Real estate mogul and private equity fund manager Grant Cardone said that there’s only one asset class that always makes you money, generates passive income, appreciates over the long-term and offers tax advantages.
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“It’s not gold, silver, Bitcoin or the stock market — it’s real estate,” he previously told GOBankingRates.
However, breaking into the real estate investment game can be tricky, and you can end up losing money if you don’t do it right. In a recent Instagram post, Cardone broke down the five things you need to make your first successful real estate investment.
The first step is choosing the right property.
“First, you need the deal,” he said. “When I talk about the deal, I’m talking about the property itself — where it’s at, what it does, how it functions.”
The location, condition and income potential of the property must be properly evaluated before you sign on the dotted line. If a property doesn’t make sense on paper, it simply won’t be a good investment.
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Next, evaluate the debt you will have to take on to acquire the property, Cardone said.
Make sure you understand the terms of your mortgage, including interest rates, amortization schedules and how debt will impact your cash flow.
You will need to access equity to purchase a property, but you don’t need to use all of your own money to make a deal.
“I don’t have to have the cash,” Cardone said. “I wish I’d have known that. I had been buying real estate for five years and didn’t realize I did not need cash — my cash — to buy real estate.”
Instead, you can leverage partner capital, private equity or syndication to fund deals.
When you’re buying an investment property, it usually requires a whole network of people to get the deal done.
“There’s no way to do real estate by yourself, ever,” Cardone said.
This “network” can include lenders, insurance agents, property managers and tenants.
“You’re going to have the government, a bank involved, probably investors, definitely residents, an insurance company, property taxes…,” Cardone said. “There’s no way to do real estate by yourself.”
Confidence is an asset you will need to close any successful deal — but you can’t manufacture or buy it.
