(ThePennyWatcher.com) – Are you interested in becoming a successful real estate investor and salesperson, but struggling to make headway? Take inspiration from success story Grant Cardone – master of real estate and sales.
From humble beginnings, he was able to rapidly scale his businesses and reach new heights by implementing strategic advice that made his dreams into realities.
But there is more to “Uncle G” that you might think. Let’s take a deeper look at the inner workings of Grant Cardone’s message on achieving success when it comes to real estate investment and sales tactics.
Through understanding his successes, we uncover the essential principles that anybody can use as stepping stones for their own success!
Get excited – let’s dive into what lessons can be learned directly from one of today’s greatest business minds.
Grant’s Unwavering Belief In The Power of Real Estate Investing
Real estate investing has long been recognized as a powerful strategy for building wealth, and one person who has mastered this approach is Grant Cardone. Through his extensive knowledge and experience in the business, Cardone has amassed an impressive real estate portfolio worth hundreds of millions of dollars, approaching 1B actually.
But what really sets him apart is his infectious passion and unwavering belief in the potential of real estate as a means for achieving financial freedom. Understanding the ins and outs of real estate investing can be a game changer, and by following in Cardone’s footsteps, you too can unlock the power of this lucrative investment strategy.
So if you’re ready to take control of your financial future, dive into the world of real estate investing and see just how far it can take you.
Incentives Are Huge!
Real estate investment has been a popular strategy among investors for its potential to generate consistent returns and passive income.
For Grant, the key lies in the incentives that come with investing in this asset class, hard assets to be exact. Unlike stocks or bonds, real estate provides tangible assets that can appreciate in value over time. And real estate investments can come with tax benefits, passive income streams, and long-term appreciation potential. All these incentives make real estate a compelling choice for investors looking for stable, long-term returns.
At the end of the day, we are talking about hard assets, meaning people everywhere will always need a place to live, and will always budget in their monthly payment to keep their housing. It’s a no brainer, and investing in this exact reality allows entrepreneurs to lock themselves into both an immediate monthly cash flow opportunity, and continuing to build long term equity with whatever asset you may have.
Multi unit Apartment Buildings: The Gold Mind
Grant is unwavering in that Investing in multi-unit apartment buildings is the best way to generate long-term passive income and build wealth. Not only do these properties offer the opportunity for significant cash flow, but they also provide a hedge against inflation and the potential for appreciation over time.
Grant preaches that although smaller unit properties can give you a taste of this general model, it is no option if you want to strive to build generational wealth that will set you and your family up for lifetimes to come.
By owning a multi-unit apartment building, you can spread your risk across several units, resulting in a more stable investment. Plus, with the rising demand for rental properties across the country, there’s never been a better time to invest in this type of real estate.
Consider A Self Partnership In Real Estate Investing
If you’re looking to invest in real estate but don’t have a partner, have you considered a self partnership? This is when you invest in real estate as an individual, but create a separate legal entity to manage the investment.
Essentially, you’re partnering with yourself to maximize tax benefits and liability protection. This can be especially appealing to solo investors who want to take advantage of all the benefits of partnership without the hassle of finding a reliable partner. You’re the owner, and you manage the property. Many people think it’s complicated but it’s not. This LLC setup protects you for all damages caused by others, banks require it to protect assets.
If you don’t form any sort of a partnership or LLC for smaller 6-8 multi family investments, you don’t put you in a position to protect yourself in court. It’s just too small of an operation that exposes you to far too many liabilities.
Just be sure to consult with a lawyer or accountant to determine if a self partnership is right for you.
Syndicators
Syndicators are another way to go about investing in longer term assets, but its certainly a bit different. Syndicators typically raise 99% of the money from others in the marketplace, and then find the deals. So you can potentially get involved in very big deals without having to take on all of the leg work.
Syndicators are responsible for locating, closing, and managing the deal. They have little or no money down on the deal and ultimately are looking to sell the investment property for a profit at a later time.
You would partner with syndicators that are experts in the field. Could be a good option as an investor. They are set up to buy, manage and flip. It’s simple from a high level, but takes some hustling to connect with the right syndicator.
Grant has talked at length that this could be a great way to invest in outside markets, or other cities that may have otherwise been outside your grasp.
Get Educated With The Real Estate Lingo!
We have put together the most important terms that serious entrepreneurs need to know in the real estate game. These are common terms among all involved in the deal process, and a must know.
Some of these should be familiar to you, but others a bit more in depth, but should be just as familiar.
Cap X:
Expenditures that aren’t ongoing everyday expenses. You can write these off! Your bank and investors will ask “what is your capX” as you may have to dip into cash flow for a roof, or some other important repair.
Your lender will ask you about what “Cap X” do you plan on, so you can’t not know this.
Cap rate:
This represents the rate of return the property will pay the investor, if there is no debt on the property. The cap rate is calculated by the cash flow assuming no debt.
Example: 1M property provides 100K cash flow and you paid cash thats a “10 Cap”….or 10%
A high cap rate: Properties that have more problems in worse locations. Possibly provide more cash flow, but more risk.
***Cap Rate is before you put debt on a property***
Lower capo rates are better properties in better locations.
COC:
“Cash On Cash” : This is the calculation based on the cash in invested only. This is calculated by dividing the free cash by the cash put down to purchase.
Example: 250K down on 1M property, and make 10% on your money… That’s 25K of free cash, or a 10% COC return.
Closing Costs:
Appraisals, title, fees to bank, broker.
DCR:
Debt Coverage Ratio
How much debt you have and will it cover your NOI. Your NOI will have to be greater than your debt load.
100K/ year of full principal and interest
Economic Occupancy:
This is the % of the property’s income that is actually collected. Could be lower than the actual physical occupancy rate because some tenants may not be paying. This is the most important!
Physical Occupancy:
“Heads on Beds”
Ex: If 95/100 units are occupied thats a 95% PO
Effective Gross Income: EGI
Actual amount of Gross income actually collected.
Expense Ratio:
Is the total operating expense divided into the GOI (gross operating income)
Ex: If you have a $50K operating expense and $100K of GOI then your expense ratio would be 50%.
Any number below 35% is unbelievable and you should watch out for.
Look for an expense ratio of 35-44% and use 50% underwriting as a worst case scenario.
Expenses:
Lawn care, utilities, taxes, security, etc. Expenses you cant get away from but not major capital improvements like a new clubhouse or roof.
Stay Motivated, Hungry, and Educated
Grant Cardone has a variety of online tools and course where you can dip your toe in to see what may benefit you. Real Estate is a huge part of his success, and all we can tell is that he has assembled a great team and model to help him propel his deals into reality.
You don’t need a ton of money of your own, but you will have to educate yourself and learn to persuade some other investors to believe in you and your pursuit of multi unit apartment deals that will enable a generational wealth opportunity.
Some folks don’t really jive with Grants personality and delivery, but his message is intact at the end of the day. Educate yourself on bigger opportunities and deals, and learn the basics involved.
Stay motivated! And cheers to your first big deal.
