Epic Real Estate Investing - Marketing, Investing Advice and the Future with Grant Cardone | 308

Episode Date: October 20, 2017

Grant Cardone sits down with Matt Theriault for a casual conversation about marketing as a real estate investor, the importance of sales training and Uncle G doles out some timely investing advice and discusses the future of real estate. Success, wealth, business, and so much more... It's Financial Freedom Friday! Enjoy! ______   The free course is new and improved! To access to the two fastest and easiest strategies to a paycheck in real estate, go to FreeRealEstateInvestingCourse.com or text “FreeCourse” to 55678. What interests you most? • E.ducation • P.roperties • I.ncome • C.oaching Learn more about your ad choices. Visit megaphone.fm/adchoices

It's time for Financial Freedom Friday with Matt Terrio. Now, this week, we're going to take a break a little bit from our normal format as we are blessed with a very special guest, a guest who really needs no introduction, but just in case you've immersed yourself here only with regard to your financial information, I'll give you some bullet points. Our guest is CEO of five privately held companies with annual revenues of over $100 million. He's a real estate investor with a portfolio of over 4,000 units. Forbes magazine says he's the number one market. marketing influencer to watch in 2017. New York Times bestselling author of seven business books. He writes for Forbes, Success Magazine, Business Insider, amongst other very prominent publications. And he's creator of the number one online sales training system in the world. So please help me welcome to the show,

Mr. Grant Cardone. Welcome to the world of epic real estate investing in the Epic Wealth show. Hey, Matt. Thank you so much. Appreciate you having me. You bet. You bet. So great to have you, Grant. And, you know, I'm famous here for touting that we aren't really in the real estate business. It's not our primary job as real estate investors. We're more in the marketing industry first and then the problem solving industry second and then the real estate industry. And with that said, you know, Forbes calling you the number one marketing influencer to watch in 2017. I thought this was a great opportunity to ask you about, you know, what's new or what advice would you give to real estate investors with regard

to marketing? Well, I give you an example. And Matt, thank you for having me on your show. I really appreciate it. I'm doing a deal right now with Fairfield Residential. They're probably top five apartment owners in the world. They're own, their subsidiary of a company called Brookfield. This is a monster, monster company. And I tell you that set the stage because these guys are not, they're not using social media or Instagram or Facebook. They're not using, they don't need to, right?

There's a multi-billion dollar company that sells big real estate projects, office, apartments, et cetera. I'm doing a deal, off-market deal in Houston, Texas. the deal is $80 million. I found it doing the old conventional looking in a market, boots on the ground, shopping product, right? Right. Found out who owned it.

It was Fairfield, put an offer for it off market. It goes to the guy that's going to dispose of products. He's the decision maker in the group. His son sees my name on his calendar. His son's 23 years old. and his son's like, you got a meeting with Grant Cardone? How do you know Grant Cardone? What are you doing with Grant Cardone?

He's like, what do you mean, Grant Cardone? He's like, I don't even, he's like, his son knew me because of Snapchat, YouTube, and Instagram. So, you know, I'm 59 years old. My wife says you shouldn't tell people that because then they put attention on your age. But I use every one of these marketing devices as a way for me to control my message. my brand to get known money and opportunity follow attention if you don't get attention um you you can you can you can you're going to miss opportunities you're going to miss gigs you're going to miss deals if people don't know you um it's just better off it's all it's always been said it's not what you know it's who you know and today

it's not who you know but who knows you right right absolutely you know um i was you know, several years in real estate before I ever had any sort of presence or had a podcast or anything like that. But once I had the podcast, we're going on almost nine years now. And my actual real estate has exploded much more than the educational business that we run has ever done just because of people who knows me, right? Yeah, yeah, yeah. I get it. I get it. So another way that you get people to know you are through writing books, and we have that in common. You're a New York Times bestselling author of seven books.

That we do not have in common. So congratulations. Which one would you say is your most important book and why? Probably, can you pass me that book? Probably my most important book is the one that took me the least time to write. This book took two hours. Okay, it took two hours to write this book. It's called The Millionaire Booklet. It's 44 pages long.

It's been transcribed into 38 languages. It sold more copies than some of my books that have been out for seven years. It's a book about money, and it's about a book about money that really disrupts the way you and I were trained by our parents or other generations about money. And it really shows people the three major concepts of money, why people don't have it, what they would have to do to get it. And it simplifies without you having to go call somebody on Wall Street or a financial planner, how can you get it, how can you keep it, and how can you multiply it? Is that available on Amazon? Yeah, you actually can get it at my site free, Millionaire booklet.com. All right, that's simple.

Perfect. All right. So another thing you've got here to your credit, you've got the number one online sales training system in the world. So who's your ideal student for this training? Who is this benefit? Well, probably two students. Number one is a company that has a sales team.

So companies like Toyota General Motors, Auto Nation, Sprint. Google, a lot of military people, over 20,000 military people that are in transition coming back. We provide that platform, a version of that platform to them to help them transition back into civilian life, finding a job and becoming useful, making money and creating financial freedom. Because the first thing with money is you need to get it. You know, a lot of people, when you talk about real estate,

they're like, how do I buy real estate with no money down? you know, I mean, really you don't. You're either going to trade time or you're going to trade money or both. So how do you get money is the question. How do you trade time for money? Somebody else's money, there's no shortage of it. And so the core groups that would do this is a company that's trying to get more revenue. Our job is to increase the revenue of a company.

That's the only thing we do for companies. And the second person would be an entrepreneur, an individual, somebody trying to either sell a book a product, a service. So we've had, like last year, we had 33 million lessons delivered to entrepreneurs in that platform. So you said a corporate type sales force and then obviously the individual entrepreneur as well. Yeah, like we put Sprint. Sprint was put on our program last year. The state of Florida, it was a trial run for the state.

We just took the state of Florida. The state of Florida was the only territory. in the country that exceeded their corporate targets. Got it. Where did you hone your chops in sales? What's that history looking? I grew up in late Charles, Louisiana. I got out of college with an accounting degree that became very useful in my real estate

background later and running businesses. But I was trained as an accountant in college, got out of college, couldn't get a job because it was 25% unemployment, had to take a sales job, which I was. I hated. Hated sales. Hated talking to people. Hated the small talk. Hated the uncomfortable meeting. And it was a retail sales job. And then I was 25 years old. And as much as I hated it, I realized that that's what I had to do at that time to make any money. So I started grabbing people's sales programs. I'm like, maybe there's a course on sales. And so I started studying. other people found out there was an actual way to do this thing that made it faster and more

effective and studied it until I became a master at sales and became so good at it, I started teaching it to other people and even challenged in some of the old ways of doing it. And so when I left that sales job, my next and first business was basically changing the way an industry handled their retail sales. Very much similar path to most educators and most instructors. Yeah. You get really good at something. And it's just natural, you know,

they always say that I think the saying is those that can't do teach, right? And I really think that those that can do that and they do it really well, they can't help but teach. Yeah, yeah. And I think to add to that, like those that can't do teach, those that can do, teach and do. So, you know, one thing that I've done, like my sales career, I spent five years getting an accounting degree. I've spent, I don't know, 25 years working on sales.

And somebody said to me today, why do, why would you spend 25 years? Sales, that deal I'm buying for $80 million in Houston, if I didn't know how to negotiate, communicate, get somebody on the phone, get through the gatekeeper, I would have never gotten the guy. It's an off-market deal. Right, right. Okay, when it gets announced that I bought this deal in Houston, Texas, I will have the attention of every apartment owner in, in the state of Texas, probably in the whole country. That's how big this deal is. Right.

And I got that deal, not because I'm a real estate investor, but because I know how to call people, talk to people, communicate, negotiate, handle objections, be thrown off, call back, you know. So that's the game that's, you know, the Elon Musk and the Steve Jobs and the Jesus Christ and all the guys that you and I know the name of somewhere along the way, they learned how to communicate whether they wanted to or not. Right. They learned how to communicate and persuade.

It's the highest paying skill and you should never stop working with it, right? So tell me, Grant, what's in your near future that has you super excited? We currently own, you mentioned it, we own 4,000 apartments. My goal is to go to 40,000. Okay, I've been, we, I have resisted allowing other people to invest with me for years. And I've had brothers and. sisters and moms and mother-in-laws and business and business partners and clients ask me to invest with me for years. And so we've just opened that up. Cardone Capital is basically giving

ordinary people opportunities to invest in extraordinary apartment investment opportunities. This is not a reet. This is a true. It's not just a syndication like you hear most of the time where people go out and raise money. This is a true part. partnership created so that you can, others can invest with me so that I scale out my goal. I'll actually reach my dreams faster, but I'm giving people a real opportunity to take advantage of what I believe is an enormous opportunity in this specific product that we invest in. These are big 300 unit, 500 unit company. apartment complexes in great cities that provide cash flow in month one. We won't buy anything

that doesn't provide cash flow. And then on the exit should provide investors with 160 to 200 percent return over the term of ownership. And the term of ownership is how long? Anywhere from seven to ten years. Seven to ten years. Okay. So it's more of a longer term commitment? It is without a doubt. And one of the things that we wanted to create was I've been doing apartments for almost 30 years now. I've never lost money in an apartment deal. And the reason why is, number one, I have an extremely good picker. I'm very, very, very, very selective.

Number two, I will move to different parts of the country when necessary. And number three, I don't have a time horizon. That means I don't sell until I double or triple my money. Good returns. So we expect to pay my brother invest in a deal with me. I expect for him to walk away with 200%. I expect a deal to do north of that so I can benefit as well. So those are the kind of opportunities we're looking for.

If someone had an opportunity like that and wanted to share that with you, what would be the best way for them to do that? Well, number one, I mean, the first thing we look for is not investors. The first thing we look for is product. So if you have a deal that's got 250 units are more in any of the top 20 markets, you can go look anywhere online and say what are the top 20 real estate markets or apartment markets. We're not doing single family homes. We don't do office.

We don't do retail. We do one thing. $1,200 a month rents. Not $3,000 month rents. I don't want any new product. I'm not stabilizing products. Okay. I'm not buying, we're not doing a brand new thing in Fort Lauderdale.

We're buying $900 to $1,200 month rentals, good location. nice product. We're not doing $4,000 a month rents. And we're doing it in markets. So you would just send me an email to grant at cardonecapital.com if you have that deal. You know, none of us have a crystal ball. Obviously, it's a cliche at this point. But we've been on a long run with the real estate market, been going really well for, I don't know, if you look in history, it's seven, eight years cycles and we're approaching nine years almost. Yeah. How is that impacting your actions and your thoughts right now? You know, the best thing that could happen to me right now is that the, I mean, first of all, we're talking about a lot of different spaces within real estate. In 2007, when the economy crashed, when we had the worst housing correction in the history, my occupancy went up, not down. So I didn't lose any product. Every one of my buddies lost. They didn't lose everything they had. They lost everything they had and all the money they had. I know builders all lost. I didn't lose anything. Right. I had a bank that I owed $50 million, $48 million to failed. I didn't lose anything. I didn't miss a payment.

Didn't lose anything. Couldn't sell anything at that time because everything freesed up. So the thing that I would tell everybody is, yeah, we're long in the cycle right now. We will have a pullback. Number one, if you wait for the pullback, you'll never be a player in real estate. The thing to do right now is to focus on a product type. that is invincible and inverteable and actually would be improved if there was a pullback. So the best thing that could happen to me right now would be a 9,000 point correction in the stock market.

I would love to see unemployment go from four and a half to about six up. I'd like to see unemployment go back the other way. And I would like to see a recession that would last about 18 months. I mean, I know everybody's going to be like, dude, you're like, what's wrong with you? Nobody wants that. It will happen. It's going to happen. And I'd rather it happen sooner than later. And it would be, it would, it would be good for me, not bad for me. Because they become tenants. Because what happens, exactly, because the guy that bought the house will get rid of it. Okay. The equity in that house is gone. If you own a home, by the way, you should sell it right now. If you have equity in a home, you should get it out right now. Sell the house. Get your equity. okay 90% of all homeowners should not own a home they should own rental property right that you can

rent to other people so um first of all the home the home we're at the lowest home ownership even with the results the the facts that you stated about a nine year cycle we're still at the lowest homeownership in the history of the United States so that tells you that we have a changing demographic okay we have the lowest unemployment in 20 years we have the highest stock market in the history of the world, and we have the lowest home ownership. Why is that? We have cheap money,

and we still have a lower home ownership than we had 10 years ago, okay? Because people do not want to own homes anymore. People, the way people live is changing, just the way they drive their cars, okay? We weren't talking about call somebody up, they'll pick you up, and you can just pay for your drive there and back. You know, today, today we're talking about that. We weren't talking about that six or seven years ago.

Now you can Uber anywhere. Okay. So, used to be when you went on a trip, you didn't have the alternative to go Airbnb and somebody's home was open maybe for you to live in. Everything's changing now. Right. Okay. That changes the hotel business dramatically. I would not want to invest in hotels right now.

Right. Right. But if you look at the apartment thing, there is no condition. there's no condition that can happen on this planet, short of Rocket Man, the North Korean situation, there's no condition in this planet that if it happened would not improve what we're doing, which is a $800 in, you know, Mobile Alabama, it's an $800 rent. In Houston, Texas is $1,200. In Miami is probably $1,400.

That's that space that we're looking at that we think is a protected rental ban that only goes up, not down. You know, Grant, it's really been a pleasure. I saw you on the calendar. I really, I had no idea what to expect. And it's very comforting and encouraging that we're on the same page. I think we're of like mine for sure. If someone in the audience today wanted to get more information about you and your ventures, I know we gave out the book domain, you gave out your email. Thank you for your generosity there. Where would be ultimately the best place for them to start? You know, the real estate people should go to cardonecapital.com. You can see the product that we buy. You can see the kind of, you can see what we own, what we're looking at, how we pay people,

what our story is, why it works. You'll probably understand very simply why we don't lose money. And I mean, I've made a lot of mistakes in real estate. Happy to discuss them. The one mistake I've never made is I've never lost money in a real estate deal. Never. Because we look at, we, I'm just extremely disciplined. And this is the mistake that most real estate people make. They're not disciplined. and they start too small and they start with a budget. Okay, anybody that owns a twoplex, a fourplex, an eightplex, you need to beware right now. You're going to get hurt.

The only thing that has to change when you own 24, six, eight, 12, or 16 is insurance rates go up. If insurance rates go up, you could get cut in half immediately. So it's not just about rent. It's not just about the debt. There's a lot of other little plays inside that would show you that, that would show you that in most cases, the smaller unit deals don't produce enough cash flow to take care of any changing condition.

So we look for these bigger complexes. Like there's a shortage of 300 units. There's no shortage of two and four, twoplexes and fourplexes in America. They're all over the place, every city. But there's a big shortage. You go to Los Angeles or Seattle or Denver. There's a shortage of 300 unit complexes.

in desirable cities. So people could go and check out what we do at Cardonecapital.com. You know, you said something, you haven't lost money because you're disciplined. And you might have already answered this question, but if you were to like really sum that up and give someone a really golden nugget to go walk away with, what's the area that they should be disciplined in? What is like hard and fast rules that you won't break? There are something that you could relay.

Well, I used to look at like 30 deals to buy one deal. Now I look at 100 deals to buy one deal. Again, this goes back to what you're saying about long. the tooth, a lot of greed, a lot of pricing premiums right now. All I did was this. I just increased the number of deals I look at. So I have to be more selective, right? I have to do more homework. I have to spend more money, time, and energy looking at deals. So number one, I would tell you, you should be using something like a hundred to one or a hundred to three ratio. You need to look at a hundred deals to feel good about buying one, two, or three. Number two, I would, I would,

use cash flow. If it doesn't provide cash flow in month one, don't touch the deal. Okay, if it doesn't provide cash flow, if you got to wait four months, don't do it. All of the out there, they're like, oh, we're going to build, I'm going to build because it's cheaper to build. There's no cash flow. Don't do it. I'm telling you, builders, 90% of every builder that you'll meet in your lifetime, probably 99,

will go broke. And they always go broke on the last deal. They make a bunch of money on the first three deals and they lose all their money in the last deal. Why? Because there was no cash flow. The reason I didn't lose anything in 2007, 2008 and 2009, I had cash flow. Property value came down. So what?

I wasn't selling that day anyway. The cash flow didn't change. I kept getting my check, right? It kept paying the debt. So the third thing I would tell people to do is I would use a worse case scenario. So we buy everything on a trailing 12. We don't buy it. When a real estate broker shows me a performer,

performa means in the future, as you know. I don't, like, I don't even look at those pages. I just pull them out of the book, throw them away. They're useless to me. I can make shit up by myself. So all I want to see is what did it do in the past? Trailing 12, worst case scenario. And by the way, I'll go back to as far as I can go back with their books,

depending on how good their books are, what was the worst year they had? Because I expect Matt to revisit a worst year at some point. Can I hold on during a worst year? So like I'm buying a deal right now. I think I'm going to get 4% out of the deal in the first year. So I don't delude myself. I increase my taxes.

Okay, I increase my payrolls a little bit. I increase my expenses. I do not increase my rents. I assume that my rents are going to stay flat. It's not true. They're going to go up, particularly if I have a 10-year time horizon. But I still make my decision based on flat rents and a gradually increase in expense ratio. And I say, can I buy this deal?

So that when I go home at night, I say, hey, we're going to earn 4% on $10 million. I'm going to earn $400 grand. People are like listening. It's like, what? I'm going to earn $400,000 and I put $10 million in the deal. and they're like, you're crazy. No, because sooner or later, that thing's going to pop, and I know it. The top's going to come off that deal.

Also, I'm going to look for a lower cash flow than a higher cash flow. So those of you out there that are chasing cap rates, you're chasing cap rates, you're not going to make money in real estate in this market. I'm not chasing this cap rate. I'm chasing this cap rate. So you want the lower cap rate right now because with discipline and look, at 100 deals, it suggests to me that I'm buying a better location. And if I'm actually looking at product, 250 to 300 units with $1,200 month rents, there's a shortage of this product in this country.

Oh, you got to do is, what city are you in today, Matt? I'm in Los Angeles. Yeah, well, I mean, there's none of this. No, nothing. It doesn't even exist. When I just described, you cannot find, you can't find one address that sold with that description in the last 24 months. Probably right. Probably right. So you go to West Hollywood, you're going to say a 24-unit deal is a big deal. So now the point of that is this, when the Chinese come over here and buy, when the South Americans start discovering multifamily, because these things, this multifamily apartment space that we take for granted, the rest of the world doesn't even know exists. When the people in England, the UK, you can't go buy 180 units in London, okay? those are flats. They're called apartments there. They don't even have apartments. Those are actually homes that you own. So I just, we're very, very disciplined. Again, worst case scenario, positive cash flow and the 100 to one rule. Great advice. All righty. So Grant, let's do this again sometime. Sound good? Matt, I appreciate you having me. Thank you so much. You bet. You bet. All right, everybody. What did you learn today? What did you notice? What insights did you have? Stop the treadmill. Pull over the car. Stop what you're doing. Grab.

Grab a piece of paper, grab a pen, write down at least three steps that you could take with the new insights and the ideas that you got today. And, you know, really, if you don't, your time here today was wasted and life is just too damn short. And luckily, we got a rewind button. So if you missed anything, go back, rewind it, take notes. And it only works if you actually apply it. All right. So on behalf of Grant Cardone and myself and the epic real estate investing show, that's it for today. I'll see you next Wednesday, where we'll resume creating your epic wealth.

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