Tracy Ellis

Real Estate Magazine

Edition 6 Features

Grant Cardone On Multi-Family Real Estate

If you haven’t yet heard the name of Grant Cardone he takes the responsibility, because he 4lives with the duty of letting the world know his name and his mission.  He is a New York Times best-selling author, international speaker, and considered the top sales training and social media expert in the world today.  He wants to reach out to and help all 7 billion people on this planet.

Grant goes by the mantra, “Success is your duty, obligation, and responsibility” and believes 3that people need to rise above outdated, unworkable middle-class myths perpetuated by society in order to achieve true freedom for themselves and their families.  Grant has helped Fortune 500 companies such as Google, GM, and Morgan Stanley, but he came from modest beginnings.  Born and raised in Lake Charles, Louisiana, Grant lost his dad at a young age. His mother had to keep finances tight in order to provide for Grant and his siblings.

After graduating from McNeese State with a BA in accounting, Grant had very few connections 2and half-heartedly went into sales.  It wasn’t until the age of 25 when he made a commitment to becoming a professional in sales that things began to turn for the better.
After becoming successful, Grant kept the pedal to the metal and became a highly sought after international speaker and began to regularly appear on Fox News, CNBC, MSNBC,, and the Huffington Post.  He also authored not one—but five—revolutionary sales and entrepreneur books, including New York Times bestseller If You’re Not First, You’re Last.

He also developed the first online training platforms of their type, Cardone University and Cardone On-Demand.  Never before had there been such a revolutionary product for training available to the automotive and sales industry.  With over 12-million user logins, this on-demand virtual training program gives access to salespeople on any phone, tablet, or computer.

Today his straight-shooting viewpoints on leadership, the economy, small business, retail sales, employment, and headlines have kept him relevant to entrepreneurs and Millennials.  As Grant says, obscurity is your—and his—biggest problem, which is why he wants to reach 7 billion people.  You can’t do business with someone if they don’t know who you are!

In addition to his sales training platform, Grant has extensive real estate holdings.  I had the privilege to talk to him about his thoughts on real estate recently, a topic he is more than familiar with.  Grant relocated from southern California to Miami a few years ago and now hopes that he can invest a billion into the state of Florida before the close of the decade.  He said that there are many reasons to keep buying properties in Florida because it is a great place when it comes to investing in real estate.

Grant lives in the beautiful Regalia, a contemporary luxury residential condominium oceanfront masterpiece featuring characteristics that have never been constructed before in any Miami skyscraper.  Grant only deals in multi-family units, and when asked explained, “I have been buying apartment properties for almost 25 years. By selecting the right properties in the right locations and then being very smart in how I manage the properties, they produce a number of benefits unmatched by other investments.”

While luxury real estate has great benefits, Grant prefers multi-family for protecting and growing his wealth.  He wanted to share with my readers his 9 reasons to invest in income producing real estate:

#1 Dependable Income Stream
One of the biggest benefits to income producing Real Estate Investments is that the assets are generally secured by nine to fourteen- month leases.  This provides a regular and dependable income stream that should produce positive cash flow higher than typical stock dividend yields.

#2 Multiply Asset Value through Leverage
Another important characteristic of commercial real estate investing is the ability to place debt on the asset which is several times the original equity.  This allows you to buy more assets with less money and significantly multiply asset value—$100,000 can buy $300-$400k in property.

#3 Multiply Cash Flow with Low-Cost Debt
Placing “positive leverage” on an asset, allows for investors to effectively increase positive cash flow from operations by borrowing money at a lower cost than the property pays out.  For example, if a property generates a 6% cash-on-cash return were to have debt placed on it at 4%, the investors would be paid 6% on the equity portion and approximately 2% on the money borrowed, thereby leveraging debt.

#4 Debt Reduced by Property Income
The debt on the property will be reduced by the income of the property’s net operating income, NOI.  NOI is figured by the gross income less all expenses before debt.  The NOI will sufficiently fund the debt payments thereby reducing the debt balance and creating equity.

#5 Inflation Hedge
Real estate investments have historically shown the highest correlation to inflation when compared to other asset classes such as the S&P 500, 10-year treasuries, and corporate bonds.  As countries around the world continue to print money to spur economic growth, it is important to recognize the benefits of owning income producing real estate as a hedge against inflation.  Generally speaking, when inflation occurs, the price of real estate, particularly multi-tenant assets will also rise.

#6 Physical Asset
Income producing real estate is one of the few investment classes that as a hard asset has meaningful value.  The property’s land has value, as does the structure itself and the income it produces has value to future investors.  Income producing real estate investments do not have red and green days as does the stock market.

#7 Tax Benefits
The US Tax code benefits real estate owners in a number of ways including no limit mortgage interest deductions and depreciation accelerations that can shield a portion of the positive cash flow generated and paid out to investors.  At the time of sale, IRS allows investors a 1031 provision, allowing investors to exchange into a like kind instrument and defer all taxable gains into the future.

#8 Pride of Ownership
The right property in the right location with right tenants and right ownership mindset can produce a tremendous pride of ownership factor that is highest among all asset classes.

#9 Appreciation of Asset Value
Income producing Real Estate investments have historically provided excellent appreciation in value that meets and exceeds other investment types.  Properties historically increase in value as the net operating income of the property improves through rent increases and more effective management of the asset.   Grant emphasized that while no one can ensure the future of rents or income properties’ values this asset class seems positioned to continue to benefit from a number of other social economic issues.