IS GRANT CARDONE'S FUND GOING BANKRUPT? (Or Is He Just Marketing?)

Hey guys, welcome back. So in this video, we're gonna talk about is Grant Cardone actually going bankrupt? We're gonna talk about his debt structure in his funds, how he's taking non-accredited investors and why that's very risky, and also how his website and a recent live video— I'm gonna play a live clip of him declaring his bankruptcy yesterday. So Grant, I got a few compelling things right here, so I want to play the clip. So yesterday he was live on Instagram and he says This. Ready?

Now, on the rumors of my bankruptcy that is soon to happen, yes, it's true, okay? I'm losing the plane, the condo, all the apartments, 8,000 units, okay? All of it's going back to the bank. So if you guys want to get it before it goes back to the bank, call me. Uh, the Gulfstream, 2017 Gulfstream 550, brand new, it's about $50 million. You could probably pick that thing up today for $7 million. I don't know.

$6.5 million.

$7 or $8 million bucks. Somebody can probably buy that for nothing, okay? Alex Martin, you could probably get it for $8 million.

So is he just, is this a ploy, right? He's had all these rumors, people are chatting about him on the internet, did he just do this just to create a buzz for guys like me to go out and make a podcast like this, right? If you guys have been on the internet in the last couple days, last couple weeks actually, you've seen a lot of chatter about Grant Cardone, about a looming bankruptcy, pulling up a couple tweets from former employees of his saying, hey, I just got laid off from Grant Cardone's marketing agency, looking for a job, please help. And that was posted to dozens of groups from his. One person said, I was his chief product designer, just got laid off. That whole company, online marketing company, went bankrupt with Frank Kern. You guys know Frank Kern? Went bankrupt with them. So what's going on at Cardone Capital? and what's happening inside of that. Now, this is interesting, this little corner of the internet of guys talking about this. Is this the greatest ploy that Grant Cardone has done yet, right? He's a very good marketer, we all know that. Is this a ploy or is this actually true? And a lot of people on the internet are debating this topic. People are making, getting a lot of views, a lot of content out, and Grant is gaining a lot of clout online because of this stir, and maybe he's doing it on Purpose. So it's interesting. I know myself, I don't really care, right? I run my fund. My fund's doing well right now. We're actually—we have too much money. Investors are trying to give us money like crazy. It's pretty fun. I don't know. He's a great marketer. Great marketers do stuff like this to get views and followers. And he—he barely—he just deleted the video. So he made this as a live stream. Some people recorded it, and then he took it off his Instagram right away. Right now. So a few things though compelling. I'm actually—I've actually called into Cardone Capital a couple times to see to get their LPA, PPM, their docs, all that kind of stuff. I wanted to see how. They ran their system. I got called yesterday twice by 2 different people from Cardone Capital asking if I wanted to put money in. Grant has put out 2 tweets in the last week asking for renters to come into his properties, advertising his properties for people to come in. And right now, if you go to store.grantcardone.com, 99% off sale, fire sale. You can go buy anything you want. I just looked it up. Seriously, it's like his program, $4,000, currently $120. You can buy his hat, $3. You can buy a little flag for like 50 cents. It's crazy. They're usually priced way up. He's doing a fire sale on his website. So what is happening with Cardone, Grant Cardone? And you got guys like Meet Kevin, you have guys like, I mean, there's a whole army of people on the internet right now talking about this. And I, you know, I don't, I'm not gonna dive in there and say Grant's this or Grant's that way. But I will say a few things because we talk about funds on this episode on this podcast about how he structured a lot of his funds and why I'm nervous that he, if this is true, he might actually go to jail. So Cardone Capital, Grant loves to get young small investors for $5,000 or less. You can invest in one of his funds and then he has bigger funds. That one fund though that takes non-accredited investors that he has puts him at a lot Now, he has other funds. He did this a while ago, and I think he's converted most of his funds to accredited or qualified clients now because he wants to charge management fees like we talked about. You can't do that on just non-accredited investors, and it puts a lot of risk on your plate. Why? So a non-accredited investor, they don't have a million-dollar net worth. They don't make $200,000 a year or $300,000 a year with their spouse. Okay? That's a non-accredited investor. The SEC Hates when anybody, especially guys like Grant Cardone, take money from non-accredited investors and lose it, okay? That's why they've made this classification. If you are a non-accredited investor, you typically can't— you can't invest in my funds, you can't invest in my dad's funds and other big funds. Sometimes you have to be a qualified client or qualified purchaser, which are even higher metrics, $2 million net worth or a $5 million net worth to get into those funds. They have these classifications because the SEC says if you're rich and you lose money, okay, big deal, we don't care. But if you're— if it's grandma and this is her last $20,000 and you lose it, that's a big deal. And the SEC is out there to protect the little guy. So Grant has taken money in the past from the little guy. Now, I hope that they restructured their funds. And when I called in previously, they put me all to— because I wanted to see their accredited investor funds. So they showed me all their accredited investor funds. They did not show me their non-accredited investor funds, which I hope— I like Grant. I like his content. I hope that he didn't take money, non-accredited investors' funds, and they are in fact going bankrupt because he'll probably go— he might go to jail. He'll have a lot of things happening. Now, something interesting with their online marketing agency, closed it last month. Employees were told to not contact— if they— the letter to employees said, please do not call us, we will not answer. If you want to contact us, have your lawyer send a letter. That's their goodbye message they had to their employees at their— this last company with Frank Kern, they just closed it down just a little bit ago, their online marketing agency. Wild, right? Like, are you serious? Like, just contact me with your lawyer, that's your goodbye wish? And there are people, this is a good one, saying, where's my money? Show me the money. All the employees were like, show me the money, 'cause they weren't getting paid on their last couple paychecks. And so Grant, what is happening there? On a livestream admits he's gonna go bankrupt. Is— that's the big question, right? Is this the best marketing ploy of all time? Because if he does this right now, he has people like me and dozens of other people making videos just like this saying, oh, Grant Cardone's bankrupt, and he just goes viral online. He gets tons of followers and he goes, guys, it was a big joke. We're doing just fine, and he gains all this clout on the internet. Or is he trying to stir up people to get him— and they're calling me to invest in his funds. They're trying to find money any way possible to leverage his influence To find money to get banks to invest with them in any way possible, and they're actually going bankrupt. Now another thing with Grant Cardone's portfolio, they are very overleveraged on their portfolio. Why why would they go bankrupt? What well you know you got apartments. Apartments are the best, right? Apartments they pay rent every month. What is happening? So this is what's happening. So Grant, on a recent property right here, they bought. I believe it's for $135 million they have here. They put down. 20 to 25% on this deal, and their numbers are a little bit off as well from their pamphlet online that I'm looking at right now and the actual deed and trust. Their numbers are a little bit off, but it looks like around 20 to 25%, and they leveraged with a bank the other 70 to 80%. We've talked about this before, leveraging your IRR. If you can leverage it on a spreadsheet, it makes you more money. What it also does though is you have to make monthly or quarterly or, you know, biquarterly payments to the bank for that interest, right? The debt on Grant's properties where he is very overleveraged on these properties kills him and it's like, Grant, it's only been— we've only had this coronavirus for what, like 30, 40, 60 days maybe, right? Like it's been that serious where people are missing rent and losing jobs? 60 days? Like you can't survive for 60 days? Are you serious? If that's true, Then this is one of the most mismanaged companies ever, Cardone Capital, right? If you can't survive for 60 days, cover your debt for 60 days. In contrast, so my dad, you guys know my dad, co-founder of $20 billion family of funds, real estate funds, very similar to Cardone Capital. They have multifamily funds, they have office building funds, just they're 20 times bigger than Grant Cardone. And I was talking to my dad, he's like, oh, we're doing great, like this is awesome. We got plenty of cash, we have a war chest of money, we can cover our debt payments, we can survive for a long time. And I was like really, like why, you know, and they still apply leverage, they're just not as much leverage as Grant Cardone and they have a war chest for war, times of war. When a coronavirus comes, you have a war chest. You see companies like Cheesecake Factory, right, laying off thousands of employees, they're like looks like they're gonna go bankrupt, right? Cheesecake Factory, are you serious? You haven't saved up enough money to survive for 6 weeks? 6 weeks? You're that close, you're that razor thin? You can't survive for 6 weeks? It's just wild to me, and this is, I love the quote by Warren Buffett. He always says, when the tide's up, you can't see who's wearing their swim trunks or their underwear, but when the tide goes down, you can see who's not wearing their underwear. And right now the tide is going out and we're seeing who's not wearing underpants right now. You see AMC goes out of business, you see all these airlines, and we always knew that forever, but airlines were so razor thin, but Cheesecake Factory, are you kidding me? Grant Cardone, are you serious? Like, you guys don't have a war chest to survive? 6 weeks? Now, I understand if it's, you know, the great financial crisis and it's been 2 years and it's just been a big recession for 2 years. Okay, 2 years, that makes more sense. But 6 weeks? Seriously? In a real estate fund? Now, comes back to the final question, right? Is this a big ploy? Is this one of the best marketing campaigns Grant has ever done? Or are the rumors true where he's at? Well, he has bankrupted one company, that's true. Uh, is his Cardone Capital going down like it sounds like it is? And he says you can buy our properties for pennies on the dollar. Now another thing with his real estate that is another crucial mistake. So non-accredited investors, too much debt, and also he's buying core A+ or A properties primarily in his funds. He's buying the cream of the crop fund or type of properties in his funds. The problem with that is when there's a recession, when there's a blip in the market like we have right now, all those rich people go, well, maybe I don't need the big penthouse, maybe I'll downgrade to a B-class apartment. And all the A people over time move to the B-class apartments, and then those B-class people move to the C-class apartments, and that's kind of how it works. Now, nobody fills the A-class apartments. That's why Grant's tweeting, hey, we got people, you want to move into our apartments? We got great spaces available, we'll give you a deal. He was doing huge discounts to get renters into his apartments to get any type of cash flow because Grant Cardone tells you cash flow is king, right? Talking to other multifamily funds, they focus on B-class apartments or C-class apartments because of that purpose. It's very recession-proof. I was talking to my dad, his funds, a lot of their properties are in B-class apartments. They go, we're doing great. B-class people, okay, if they need to leave, no worries. They leave, the A-class people come down and they fill those voids in their B-class apartments. They pretty much stay B. He's like, B-class, it's very hard to lose money unless you have too much debt. It's hard to lose money on B-class apartments if you have the cash. And that's why they've been successful for decades and they're doing great right now. And they're like, this is— and they are probably going to come in. I'm not even kidding. My dad's funds are probably going to come in and scoop up a lot of Grant Cardone's properties for pennies on the dollar. Just— and that's what they did in the— that's what they did in 2000— 2009, all these overleveraged funds, they came in and said, great, we're not overleveraged. We'll come buy all of your stuff. And then 3 years later, they sold them back to him. There was actually one story. They bought an apartment building, excuse me, an office building. They bought it from some guy. He was really cash, strapped for cash, and he'd held it forever. They bought it for here. They sold it back to him for more money about a couple years later. And it was great and there was— he kind of did, you know, mismanaged a little bit and they threatened him, they were going to move out of the building, people were going to move out of this building and it went down. They bought it again at a cheap price point and then sold— they were trying to sell it to him again at a high price point and it was just a pride thing. He said, I can't buy this, it's just— I cannot do it. They ended up selling to somebody else for that same high price. They bought the same property, bought and sold it twice and made money both times because they could time They had cash when everyone else was out of cash. A time right now, like right now, my phone has been ringing off the hook for deals, for hard money deals, or I need money on this real estate project, or I need money in this, we're doing an IPO over here. It's, uh, when you have cash and you're hoarding cash at this time is really— and they say cash is king— you can come in and scoop up assets at a very, very steep discount. Now I've told you guys, if you haven't started a fund yet, that's okay. Investors are so sick of the markets right now, they're so sick of the volatility in the markets that right now is actually a very, very good time to launch a fund. Investors want to put money into alternative investments where we have cash, we can come in and scoop up assets. You know, start a fund to buy Grant Cardone's crappy real estate projects. Not crappy, they're good real estate projects but on sale, right, because he misleveraged them and they're still good projects, they're still great real— it's still assets Come scoop them up. Like he was saying, the jet, I think he said $50 million jet, you could buy it right now for $8 million. Great, let's buy that thing for $8 million. In 6 months, we're gonna sell it for $12 million. When people do a fire sale, things go on just so cheap. And anyways, that's my 2 cents on this whole thing. But Grant Cardone, I hope the best for him. Hope he does well. Hope he doesn't go to jail for taking non— that's why I tell people, be very careful if you're gonna take non-accredited investors' money. Because the SEC will come in and really analyze what you're doing, and if you lose them money, they, they don't just slap you on the wrist. They might take you to jail and really give you some steep penalties. So this corner of the internet, everyone's talking about Grant Cardone, what's going on with Uncle G, right? I hope the best for him. Hope he's doing good, but it could be the greatest marketing ploy of all time, or he's actually going bankrupt. So hope you guys enjoy. Peace.