real estate investing – Cardone Capital https://cardonecapital.com Cardone Capital Wed, 23 Jul 2025 16:29:36 +0000 en-US hourly 1 https://wordpress.org/?v=6.8.2 The Four Quadrants of Real Estate https://cardonecapital.com/2018/12/10/the-four-quadrants-of-real-estate/ Mon, 10 Dec 2018 16:25:42 +0000 https://cardonecapistg.wpenginepowered.com/2018/12/10/the-four-quadrants-of-real-estate/ I’m going to show you what I call the four quadrants. The four quadrants of investing and the four quadrants of real estate.

I used to use this in car deals to help people buy a car. They would always focus on one thing – the wrong thing. They would tell me, “I need the best price on a truck.” And I would say, “Of course. I can get you the best price on a truck. No problem. But there’s more things involved in a car deal than just the best price on the truck.”

In a car deal, there’s the price you paid for the truck. There’s also the down payment you put on it. Then there’s a monthly payment and also the trade-in.

Those are the four parts of a car deal. And they’re the same in real estate. Price, down payment, cash-on-cash and NOI.

In real estate, you have price. You’ve got a down payment. And, by the way, there’s no such thing as no money down. Zero is money down because zero is enough. If you don’t respect zero, you don’t respect dollars.

Zero money down means there’s an obligation to something. And if he gives you or she gives you something for no money down, there was something paid in one of these other quadrants, okay?

When one of these numbers goes up or down, if it influences the rest of the quadrants of real estate.

All the quadrants matter. Don’t make the mistake that they don’t.

And speaking of mistakes, when people are starting to invest in real estate the first mistake they make is that they don’t know their market. And number two, they get fixated on one of the quadrants.

These investors say, “I can only buy so much. I only have so much money down. I must have this. And I have to have this cash-on-cash.”

In investing, the cash-on-cash return is the ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage. It is often used to evaluate the cash flow from income-producing assets.

Some of the best deals I bought had the lowest cash on cash. I’m looking at deals right now that might only pay me five percent, but there’s a reason I’m buying that deal. Trust me because I think somewhere down the line I’m going to make a lot of money off the property.

Why? Because I took less in a specific quadrant. When one quadrant goes down, something else has to be adjusted. That’s called the market. The market will adjust. Something goes down here. Something’s got to go up there. Unless everything’s terrible on the deal – then you wouldn’t do it anyway.

So first quadrant is price. I’m not going to negotiate the price. If you have to negotiate the price to buy the deal, it’s the wrong deal. I’ve said this over and over again.

Pay attention to the cash on cash quadrant. I call it the super box because even when the market pulls down, when there’s a recession that hits. The number of units are still the same. During a recession, no one is building anything. Those units become more valuable and are still paying you.

Another important factor is Net operating income. NOI is a calculation used to analyze real estate investments that generate income. Net operating income equals all revenue from the property minus all reasonably necessary operating expenses

You gotta know your market, know your market, know your market, know the comps, know what’s in the neighborhood. Know what a good deal is. Know what a bad deal is. Know your four quadrants. Keep it simple.

]]> Cash Flow https://cardonecapital.com/2018/11/28/investing-for-cash-flow/ Wed, 28 Nov 2018 22:07:07 +0000 https://cardonecapistg.wpenginepowered.com/2018/11/28/investing-for-cash-flow/ Cash Flow Definition: Total amount of money being transferred into and out of a business – especially affecting liquidity. Cash flow Calculation: Gross Income Less Expenses Equals NOI (Net Operating Income) less Debt Equals Cash Flow. Cash flow is the holy grail of any investment transaction. And, remember when investing look for the following and keep these three things in mind: 1. DLM. Don’t Lose Money! 2. Cash Flow. Invest for cash flow. 3. Long Term. Be in the investment for the long term. And when you are ready to invest you need to do your homework. You need to know your market. You need to know the property and location – and the difference between markets. What is good in one market, is not necessarily good in another. Austin, Texas is a very different market than say Orlando. Pay attention to this. Never invest in a house, duplex or small property. A house traps your equity. In fact, during the market crash of 2008, over ten trillion dollars of equity was wiped out overnight.. A small property cannot generate enough cash flow to cover the debt, your time or generate any kind of cash flow. Do your background on your debt partner – your bank. Besides knowing the terms and what they will do in the deal, you should know what that particular strength of that lending institution is – what’s their specialty? You wouldn’t hire someone without seeing a resume, why would it be any different with your bank? You gotta think long-term. How much will the investment pay you with cash flow? How much will it appreciate? And this is something that you shouldn’t look at in the mindset of months, but in years… Remember to plan your exit. What do you want and need when you sell. Who are you selling to? What do they look like? When you know these answers, it helps you plan the length of investment and how to market your investment for maximum return. These points are general categories. Each one has a tremendous amount of information you need to know and be knowledgeable about so you can make the best investment. Investing in real estate is the single most important financial investment you’ll make in your lifetime after investing in yourself. Cash is continually going down in value. Cash is not KING. Cash sitting in the bank does nothing. Use that cash to own an asset that appreciates in value and produces cash flow. ]]> Why You Should Get Started in Real Estate https://cardonecapital.com/2018/08/21/why-you-should-get-started-in-real-estate/ Tue, 21 Aug 2018 14:47:40 +0000 https://cardonecapistg.wpenginepowered.com/2018/08/21/why-you-should-get-started-in-real-estate/ HOW I GOT IN THE REAL ESTATE GAME AND HOW YOU CAN TOO.

How did I get started in Real Estate? Captain Ryan on my real estate team asked me the other day who taught me the real estate game.

Before I started in real estate, I was working hard on my own business. I was grinding—I went from discouragement, disappointment, to score. I was making a lot of money, but it was work. I started to sack my money away but didn’t know what to do with it.

When you get money, you have to learn how to use it. Money is dying when it’s not growing or going any place. I realized one thing: when I wasn’t pitching, I wasn’t making money. I was worried all the time that what I accumulated would be taken away from me. That wasn’t freedom!

ADVICE TAKEN

My uncle gave me good advice—he said that I need to learn how to get my money to work for me as hard as I work for it. He had invested in single family, section-eight government housing. I didn’t want to be involved with that type of real estate, but I took his advice…

When I told my mom about my desire to invest in real estate, she said I shouldn’t do it because people would call me at midnight about termites and broken toilets.

I wasn’t worried about that. I’ve been working my whole life for someone to call me! I was going around the country pitching, speaking, and hustling. If someone called me up that meant they were paying me!

Be careful what advice you listen to.

Your parents have half of everything right. They know how to make money, save some money (most of them), but they don’t know how to produce income.

I got into real estate so I could put my money to work for me. Your parents were never taught to invest their money in assets that produce income. They were taught to put it in a 401k or give it to Wall Street!

WORD OF CAUTION

Not all real estate makes you money. My first real estate deal was a single-family home. When the tenant moved out I had to sell the house just like my mom did after my dad died. The property taxes, the heating and cooling, the roof, the plumbing, that all comes out of my pocket. Everything is fine when someone is renting the place but I was relying on one tenant. Real estate that makes you money provides income every month—positive cash flow. Stay away from single-family homes, duplexes, quadplexes, and eightplexes. When someone is not renting your property, it’s up to you to cut the check. You’ll be the first to foreclose and will always be worried…

WHAT IS REAL FREEDOM?

Dave Ramsey says that if you have debt then you’re not free. I disagree; if you have to take care of something then you are not free. When things are coming out of your pocket like roofing, heating, and cooling, that makes you worry.

Not worrying about property taxes and having income every month gives you real freedom.

That’s why I buy apartments and office buildings—multiple tenants and more units equal more protection for you. If you think buying a 19 million-dollar home and renting it out is an investment, you’re wrong. That’s for super-rich people who have money to throw away. It’s dead money that isn’t producing income.

Get involved in income producing properties. Nothing is going to wipe out the fact that people have to have a place to live. A good deal gives you cash flow that pays you every month. Your first purchase should be 16 units, preferably 32 units. You’ll have to look at a hundred deals to find two that makes sense.

Cash flow is not bragging rights. It’s financial freedom. Make freedom your destination. Listen to my Real Estate podcast on iTunes or Stitcher.

GC, Cardone Capital.

P.S. You can also invest with me if you don’t want the trouble of going at it alone. Check out the investment opportunities at Cardone Capital.

]]> The Top Ten Things You Must Know Before Getting Started Investing in Real Estate https://cardonecapital.com/2018/08/13/10-things-to-know-to-get-started-investing-in-real-estate/ Mon, 13 Aug 2018 18:39:41 +0000 https://cardonecapistg.wpenginepowered.com/2018/08/13/10-things-to-know-to-get-started-investing-in-real-estate/ 1. Know Real Estate Is Your Plan. Know what investment vehicle you are going to concentrate on. And once you know what it is, know absolutely everything there is to know about it. If you are awake you should be studying, investigating and learning all there is to learn. If real estate is what you choose, then you should learn all about the type of real estate you are going to invest in, the location, financing, deals, the power players, the economy of the area, and on and on.

2. Shop The Deals.

Again, you need to do your homework. Identify which deals are currently on the market. What deals are under contract. How long and how many deals are open at any given time? Where are the deals? Are they where you want to invest? Studying these deals gains you market knowledge and lets you spot insider area trends.

3. Find Deals That Are For Sale.

If you’re driving around and you see an attractive property call the property to see who owns it. Find out how long it’s been under the same ownership. Find out what else they own. Pull tax records and other public information. Usually, property that’s been owned for a certain period of time is most likely going to be up for sale or be on sale. Don’t limit your search to what is simply on the market. Expand and tailor your search to what you love and what you’d want to own. Property under contract can still be purchased if the price is right. You just have to know what you want.

4. Contact.

Make contact with the broker, seller or whomever you need to. You need access to the deals and market and more than likely you need an insider and someone in the business. Brokers are hard to track down and in my book, How to Create Wealth Investing In Real Estate, I tell you more about how to work with them. Making contact is an important step in getting knowledgeable about investing and it’s worth studying and learning how and who to talk to.

5. Learn/Make a Pitch.

Put together your sales pitch. Decide how you are going to convince the person to sell to you over someone else who has more history and experience. Write down what you love about the property. Create your script and story about what you want to do, how you see it fitting into your portfolio that you want to build, what about the location is perfect, and what price are you willing to pay for it.

6. Underwrite Your Deal.

Do your due diligence. Determine financing, money and exactly how much cash flow the property will produce. Plan your exit strategy – who will buy this when you are ready to sell? Plan out your operating expenses, your EGI (Effective Gross Income), your NOI (Net Operating Income) and CAP rate. Don’t be afraid of the big deals.

7. LOI (Letter Of Intent)

You don’t need a lawyer for this letter, it can be very simple form letter you get off the internet. Think of it as your offer letter. The main message: I’m going to buy your property from you for this much money.

8. Financing and/or Investors.

You should always use some form of leverage (debt) on your deals. It makes the most sense. Make sure to arrange your financing and know the terms of what you intend to do. If you don’t have the patience, aptitude or time to get your capital together, you’ll need to look for investors. Either way, you are going to have to sell yourself.

9. Legal.

At some point, you will need to involve a lawyer for the transaction. Again, this can be as simple or complex as you make it. On a deal, your bank or financing institution will tell you what your legal documents and setup needs to look like. Don’t think you need an LLC or corporation right off the bat without doing some homework and research to exactly what you need and what your exposure is.

10. CLOSE.

This is actually doing the deal! Sign the papers and take ownership. It will be the best and scariest day of your life! GC, CardoneCapital.com ]]>