Grant Cardone's "buying apartments" show.

[Brandon Hicks]

I loved his podcast. I bought his 10x audio book and just started listening to his Cardone Zone podcasts. Wow. His real estate advice is....almost horrible. If he really analyzes deals this way then he HAS to put 25% down to have them cash flow. It's buying cash flow vs creating cash flow. Not knocking the guy because he obviously is crushing all of us but I was disappointed in what I heard. I'll still listen to his other shows but I'll likely cringe through the real estate ones. If he had learned to buy more creatively he'd already have a billion in real estate assets.

[Ben Leybovich]

@Brandon Hicks - it's a little more complicated than this.  Let me explain:

RE to Grant Cardon is not a business - it is a place to store and grow wealth that he generates elsewhere.  He says he wants to learn NMD, which means that he would have to change his perspective, but thus far he has done very well buying Cash Flow.

The thing is - he generates $2 mil. of cash flow in his business, which is highly taxed because it's earned income.  So, Grant's priority is to convert the face value of that lump sum into passive, and the best way to do that is RE.

Furthermore, there is the concept of time-value of money. So - now that this cash is sitting in his bank, what can be done to have it invested for the most after-tax ROI. Projecting this thinking 3,4,5 years ahead lands us at the door of the mathematical concept of Net Present Value (NPV). Which answers the following question for Grant:

 If I were to dump $2 mil. into a piece of real estate, and receive a set of cash flows over a set period of time in exchange, would I end up better off after-tax than putting this $2 mil. into something else adjusted for opportunity cost and inflation...?

Something like this :)

Now - to frame this question, Grant must use what's called a "Discount Rate", which is essentially the opportunity cost.  As in - I can get 8% by re-investing in my company; will making a down-payment on RE be net positive, break even, or net-negative relative to this discount rate of 8%...?

Thus, for someone like Grant, the best thing may very well be to dump the money into RE, even if that means buying CF.  The point of my article, and what I said on his show, was not that he is wrong about the way he is doing it - if I could do it that way, I would.  My point was - if you can't do that, is the best thing to do nothing, or is doing NMD better?  My answer is that even though NMD is definitely a hustle, it's better than nothing!  And where he is wrong is to suggest otherwise, which is what I called him out on :)

After all, there are grave costs to doing nothing.  And we, NMD guys, because we have so much more cost associated with doing business in RE, have to pick deals with arguably better margins than Grant Cardone...

I am thinking of writing an article on this.  If there's an interest, I might do that.  Hope this helps :)