How to Build a Real Estate Fund Like Grant Cardone Capital #GrantCardone (crowdfunded real estate)
Grants Cardone well-renowned investors strategies on how he finds invests in and uses the equity capital of other people, especially small check investors and unaccredited investors, to buy his property for him. And so we’ve looked at the three key strategies that he used and why he’s using these strategies to be able to acquire real estate at scale at Grants Cardone and Cardone Capital. And so in this video and especially at the end, you know, we’re going to just walk through the key strategies that he uses and we’re going to see if you can emulate these strategies for yourself, if it makes sense for you or if it doesn’t. So you may want to stick to the end to see how these strategies you can apply them. If you’re looking to raise capital for your real estate private equity fund. So Grants Cardone, if you don’t know him, was the star of undercover billionaire and approaches a net worth of around 1 billion. So the first thing that he uses is something called the Regulation A exemption. So Grants Cardone, the way that he raises capital is using the regulation a exemption basically in the United States to raise money from investors. You either need to register with the SCC or you need to use an exemption that exempts you from registration requirements. That means that you don’t have to register with the SCC. And to do that, there are different exemptions that people use. There is the regulation, the exemptions, which is another world that they’ll get into. (crowdfunded real estate)
And then there are several other exemptions. So he uses the regulation A exemptions. These are exemptions that allow you to sell to unaccredited investors, in other words, accredited investors that don’t have over $200,000 in annual recurring income or they don’t have over $1 million in assets. And so you can actually sell to these investors without registering with the SAC using that exemption. And the exemption I use is called Regulation A. And so all regulation means there are two types of Regulation A exemption. So you have the regulation A tier one and regulation tier two. So Tier one allows you to raise up to 20 million and and then tier two allows you to only raise $75 million within the first year or 12 months of the offering. So basically you have to give quarterly reports and audited financial statements of the deals that investors are investing in. And that’s really expensive. And to people who aren’t familiar with that. So it can take a lot of work to do that. It’s very similar to a public offering because you’re selling things to unaccredited investors and you have to disclose a lot of information to make sure that the investor is suitable and they’re okay with understanding what the investment is. So that’s number one, and that’s how he structures his investments. Number two, So why does Grants Cardone always talk about how much AUM assets under management he has? Basically the way many people buy real estate who don’t own them. (crowdfunded real estate)
So use the cash from other people to get the down payments. So even though Grants Cardone may have a lot of cash available, a lot of people, they get the other people, they get other people to pay for the down payments on a deal and then they get debts from somewhere else. For example, let’s say it’s a buying apartments, $100 million apartments. He’s able to get a loan of 75 million. He would need to raise 25 million from other people in order to acquire that apartment. He himself may not want to be used as money to pay and not to use in that down payment. He may use other people to do that, and that’s essentially what a lot of people do when they set up funds like the way that Grants Cardone is. And the third thing is a status. So Grants Cardone is deliberately targeting really small check investors at scale. And because he’s doing that, Grats Cardone already sells a lot of courses, unlike 1000 bucks and 2000 bucks to allow for real estate investors who are new to the type of work he does. And because of that, many people who work with Grants Cardone are familiar with him. They really have trust in track record and he has a lot of status. Delta. So because of his business situation may be a bit different. He may not need to bring on a giant investor and he even admitted to himself in his interview with Alex Farmaci, another large Internet personality in the business world. (crowdfunded real estate)
He also mentioned that big investors are mean. Grats Cardone would prefer to bring on many small check investors because Grants Cardone has what we call status delta so he be able to influence and sell on investors into his long term plans and visions. Whereas if he were to find an investor that was really sophisticated and had more money than him, you know a lot of those investors, you have to play by their rules. And so sometimes for his case, he chose not to go through institutional investors, but he decided to go mass market because he already had a really big presence with his mass market fan base through his online courses and the trust that he’s built in his conferences, through his small products and through the reputation and Brandeis built over the years. Oh, all in all, just to recap, number one grants, Cardone used a regulation, a exemption to sell to unaccredited investors. Number two, the typically uses this so it can raise money equity capital to get people to pay for the down payments on the deals so that he’s able to grow his assets under management using other people’s money. Step number three Grants Cardone. is able to make sure that he maintains status delta by using the Regulation A So you can upsell and cross-sell people into his other offerings because he has a real estate course which teaches people how to get into real estate and then how to make money from real estate, and then in other ways of making money from real estate. (crowdfunded real estate)
The done for you option is to just invest with Grant Cardone. So if he has a product that already exists and is doing well in one niche, it’ll be really easy to sell the trust that you’ve already built for him in another product line or another investment line, because he’s already built that trust and track record and the investors are really small, impressionable, and if he helps somebody make their first million in real estate, then he already has built the trust to get people to become accredited investors through his through his process or to make money through his process. And so it will be a much easier sell to bring people along the ride. So is this strategy something that you should do? Well, number one, if you plan to if you have a lot of status, Delta, in other words, you’re able to convince a mass audience more of A B to C audience about your offering and you’re able to build trust along the way, then it can be easier to position yourself as the experts for people to come into your deals and to work with them. But if you’re somebody who you’re certain that you want to work with institutional investors right away and skip all the small check investor stuff because you don’t want to deal with the legal and compliance overhead, then this is probably not for you. (crowdfunded real estate)
But if you’re somebody who is, you’re working with the mass market and you already partner with somebody or you are somebody who has an existing product line in the real estate space, then it could be really beneficial to look at bringing in many small check investors into another product or investment offering that allows unaccredited investors at scale to invest in your offering. For example, let’s say you’re somebody who sells, you know, of course, on YouTube and you have a million followers. A regulation may be perfect because you’re talking with many small tech investors who you’ve already sold stuff to, Whereas if you’re somebody who’s who just wants to work for the big guys and you have very few followers and you’re obviously close and quiet, then maybe it’s not for you. It also may not be for you if you don’t like dealing with many investor complaints because Grants Cardone did have some litigation and that is a risk when you’re dealing with unsophisticated investors who actually have money to lose. So all in all, if you want to actually get this done, it implements you know capital raise for your real estate private equity fund, such as a regulation A, regulation B or something else for your deal. Just make sure you head to. (crowdfunded real estate)