made what was dubbed Florida’s largest private party acquisition of multifamily real estate, a portfolio of 1,016 apartment, spread over five apartment communities, for a total of $59 million.
His real estate holdings are based in Alabama, Arizona, California, Florida, Georgia, North Carolina, Tennessee and Texas.
