Lets talk about Grant Cardone and why I don’t buy 16+ unit properties

Lets talk about Grant Cardone and why I don’t buy 16+ unit properties



I’m often asked why I’m not investing in 16+ unit multi-family properties like Grant Cardone highly recommends. While I have nothing but massive respect for him, …

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37 Replies to “Lets talk about Grant Cardone and why I don’t buy 16+ unit properties”

  1. This at least is solid advice. Never ever listen to Grant Cardone he might be a successful motivation speaker but don't take any propertie advice from someone how directly profits from one of the biggest real estate holding company of which he is a part of. I am speaking of Scientology they provided him with most of his big buildings for far below market prices. So if you don't have powerful and rich connections continue listen to Graham and don't get scammed

  2. I don't recall anything on there about the initial down payment to even purchase something with 16 units. Getting that kind of cash together would be difficult for a lot of people only investing in a 16-unit or bigger. It would be a con for a lot of people it would be difficult to get a down payment to start doing something like that.

  3. Hi Graham,

    I think you are missing a few key points regarding the logic behind Grant Cardone's investment criteria.

    1. Occupancy rates: 15% vacancy rate is averaged from a large number of properties, which is not necessarily representative of performance using smaller sample sizes. While using the market average can be a quick way to estimate potential income of a single unit, you are not taking into account the higher monthly vacancy rate variance that can occur when you do not have enough units to "smooth out" the numbers. With smaller investments (1-4 units) you are more likely to witness extreme fluctuations in overall vacancy on a month to month basis given the scales involved, ie if grant's property has a 1.8 month vacancy per unit per year, he only sees a minor 1% effective change in income at any given month assuming equal distribution of vacancies. (1.8 divided by 12 divided by 16). On the flip side, 1.8 months of vacancy on a unit per year with a 4 unit or less building has a much higher effective change in income (4%-15%) at any given time. This doesn't take into account the higher risk from complete loss of a single unit (40% effective yearly vacancy rate) vs with 16 units (21.25% effective vacancy rate).

    2. Capital efficiency/costs: 4+ unit properties are generally priced at lower cost per sqft, effectively buying wholesale vs retail. 4+ Units generally have better access to lower rate lending that are based on the asset and not the investor. I have investors that get as low as 3.2% loans on their MF properties, some are interest only loans too. Meanwhile, a 1-4 unit falls under residential lending rates and averages as high as 5%. Selling costs much less than residential for these types of deals. Cost per unit for renovation and repair is much lower, and insurance and maintenance costs per unit is lower as well. Utilities are more efficient, and management is easier and cheaper per unit as well. 4+ units are also easier to sell than single family because they are less connected to "feelings" than they are to pure numbers, and a good investor can make a 4+ unit shine easier than a 1-4 unit.

    3. Income: 4+ unit properties generally achieve higher returns than 1-4 properties by a factor as high as 2x. Cap rates on MF go around 4.5% in solid areas, whereas residential units barely break 3% in those same areas.

    4. Taxes: 4+ units get to take advantage of higher potential tax write offs and are easier to achieve 1031 exchange eligibility.

  4. There are so many individual
    factors in each situation, buying a duplex is great I own 4. I got two for $20k, 1 for $40k the other for $57.5. Only in Central Florida. Duplexes are better because it's a little house, people would rather have the feel of a house than a condo…I dont think like that I need 32 doors so I survive if 5 DEFAULT,… LOL to negative!

  5. Guessing in LA where rent is crazy. Prob charge 2000 or more a apartment door have 70 doors and have huge cash flow. Let the kids who inherits the place help pay it off lol. Could be some people’s mindset

  6. I am a broker investor also in Florida. I buy SFR (houses) one at a time. I can sell any house, (get in escrow) in less than 7 days if priced right, maybe 2-3 weeks tops, because my purchase criteria is very good and I adhere to it. If you have 16 houses, just like 16 apartments you have the same vacancy rates, it will be 3-5% of PGI (gross rents) if you manage well. Graham is not a syndicator, he is a RE Investor, and does not have to file with the SEC and share profits with investors. He is the BOSS. You can get wealthy buying them one door at a time, or even duplexes. Apartments are very complex and not for the average RE Investor. In the real world that I operate in, most folks would be very happy to just have enough cash flow coming in every month to cover their monthly nut, say around 3-5k. And you can do that very fast with around 5-15 houses, mobiles, lower price duplexes. Great content Graham, just say no to avocado toast!

  7. The only thing keeping me from subscribing to your channel is the length of your videos. I feel like every second or point you make is drawn out or milked for some reason.

  8. hey brother, just started watching some of your content because I do see you're genuine and you have very good stuff to say. Feedback: The amount of times you clarified that you dont disagree with GC and the amount of energy you spent protecting yourself from criticism is evident. It's not your fault and I cannot judge what one may feel when viewer support affects your livelihood (as a Youtuber). I do, however, recognize how careful you were and the true underlying reason (people are too sensitive and ignorantly outspoken), and this sucks! I guess my feedback is dont be too prudent so you can get to the point 🙂 Thanks for the videos

  9. In LA your paying what? $600,000 a door? I am paying $50,000 a door in Fayetteville, AR. In LA your making equity. In other parts of America your making cold hard cash.

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