Let’s face it: Cardone Capital is mostly known because of its founder, Grant Cardone. This private real estate offering has also made a name for itself because of its monthly payout schedule. When I first started researching I wanted to know what my monthly cash flow might be. Here’s what I found:
Your monthly payments from Cardone Capital are determined by two factors: 1) the amount of capital you invest and 2) the targeted cash-on-cash return by the fund you invested in. Typically, this will be around 5-6%.
In this post, I’ll look a bit more closely at how the monthly payout mechanism actually works at Cardone Capital and how much money you can expect to get out every 30 days. Below you can also find a precise formula for determining exactly how high you can expect your cash flow to be. Let’s get into it!
How does Cardone Capital work?
Cardone Capital is a private real estate syndication that offers retail investors the chance to invest in a multi-family property fund. These funds are open to accredited as well as non-accredited investors and the return varies accordingly.
Usually, there is only one open fund per investor type at a time so your investment choices are quite limited from the onset. After you have registered and completed the KYC verification you will be able to access the individual investments and place an investment request.
After this you will be asked to wire the funds to Cardone Capital and finalize your investment. The minimum investment for most funds starts at $5,000 although for some funds it can be as high as $10,000.
Investors receive monthly dividends (or rental payments) during the holding time and a full return of capital plus return at the sale of each property. The targeted internal rate of return (IRR) for most funds is around 15-18%.
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Why does Cardone Capital pay monthly?
While many other publicly-traded REITs pay out earnings on a quarterly basis Grant Cardone has made the decision to pay earnings out monthly. In his words: “Rents are collected on a monthly basis, so why shouldn’t investors be paid monthly”.
This fact also makes it easier to calculate your monthly returns on your investment and check whether you are still on track instead of waiting for quarterly reports and dividing every payout by three.
Next, let’s look at how you can actually estimate the monthly payments you will receive from the funds.
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How to calculate your monthly payments from Cardone Capital
As mentioned earlier, how much Cardone Capital pays monthly depends on how much you invest. Since the targeted cash-on-cash return is somewhere around 5%, let’s use that as an example. The formula would then look as follows:
C * 0.05 / 12 = Monthly Payment
Where C is the invested capital and 0.05 is the 5% annual return. Let’s use a hypothetical investment of $10,000 to calculate our monthly earnings:
10,000 * 0.05 / 12 = 41.66
For a $10,000 investment in one of Cardone Capital’s funds you could reasonably expect to receive around $41 in monthly payments. This return does not include the return from the final sale of the property which should add another 10-13% to monthly returns.
Here’s a small table of the expected monthly payouts depending on your capital investment:
|Capital Invested||Monthly Payouts|
Please note that these numbers are only estimates and real returns and payouts may vary! In some instances such as during the COVID-related lockdowns, many funds did not pay out any monthly earnings.
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Does Cardone Capital offer a good monthly ROI?
While 5% annualized on a cash-on-cash return is certainly not bad there are better cash flow opportunities out there. However, with real estate – and especially the kind of real estate that Cardone Capital invests in – the real payout comes with the final sale.
When the holding and waiting time is over, Cardone Capital expects an IRR of up to 18%! This return goes way beyond what you could hope to get in the stock market or from public REITs. In terms of the overall return on investment, Cardone Capital, thus, offers a highly lucrative investment.
It is also important to note that the investment term for any fund can be up to – or even exceeding – 10 years in time. As real estate is a highly illiquid investment you will not have access to your funds for a while!
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What are some alternatives to Cardone Capital that also pay monthly?
Believe it or not, there are even some publicly-traded REITs out there that also pay monthly. You can find a great overview of the most popular ones here. In addition to public REITs, there are also a bunch of private offerings that offer monthly payouts such as the REITs offered by RealtyMogul and RichUncles.
In conclusion, you can expect a 5% annualized earnings payout with Cardone Capital which would get you around 0.45% per month in ROI. The more you invest, the higher your payouts, and the more capital is locked up in the fund.
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