Grant Cardone is the founder and CEO of Cardone Capital, a company that manages approximately $5 billion in real estate. And it just launched a new fund that invests cash flow generated by properties in bitcoin (BTC).
“No one else has done this at scale. No one has ever done this particular model,” Cardone told CoinDesk in an interview. “And the response from our investors is phenomenal.”
“There is a friend of mine who has known me for 15 years. He has never invested a cent with me. He has also never bought bitcoins. He told me bitcoin was too risky and real estate was too slow. When I showed him the fund, he put $15 million into the deal,” Cardone said.
How does it work?
For his pilot project, Cardone purchased an apartment complex on the Space Coast in Melbourne, Florida, for $72 million, and invested an additional $15 million in bitcoins in the fund, for a total of $88 million. The cash flow generated by the property will be dollar cost averaged in bitcoin each month for the next four years, or at least until the fund’s asset ratio, currently at 85% real estate and 15% bitcoin, changes. to 70% real estate and 30% bitcoins.
If the leading cryptocurrency, which is now trading at $104,000, reaches the $158,000 mark within a year, the value of the entire fund will grow by 25%. If it reaches $251,000 in two years, that figure shoots up to 61%. Cardone’s projections assume that bitcoin will reach $1 million per coin in the next five years and will continue to rise after that.
And its ambition is to implement another 10 similar projects before June, for a total investment of one billion dollars. If bitcoin rises according to Cardone’s projections, Cardone Capital may end up with a stash of bitcoin potentially worth hundreds of millions of dollars thanks to its real estate cash flow alone.
Taking a page out of Saylor’s book
Cardone has been buying real estate for 30 years and is famous for it, with more than 4.8 million followers on Instagram, 2.7 million on YouTube and 1.1 million on X. Cardone Capital manages 15,000 units, 6,000 of which are owned to Cardone himself, and 9,000 of which have been collectively financed by 18,400 investors, accredited or not. The company distributes $80 million a year in dividends and its last six deals were paid in cash. “We don’t accept institutional money,” Cardone said. “No sovereign wealth funds, no Wall Street.”
“I’m definitely a risk-taker, but I’m a real estate guy, so compared to the degenerates in the blockchain industry, I’m so conservative it’s unbelievable,” Cardone said. Despite studying bitcoin for seven years, he didn’t see a way to combine real estate and bitcoin until MicroStrategy (MSTR) co-founder Michael Saylor suggested the model to him. “This is really a version of what you’re doing at MicroStrategy,” Cardone said.
One of the advantages of the bitcoin real estate fund is that it allows the company to raise capital much faster. Not only are investors getting on board, but Cardone plans to issue corporate bonds to get some cheap long-term money and, in some ways, replicate Saylor’s convertible note formula.
It also wants to grant combined mortgages against the projects. Bitcoin mortgage products don’t exist yet, he noted, but Cardone expects that to change once he’s finished investing hundreds of millions of dollars in these hybrid projects. “$700 million in real estate paid in cash, $300 million in bitcoin and no debt. Who wouldn’t give me a $500 million loan against the combination? said. “I’m talking about very friendly long-term debt, without margin adjustments. “From seven to ten years.”
Not to mention the possibility of the company going public, which Cardone says could happen in 2026.
Cardone plans to purchase bitcoins in a price-agnostic manner, meaning he will not focus on buying dips but will simply purchase bitcoins within 72 hours of the monthly distributions arriving. The company will also not take exposure to bitcoins through any venue. exchange-traded funds (ETFs); The plan is to hold the cryptocurrency through an institutional custodian.
Do you ever plan to sell? Not in the immediate future. But he is still concerned about the growing frenzy surrounding cryptocurrencies.
“Where I am in my life, I can take advantage of this opportunity. “I don’t need more cash flow,” Cardone said. “But if you’re 25 years old and trying to get some cash flow for life, bitcoin is not a solution. It’s a gamble, it’s a gamble, and you have to pay the rent, you have to take care of your family, you have to cover your bills. And bitcoin just doesn’t do that.”
