access to their properties because they can address any issues quickly and oversee the property rather than hire someone to do it for them, but this can become a full-time job—one that you’ll hate. Take it from me, there’s nothing lordly about being a landlord. You’re the lord of clogged plumbing, broken appliances, mold, and pest control. That’s why many people choose to invest with a fund, because they can simply park their money and let experienced profes - sionals do all the work. Besides location, you need to consider factors like median home value, median income, employment statistics, percent of owner-occu - pied homes, and school ratings. These statistics are easy to find online. If you decide to buy into a fund, then the people who man- age it will have no problem sharing that information with you. Also, the primary employer in an area also informs my decision to buy. While the stats are no doubt import - ant, there are also certain things that you can’t measure and just have to feel by inspecting and observing the property for yourself or having a trust - ed, experienced, authority do it for you. I personally inspect not just every property I consider buying, but the surrounding area as well. That’s how I assess the long-term potential of a property to determine if the area has a cool factor that will attract young - er people who tend to move around more, and therefore rent. For exam - ple, when I am shopping a property, I always consider how close the nearest Starbucks is. I know those shops are not put in a location without a lot of research. I piggyback on well-known brands such as that to help me make my decisions. Of course, to invest you must have
money, although not as much as you may think. How much do you need to invest in order to see a worthwhile return and how do you do it in the smartest way possible? The answer depends on if you can buy outright with cash or you’re going to take out a mortgage for your down payment, which is called “leverag - ing.” Both are common practices and they each have their pros and cons. If you pay cash, you’ll avoid the headaches and hassles of the mort - gage process and not have to pay interest. However, paying cash locks you into a single investment. If things go wrong, you have no other proper - ties to compensate. It’s like playing roulette and betting everything on one square. Investors with limited funds should avoid paying cash. Leveraging is very popular with investors, even if they have the cash. If a property’s value increas - es, investors can make a huge profit without a large down payment. Being leveraged also means being able to diversify by investing in multi - ple properties in different markets. However, if you have credit issues or simply don’t have the wherewithal to apply for a mortgage, leveraging is not the solution. The option I would recommend gives investors the best of both worlds, which is to find a partner - ship or a fund, with experts who have experience and success in managing real estate and invest your cash in that fund. This way you get the ben- efit of diversification without having to go through the hassles of getting funding. For investors who are just starting out, $50,000 is a number that will get you in to a fund and will get you returns in your bank account. If you invest without a fund, I recommend following the 1%
Rule, which states that to get the best return on an investment, one month’s rent should be equal to or greater than one percent of the home’s value. Example: if you invest $100,000, your property should rent for $1,000 a month. While the term “passive income” sounds great, there is a ton of addi- tional work that comes with owning a property if you go it alone. Inspec - tions, advertising, tenant screen - ing, maintenance, rent collection, evictions, etc. Are you aware of all the laws and regulations regarding landlords and tenants? What do you know about writing a lease? At this point you’re probably saying to yourself, “I thought owning real estate was all about creating passive income.” Well, it can be if you hook up with a team of real estate profes- sionals who do all the work for you. Then all you have to do is sit back and wait for your monthly check. It doesn’t get more passive than that. Being a successful real estate investor is one of the best ways to increase your cashflow without increasing your workload. •
Grant Cardone owns and operates seven privately held companies, and a $1.8B real estate portfolio as the Founder and CEO of private equity real
estate firm, Cardone Capital. Cardone is also the founder and leader of The 10X Movement and The 10X Growth Conference, which is now the largest business and entrepreneur conference in the world. Moreover, Cardone founded the Grant Cardone Foundation, a non-profit organization dedicated to mentoring underprivileged and troubled youth in character and financial literacy. If you want to learn more about real estate investing in multifamily rental properties, you can find more information at cardonecapital.com.
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