Cardone Capital Reviews: Who is Grant Cardone + Should You Invest In Cardone Capital? | WallStreetZen (2024)

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Wanna get into real estate investing … But don’t wanna be woken up at three in the morning when one of your tenants has an emergency plumbing issue? You may want to consider a crowdfunding real estate platform.

This article reviews a crowdfunding platform with star power: Cardone Capital. I won’t sugar coat it: I am not impressed by Cardone Capital. Below, in what might be one of the most comprehensive Cardone Capital reviews out there, I’m going to tell you why.

In the following sections, I’ll explain what Cardone Capital is, how it works, and what I think of it overall. I’ll also compare it to other crowdfunding platforms to help you decide if it’s a good fit for you and your investment objectives.

Is Cardone Capital Legit? Key Takeaways:

We’ll dig into these platforms later on, but for now, let’s get to why I’m not a fan of Cardone Capital.

After five years of working for one of the largest real estate firms in New York and investing in rental properties myself, I still turn to real estate crowdfunding for a good portion of my portfolio.

That said, I’m not a fan of Cardone Capital. But this review is designed to help you make that assessment for yourself. Here are some key things to know about the company:

• Cardone Capital was founded in 2017 by investor and social media influencer Grant Cardone
• Cardone Capital focuses on multifamily real estate investors
• The minimum investment for non-accredited investors is $5,000
• The company aims for a 15% internal rate of return (IRR) and 6% annualized returns from property income
• Your investment is locked for a minimum amount of time, typically between three and ten years
• Legal trouble has plagued both Cardone Capital’s CEO and founder, Grant Cardone, and the company over the last ten years

I’m going to cover everything in that list in more detail, but I want to highlight the fact that Cardone Capital has only been around since 2017. Seven years in business is not enough time to draw long-term conclusions about a company’s reliability in different market conditions, no matter what Cardone Capital reviews say.

That is not specifically to say Cardone Capital is unreliable or that its return targets are unrealistic, only that the company hasn’t been around long enough to know either for sure.

With that out of the way, let’s get down to business.

Who Is Grant Cardone?

Grant Cardone is a real estate investor, sales trainer, and social media influencer. He is well known for authoring several books on sales, marketing, investing, and entrepreneurship and is an unabashed Scientologist.

In his book, Grant Cardone reviews how to build wealth by investing in real estate and how to increase your conversions by learning the psychology and tactics of sales.

Mr. Cardone founded Cardone Capital in 2017 in Aventura, Florida. The company’s mission is to provide an easy-to-use crowdfunding platform that focuses on multifamily housing units.

Grant Cardone has been involved in several legal battles since 2015, including several levied at Cardone Capital.

In 2020, a client sued Cardone Capital for making false claims about investment outcomes. The lawsuit ultimately went in favor of the client, and the case produced the following damning quote from senior fraud prosecutor Paul Pelletier:

“It looks like his [Cardone’s] business is built on lies and deception that will likely collapse, leaving investors holding an empty bag.”

So, is Grant Cardone legit? It’s impossible to answer such a nuanced question concisely, but my opinion is that there’s enough uncertainty to steer clear of Cardone Capital.

Mr. Pelletier’s quote carries a lot of weight, in my opinion, and paints Grant Cardone as someone with whom I would not want to do business.

Cardone Capital: How It Works

Cardone Capital works similarly to other fractional real estate investing platforms. You purchase shares of an income-generating property to earn a proportional share of its rental income the same way that buying shares of a company on the stock market earns you a share of its value. Cardone Capital disperses the money it makes on its rental properties to investors every month.

The company has an internal rate of return (IRR) target of 15%, which means that it aims to generate returns of 15% over the entire lifetime of its investments.

For investors, that means that you stand to earn 15% on your investment when Cardone Capital sells a property you’re invested in—as long as everything goes according to plan.

Cardone Capital aims to have monthly disbursem*nts of 6% annualized from rental income, which is distinct from the 15% annualized IRR target since a large chunk of that 15% would come from the property’s sale. Of course, neither of those targets is a guarantee, and you should expect real returns to vary.

One way that Cardone Capital differs from platforms like Ark7 is that it focuses on multifamily housing. That—theoretically at least—makes the return distribution smoother since the property will still generate income even if some of the units are empty.

Single-family properties, by contrast, can have inconsistencies where they generate no income for several months if the company can’t find a suitable renter.

Additionally, multifamily properties are better investments due to economies of scale. Operational costs for managing a multifamily home don’t increase linearly with the number of units, while the rental income does. That means that multifamily properties are more cost-effective than single-family homes as rental properties.

The company offers tons of rental properties for you to invest in, either as a non-accredited investor or as an accredited investor as part of the company’s many funds. Its rental properties are concentrated in the southern U.S., with most of its locations found throughout Florida, Texas, Georgia, and Alabama.

Cardone Capital: Minimum Investment

The Cardone Capital minimum investment depends on whether or not you’re an accredited investor.

• The minimum investment for non-accredited investors is $5,000.
• The Cardone Capital minimum investment for accredited investors is $100,000.

The only benefit to being an accredited investor with Cardone Capital is access to a wider variety of funds. Non-accredited investors are not eligible to invest in all of Cardone Capital’s funds, which can be quite limiting since it doesn’t offer a ton of investment options to begin with.

Cardone Capital: Pros + Cons

I’ll be blunt: I think Cardone Capital’s cons outweigh its cons. However, I’ll give equal attention to the company’s pros and cons so you can decide for yourself what to think about the company.

Pros

Cardone Capital has a few things going for it, including the following:

• Passive real estate investing
• Investments are exclusively multi-family homes
• Monthly distributions
• Depreciation tax benefits

The biggest pro to Cardone Capital is that it gives you access to completely hands-off real estate investments in multifamily housing complexes. Some real estate investing platforms focus on commercial real estate, which is more affected by macroeconomic swings than multifamily housing.

In my opinion, however, the passive real estate investing perk outweighs the focus on multifamily housing, and you can get passive real estate investment opportunities from better platforms.

One nice perk you get from Cardone Capital is monthly distributions. Not all crowdfunding platforms pay you on a monthly basis. Having predictable monthly returns is nice to have.

Cons

The following list presents what I see as the main drawbacks to Cardone Capital:

• Low liquidity for investments
• Lack of control of your investments
• Lower returns than direct investing
• Short track record
• Hidden fees
• Questions about overall legitimacy

Let’s start with the easy ones. Crowdfunding platforms like Cardone Capital all suffer from a lack of control over your investments. When you don’t own the properties you’re invested in, you have no say over the way the properties are managed or when to sell them.

That leaves you at the mercy of your fund managers, which means you’re implicitly agreeing to someone else’s direction when you sign up.

Cardone Capital takes this lack of control one step further by locking your investments in for three to ten years.

That means that you’re stuck with your investments no matter what the housing market does. Unlike other platforms where you can pull your investment whenever you want, this means that you can’t reinvest this money until Cardone Capital exits the investment. This is not the case with platforms such as Fundrise or Ark7, which are far more liquid.

The other cons largely come from the way Cardone Capital runs its business. Some Cardone Capital reviews mention that there are hidden fees that were not made clear during the initial signup process. There is a 1% annual fee for using Carond Capital, a 1% acquisition fee that covers signing on new properties, and a 1% disposition fee.

Cardone Capital also has only been around since 2017, which is hardly enough time to get a sense of the company’s long-term staying power and performance. Even worse is the fact that several lawsuits have called into question Cardone Capital’s credibility and reliability.

Is Cardone Capital a Safe Investment?

Real estate investments always carry some risk, and investing with Cardone Capital is no exception.

The primary thing you need to remember before you decide whether or not you want to invest with Cardone Capital is that none of the Cardone Capital returns statistics should be taken as guarantees.

Having a 15% lifetime return target and getting 6% annualized each year on average sounds great but isn’t something you can count on. You could, theoretically, lose your entire investment.

Alternatives: Other Real Estate Investment Platforms to Consider

If you like the idea of real estate investing, but have some concerns about Cardone Capital, in particular, you have some other options. The following sections highlight three of my favorite crowdfunding real estate platforms.

Fundrise

Fundrise is one of the best real estate investing platforms, in my opinion. For one, it has a lower minimum investment requirement than Cardone Capital ($10). It also offers exposure to a wider variety of real estate investments, including commercial property and single-family homes, whereas Cardone Capital only offers investments in multifamily homes.

Plus, Fundrise also offers you access to private credit investing, which has traditionally been out of reach for most retail investors.

Fundrise’s lower minimum investment requirement and wider variety of investment options make it a better place for real estate investing beginners to get started.

Ark7

Ark7 also has a low minimum investment requirement ($20), but it focuses on multi-family homes / rental properties. If you want to invest in shares of multi-family homes but don’t want to go with Cardone Capital, Ark7 is a great alternative to consider.

Ark7 also offers more liquidity than Cardone Capital, which means you can be more flexible with your investments if you decide you want to reallocate funds.

Crowdstreet

Crowdstreet is a crowdfunding real estate platform only for accredited investors. It’s aimed at serious real estate investors who have some capital to play with, so it might not be the best choice if you’re just getting started in real estate investing.

Crowdstreet focuses on commercial properties, which may or may not be what you’re looking for. It also has a higher minimum investment requirement than Fundrise or Ark7 of $25,000.

If you already have some real estate investing experience — and $25,000 to invest — Crowdstreet allows you to take your real estate portfolio to the next level.

Investing In Stocks and More

If you’re not a fan of real estate investing, stock investing is a great way to get into investing and start building your wealth.

If you want real estate exposure, you can invest in REITs, or real estate investment trusts. These are entities that hold a portfolio of real estate, or real estate loans.

They’re listed on the public market, so you can buy shares of them, just as you would stocks. (Learn more: Check out our article “REIT vs Stocks: Which Should You Invest In?”

Or, you could just stick with “regular” stocks.

Either way, to buy and sell REITs or stocks, you need a brokerage account. Our favorite broker? eToro, hands down. It’s easy to get started, the platform offers a great simulated trading platform to get you up to speed, and its social aspect allows you to follow and share ideas with like-minded investors.

Plus, there are thousands of different securities available — you can browse stocks, REITs, ETFs, and even crypto and other assets, if you’re so inclined.

Final Word: Why I Don’t Recommend Cardone Capital

For my money, Fundrise, Ark7, or Crowdstreet are better options if you want to get into real estate investing through a crowdfunding platform. Those platforms offer the same convenience of Cardone Capital without the question marks surrounding Grant Cardone’s legitimacy.

Some Cardone Capital reviews say that the company upholds its end of the bargain, while others state unequivocally that the claims made in Cardone Capital’s marketing materials are lies.

It’s hard to know for sure if the positive reviews are astroturfing attempts to bolster Cardone Capital’s reputation or whether the negative reviews are part of a smear campaign run by one of the company’s competitors.

What I know for sure is that the legal action taken against Grant Cardone and Cardone Capital is very real and enough to dissuade me from using the company.

I can’t recommend Cardone Capital in good conscience when there are better platforms out there that offer the same upsides without any of the uncertainty.

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