Grant Cardone investing in Cardone capital

[Account Closed]

Hi I'm looking into investing with grant Cardone through his Cardone capital. Curious if anyone especially not from the United States has invested with him. I'm from Canada and am looking for a more passive method

[Joel Owens]

Hi Sheldon,

There are many syndicators to invest with. Are you what is considered an accredited investor?

All I will say is I saw in the last downturn of 2007 - 2009 here in the United States the class A brand new multifamily was pummeled. The reason is the developers build class A because it is about the only rent per door high enough to pencil ground up development for multifamily. That and seniors housing/assisted living.

So when economy is strong high end income earners tend to have extra income from their jobs so feel okay paying top market rents. As soon as the economic cycle trends down on it's historical pattern then you have migration from renters of new class A multifamily wanting to move to older class A (5 to 10 years old) or class B properties that are still nice but rent is much less per unit. The saturation levels put pressure on class A newer multifamily and cause flattening of rents, rent specials, vacancy increases etc.

If you invest in class A I sure would not be investing in a syndicators buying a 4 to 5 cap and hoping rents year over year blend up by 3 to 4% annually. Historically over decades has been 1 to 2%. If you are going that route you might as well invest in ground up development where the large developer might have a 9 cap rate to cost (breakeven) into the project instead of investing in a 4 to 5 cap fully stabilized.

I liked multifamily 6 to 8 years ago at the bottom of the cycle and recovering upward but it is bloated and tapped out in many markets these days. You need some heavy value add to blend the cap rate up faster than regular rental increases. I do retail syndication but focus on value add. With any investment pay attention to the targeted equity multiples, IRR's, and how LONG your money will be required to stay in a project.

Good luck.