Real Estate or Bitcoin? Grant Cardone Reveals His New Money-Making Plan

There is no such thing as saving money. You get money and then you find a place to put money. That's it. There's nothing in between. What I do is every day is I earn fiat and I convert it to something better than that. That's all I do every day.

Grant Cardone, a real estate tycoon with over $5 billion in assets under management, is betting big on bitcoin. He says he took Michael Saylor's strategy and made it better. The plan combine the stability of real estate with the volatility of bitcoin and.

The real estate's not going to grow. It's a flat line. I'm adding bitcoin that could expl flow through the process. Say I wake up tomorrow morning, bitcoin goes to a million dollars. Yeah, I'm probably selling tomorrow.

But is this genius a smarter twist on the bitcoin treasury model or just a high stakes gamble that could backfire? Did you start offering this product at the end of last year and not three, four years ago? You knew bitcoin for a very long time.

Yeah, because it's a great question.

Today we dive into Cardona's new move. The potential risks and what it could mean for the future of bitcoin investing. As always, this video is for educational purposes only and does not constitute financial advice. I'm Giovanni. Let's get started. So we have real estate which is a very conservative stable asset. On the other hand, we have a very volatile new type of asset, not conservative. So why did you decide to combine the two together?

Well, look, as an investor I'm always looking for ways to improve the returns to our, to our investors and to my family. I've been buying real estate since I was 28 years old. So for, I don't know, 40 years. And you can't lift it? You know, it's very difficult to lift, does not have the volatility which of the stock market or paper or bitcoin. And I like real estate, right. I work hard, I'm a self made person. So I came from a middle class family and I only invest in things that are real. I'm extremely conservative and still am today. It's one kind of real estate apartment complexes in great locations. Traditionally we buy them from institutions. They're cash flow positive. Day one, somewhere between four and a half and six percent cash flow without debt. So the debt could improve that cash flow a little bit. But again we're in very, very solid locations. That will be your 10 years, 20 years, 30 years and 50 years. From now with what we believe to be very gradual, consistent rent growth.

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So about 13 years ago, I started looking at, you know, I was introduced to bitcoin. One being volatile, one having no volatility, one has no cash flow, the other one has cash flow, the yin yang. I mean, they're really yin yang assets. One's real and one's digital. Both have limited quantities. You cannot easily reproduce either one of them. So when we combine these two, what I get is basically an old world asset, 2,000 years old, that most of the planet agrees with. And I think this is the big play that people miss with what I'm doing. I have mass agreement by 95% of the population that already holds real estate. Most are mandated, the institutions are mandated to invest in it. Insurance companies, pension funds, you know, the most conservative investment vehicles with the most money on the planet is required to invest in real estate. So you have to, you have to educate the bitcoin audience. I don't have to educate the real estate audience. They are, they're already in agreement. So the real estate investor looks at my project and understands it. And I explained to him that I'm adding bitcoin to take returns from 10 or 15% a year to a 25 or 30 or north of that percent a year by combining the two assets.

Let's explain how this process works. Essentially, what you're doing as far as I understand, is taking the passive cash flows from the real estate, your dollar cost averaging into bitcoin with that money.

Yeah, what we're doing right now is I started this project late last year and the goal was to prove the model out, not go to Wall street or banks or, you know, the funding sources and ask them for money. I wanted to prove the model out. So we did our first project in January. We bought a $72 million piece of property that was worth 88. We took the 72 million and we just added bitcoin back to replacement costs of the asset. We knew, we knew it, it would cost 88 million to rebuild this project today. So we just took the price we paid and stacked bitcoin on top of still. Cash flowed $3 million, three and a half million dollars a year. And so every month, $300,000 of cash flow DCA is more Bitcoin. So that deal was like 85, 15%, 85 real estate, 15% Bitcoin with no debt. It'll end up being like a 50, 50, 5050 real estate to bitcoin. As bitcoin moves up, or even if it doesn't move up, it doesn't really matter. Right? Like, like this, this is what it looks like. Like this is the chart is the blue line. The blue line is the real estate. And the real estate's not going to grow. It's a flat line. Compared to these other lines that are moving, this line looks flat. I mean it's growing at 3 to 5% a year. Okay. And just the real estate could grow about 2 or $300 million right here. But you don't see it because I'm adding bitcoin that could explode through the process. It falls apart and goes back to 70, 75,000, which it could, by the way. All I'm going to do is buy more bitcoin with my cash flow and I have my base level, my blue line of real estate that prevents me from having a sell in case bitcoin dies.

Is there any point in the future where the bitcoin gets sold for, for cash?

I, I have discretion to do what I want with that bitcoin. Right. So let's say, let's say when I bought, we just bought a Thou, we bought 883 pieces with the, our most recent purchase was $230 million. We added $100 million of Bitcoin. If bitcoin rolled to a million dollars tomorrow, I only get paid, I only make money as, as the manager when we sell something. So let's say I wake up tomorrow morning, bitcoin goes to a million dollars. We would, we would have a 700 million dollar profit. Yeah, I'm probably selling tomorrow.

Okay.

And I would sell up the bitcoin and keep our real estate.

Okay, that's an important point.

Let me just back up one second. The strategy is not to sell the real estate strategies to take this whole thing public and then we would give you shares in the company and then you can sell anytime you want to. So this is a real estate micro strategy play. Okay. It's for lack of better words, it's not what Saylor's doing because the differentiator here is we have a real asset. We have, we have a company we will not abandon. Okay. Like not, not to suggest that he's abandoned the original company, but kind of, he kind of has. We won't abandon the real estate. We're going to build a very, a massive real estate portfolio and a massive bitcoin treasury.

This is something that probably our audience wants to know because there are many people that are concerned about ownership and the security of their bitcoin and so on. So where does this bitcoin get stored? Who owns the keys?

Additional third party with multiple signatures for sale for obvious reasons. I don't want to get more specific than that but third party institution will hold all the bitcoin.

What I, what I want to understand is what's the point in investing in one of your hybrid funds which combine bitcoin and real estate when I can actually invest into those assets separately? For example, getting, getting exposure to Bitcoin through an ETF or a strategy stock and on the other hand getting exposure to real estate via REIT for example.

Well, number one, number one you get the combination rather than them separate. I believe together they're worth more than they are separately. Number two, the REIT that you talked about, we're creating a vehicle that will destroy the REIT business. The RE the REITs are all suffering. There's 190 REITs in this country that are either too small or too big. And all of them have one thing in common. They're underperforming. They don't share depreciation with the investors. They're forced to share cash. They can never own bitcoin on their treasury. They have to get rid of all extra monies that they have. Many of them are over leveraged and the big ones do not own trophy real estate in the long where they own a lot of real estate that is not trophy and requires tremendous amounts of capex going forward. So by putting the two together I am basically there's a hundred, there's $4 trillion of REITs in this country that cannot own Bitcoin. There are 2/3 of the pension funds in this country have a mandate to invest in real estate. Forced to must invest in real estate because the Sharpe score is such a protected investment class. But they cannot get exposure to bitcoin directly. They could not buy it like you can directly. But when you put the two together, that money can flow into this asset class.

So we know that Bitcoin treasury companies are accumulating large amount of btc. And there are concerns that these companies might take leverage and start using risky practices in order to attract investors. You are also proposing a variation of that strategy just with real estate on top of it. So are you not concerned that the proliferation of these bitcoin treasury companies could eventually create a systemic risk that could potentially crash the market at a certain point?

I agree with by the way, the concern. There's like 170 companies that are trying to model what Michael Saylor's doing. I'm concerned about two things. One, too much money. Chasing, chasing this event like that are just reckless. It's like, feels like a gold rush to me again. I'm a very conservative investor. I am a long term investor by the way and I am a hodler of both the real estate and the bitcoin. I have not sold any of my real estate in 15 years. Typically what I do or since 2010 I have not sold any real estate yet. So 15 years and even then I only sold a portfolio to get out of a certain market. Typically what we do is every seven to ten years we refinance the asset, return the capital back to the investors and go for another seven to 10 years with no debt, with no equity in our deals. But our goal would be to return capital to the investors. We will not be a closed end fund going forward in the future. We have closed in funds right now. Those closed end funds are going to get sucked up as a reverse bar, a merger, a SPAC or an IPO. By the end of this year we'll suck up 12 different assets that both have real estate. Gray real estate and bitcoin. On the treasury on, on their financial statements will combine, merge all those together and bring them, bring them to the public markets. So it won't be a closed in fund in the future. And that stock will move based on grant Cardone's ability to make decisions to add bitcoin or great real estate or other in you know, entrepreneurial growth strategies.

Why did you start offering this product at the end of last year and, and not three, four years ago? You knew bitcoin for a very long time.

Yeah, because it's a great question, number one. The number one question was I would have done this sooner had I not listened to a bunch of these bitcoiners. Talk to me about the blockchain. The blockchain confused me because everybody kept saying put your real estate on the blockchain. I'm like show me how to do that. Show me how to fractionalize real estate. And these people would always say oh yeah, that's what, that's the future. And so I, I, I got, I went down this rabbit hole of putting real estate on a blockchain when it didn't need to be that complicated. All we did now I met with Sailor late last year and said hey, how would I do what you're doing with real estate? He's like well number one, you have a, you already have a great Audience. Your audience trusts you two. You've been doing this long enough. Now that people know you can deliver, he's like, just figure out a simple way to add the bitcoin to your. To your real estate and. And. And get a public company. You need a. You need to be a public entity. I said, well, I'm not public. So I let. He's like, that's your problem. You got to figure it out, Grant. So I left this house, came home, and started mapping out how can I do something in this space? Not the blockchain. That was just dumb. It was just people going stupid. How can I just simply add it? I'm like, just add it. Buy the asset, add the bitcoin, wrap an LLC around it, and let 10 or 15 or 20 guys invest in that asset and see what happens. We did our first deal. Money came in. We raised $88 million. That first deal is outperforming all 45 pieces of real estate that I own.

But let's say it crashes by 90% or 80%, as it has done in the past. Are you going to hold on your bitcoin even in that scenario? Or you think you're going to sell? You're going to face some pressure from your investors that are going to say, hey, this was probably a bad idea.

No, not a chance. Why would I sell the asset? I still have cash flow. I still have rents going up. I still. I don't. I don't need to now. If bitcoin's the only thing you owe and it crashes and you need money, you're gonna have to sell your real estate. I don't need to sell my real estate. My. My real estate. I don't need to sell my bitcoin. My real estate is cash flowing by itself. It continues to cash flow even though I added the bitcoin. So, you know, I don't need to sell anything now. If everything crashed together and the world comes to an end, everybody has the same problem at this point. But if the. If the Fed. If you believe the Fed continues to print money, then what goes up in value are real assets, anything limited in quantity. If you think inflation continues to happen, forget the inflation and forget the printing press, okay? Labor by itself is a problem. You cannot find people to build shit. So whether you're mining bitcoin or you're building homes are. Are affordable places to live. We're short probably 5 million homes in America today. We have 350 million people. A third of them are seniors that would rather rent than own. Where they have a swimming pool, amenities, a gym, social life they could drive up. That's the way people want to live today. That's what we're buying again. The.

The.

The original business is providing people with a great location, affordable rents, great amenities, and then we add that other piece on top of it.

Okay, and now, final question. What piece of advice would you give to someone who is watching now and is really looking to preserve its wealth against the erosion of fiat currency in the future? Like a young guy in his 30s, 20s?

Well, you know, you know what I would tell people is there. There is no. There is no world where you save money. So saving money is an oxymoron. It's. It's not true. It should come with a. It should come with a saver beware notification. Like, you cannot save money. It's impossible to save money. There. There is no such thing as saving money. You get money and then you find a place to put money. That's it. There's nothing in between. You either use it, you lose it, or you invest it. And the first two are losers. You use it, you lost it. Okay, so I would tell you, like, earn income. What I do is every day is I earn fiat and I convert it to something better than that. That's all I do every day. Hit Fiat, convert to something better, and figure out what that is. Is it gold? Is it silver? Is it bitcoin? Is it a business? Whatever it is, convert it to something better and they go repeat that activity again.

Okay, that was great, Graham. That was a very cool conversation. We'll keep an eye on your future projects and super excited to see how it's going to play out. And yeah, thanks again for coming to our show.

Thank you so much. And. And there'll be a big announcement here in the next probably 60 days. And. And for everybody that's watching right now, strongly recommend you back that truck up, man, and load up on this announcement because it's going to be super exciting. And then if not, just watch and see what happens. Sam.