Tom McKay is a self-made multi-millionaire. What Tom says in this video offers a great analysis of Grant Cardone and the Cardone investment model.
We like this video and Tom’s very pragmatic analysis of Grant Cardone. Tom raises all of the right questions.
Tom focuses in on Grant Cardone saying, “We distributed $2 million dollars to our investors last month; $800,000 of that went to me.” You heard that right. As Tom points out this a 40/60 split in which Cardone takes 40% of the monthly distributions.
Like McKay, we want to know more about how Cardone Capital’s disbursement works. Did Grant actually invest 40%? Grant says he has 3,100 investors and they received only $1.2 million of the $2 million. Let’s average the number: If we divide 3,100 investors by $1.2 million, then each investor received only $387 whereas Grant Cardone received $800,000. More details are needed. For example, has Grant Cardone suspended his distributions along with the rest of his investors?
Tom McKay also zeroes in on what we covered in our previous article: Grant Cardone says he can pay a dividend at 85% occupancy. How can Grant pay distributions with a 15% vacancy?
We agree with Tom McKay said at the end of the video: Keep your home now if you own one. Enjoy it. Don’t sell it as Grant Cardone so recklessly advises. The bottom line is that Grant Cardone’s huge debt load is driving his slash and burn approach during his time of financial crisis and, it seems to us, he is projecting his anxieties and fears onto everyone else.
Tom McKay’s book: Wake Up and Smell the Real Estate.
We like Tom’s no-nonsense and commonsense approach to business and his plain speaking.
One more great video from Tom McKay in which he compares real estate millionaires Grant Cardone and Ben Mallah. This video is funnier than hell. It’s also full of pain in a true existential disaster. Ben Mallah is brutally honest and yet he keeps his sense of humor. Ben’s not a BS artist like Cardone.
Categories: The Scientology Money Project
Tom Nash’s observation is far from original: “A fool and his money are easily parted. Would you take investment advice from a guy who:
1. Incinerates his own money–and then brags about it?
2. Sinks $50 m into a costly and illiquid “asset”–and then brags about it
3. Pisses millions away on a cult that everyone who’s looked into it will warn you about–and then brags about it?
As Tom correctly points out, Grant offers incorrect generalities as his form of “coaching.” (A lot like Grant’s idol). So you too can be a fool and invest in Grant–and then brag about it. But be sure to brag quickly because you won’t be doing it for much longer.
McKay’s take on one of the (many) reasons Cardone’s advice is destined to fail when the shit hits the fan is correct: there’s no such thing as a bulletproof asset class. There are asset classes that will do better at different times than other asset classes, but that will change over time as economic conditions change. There is no such thing as an asset class that will always outperform other ones.
On one level, this is just sleazy hucksterism at work: unsophisticated investors want to believe that the big, successful people only know a little more than they do. That’s not true. Most successful people work harder, and in most cases have caught lucky breaks at critical times. But that luck comes on top of a lot of work in almost all cases, and often on top of a lot of smarts (whether academic or “street smarts”). But the fantasy that Cardone and others are selling is that you could be just like any billionaire on the Forbes 400 list.
The certainty that people like Cardone sell is just like the certainty Scientology sells. It’s the feeling of certainty that matters, not whether the principles touted as the source of certainty actually work. It’s just as laughable that Cardone thinks apartments are a completely bulletproof asset class that will outperform all the time as it is to think that hooking yourself up to a 1930s “lie detector” will give anyone super powers to create entire universes with the wag of a finger.
So Cardone is running a mini-cult, not a quality investment vehicle. If he were running a quality investment vehicle, he’d be running a Real Estate Investment Trust (REIT) that’s publicly traded and that performs at or near the top of its market. But he’s a huckster hawking overpriced deals for apartments in second-tier markets to rubes who don’t understand that he’s (legally but not ethically) stealing them blind with management carried interest that’s way higher than the norm for quality deals. Once the suckers are reeled in, he uses Scientology-like techniques to get people to suppress their doubts about whether they’ve been fleeced.
JPC, I agree with your assessment that Grant Cardone is running a mini-cult of sorts. His investors have had their confidence shaken to the core after he suspended distributions.