I’m often asked why I’m not investing in 16+ unit multi-family properties like Grant Cardone highly recommends. While I have nothing but massive respect for him, and while don’t disagree with him or anything he says, this is why I haven’t yet ventured into 16+ unit properties and instead, why I’ve been investing in 1-4 unit buildings around Southern California. Enjoy! Add me on Snapchat / Instagram: GPStephan
Disclosure - I’m an avid subscriber of Grant Cardone and really appreciate what he puts out there. In real estate, there are a million ways to invest - it’s certainly not a one-size-fits-all approach. While you can’t argue with his success, and while I don’t disagree with him at all, these are my perspectives and points of view for the location and market where I’m investing. Every single market is different and requires a more tailored technique depending on your cash flow goals, long term outlook, and area. What Grant does is extremely effective, and I have nothing but respect for him, although my preference so far - given my price range, location, and selection of deals - has led me to 1-4 unit properties.
What Grant says (summed up to a few basic points):
1. Buy minimum of 16 units. The more units you have, the more tenants you have paying you, which spreads out your risk of losing rent during vacancy.
2. Economy of scale helps where you have one single building to repair and service with multiple tenants.
3. With 16+ units, you can hire a manager.
My thoughts:
1. It’s absolutely true that having more units reduces your risk of losing 100% of your rent, as you would if you had a single tenant paying you 100% of your rent. However, from what I’ve found, vacancy rates are about the same between 16+ units and less than 4 units. It’s difficult to estimate vacancy rates as it entirely depends on the location - and can vary wildly - but between two places in a similar location, they should each have about the same vacancy rate. So while I absolutely agree with him that it spreads out your risk, you should experience about the same amount of vanancy between both 2-4 units and 16+ units.
2. Economy of scale is another valid point. However, keep in mind that with 16 units, you have 16 kitchens, 16 toilets, 16 things to break. The cost to fix one toilet for a tenant paying $450 per month is the same as it is to fix one toilet for a tenant paying $4500 per month. Having one building can be a LOT simpler to manage from the perspective of having one single location, but it doesn’t necessarily mean that it’ll be less work than a high paying 2-4 unit place.
3. Hiring a manager is vital for something with that many units. This should be factored in your expenses and anticipated rate of return. I self manage my 1-4 unit properties and it doesn’t take more than a few hours per month, fairly manageable. This would be much more if I were to manage a 16+ unit place on my own.
For Grant, I totally understand why he prefers larger deals - when your dealing with $10m+ buildings, the rents you get on a few units for $10m rarely ever makes sense…. it doesn’t make sense to buy 50 houses to rent out. That would be a huge hassle. In the larger deals of 5 million dollars or more, having one asset vs a dozen houses makes life a lot easier.
The thing that I’ve discovered is that it all comes down to your return. It’s just money. It’s what will make you the most money for your investment. And generally speaking, they all tend to average about the same. You can increase these returns by buying something that needs work, renovating, and re-renting it out with higher returns - but you can also do the same with smaller multi family or apartments, it’s all the same. For me, I’ve focused on houses and under-4 unit buildings because they’ve generated the highest returns from where I’ve looked in my location. And because I’m not buying $5,000,000+ places in LA, the under-4 units make the most sense.
To sum things up, I don’t disagree with Grant but real estate is so location dependent that one technique isn’t necessarily better than another. It’s highly personalized and at the end of the day, I go with what brings me the highest returns for where I want to invest. It all comes down to personal preference and where you get the best value.
Thanks again for watching!
For business inquiries, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Disclosure - I’m an avid subscriber of Grant Cardone and really appreciate what he puts out there. In real estate, there are a million ways to invest - it’s certainly not a one-size-fits-all approach. While you can’t argue with his success, and while I don’t disagree with him at all, these are my perspectives and points of view for the location and market where I’m investing. Every single market is different and requires a more tailored technique depending on your cash flow goals, long term outlook, and area. What Grant does is extremely effective, and I have nothing but respect for him, although my preference so far - given my price range, location, and selection of deals - has led me to 1-4 unit properties.
What Grant says (summed up to a few basic points):
1. Buy minimum of 16 units. The more units you have, the more tenants you have paying you, which spreads out your risk of losing rent during vacancy.
2. Economy of scale helps where you have one single building to repair and service with multiple tenants.
3. With 16+ units, you can hire a manager.
My thoughts:
1. It’s absolutely true that having more units reduces your risk of losing 100% of your rent, as you would if you had a single tenant paying you 100% of your rent. However, from what I’ve found, vacancy rates are about the same between 16+ units and less than 4 units. It’s difficult to estimate vacancy rates as it entirely depends on the location - and can vary wildly - but between two places in a similar location, they should each have about the same vacancy rate. So while I absolutely agree with him that it spreads out your risk, you should experience about the same amount of vanancy between both 2-4 units and 16+ units.
2. Economy of scale is another valid point. However, keep in mind that with 16 units, you have 16 kitchens, 16 toilets, 16 things to break. The cost to fix one toilet for a tenant paying $450 per month is the same as it is to fix one toilet for a tenant paying $4500 per month. Having one building can be a LOT simpler to manage from the perspective of having one single location, but it doesn’t necessarily mean that it’ll be less work than a high paying 2-4 unit place.
3. Hiring a manager is vital for something with that many units. This should be factored in your expenses and anticipated rate of return. I self manage my 1-4 unit properties and it doesn’t take more than a few hours per month, fairly manageable. This would be much more if I were to manage a 16+ unit place on my own.
For Grant, I totally understand why he prefers larger deals - when your dealing with $10m+ buildings, the rents you get on a few units for $10m rarely ever makes sense…. it doesn’t make sense to buy 50 houses to rent out. That would be a huge hassle. In the larger deals of 5 million dollars or more, having one asset vs a dozen houses makes life a lot easier.
The thing that I’ve discovered is that it all comes down to your return. It’s just money. It’s what will make you the most money for your investment. And generally speaking, they all tend to average about the same. You can increase these returns by buying something that needs work, renovating, and re-renting it out with higher returns - but you can also do the same with smaller multi family or apartments, it’s all the same. For me, I’ve focused on houses and under-4 unit buildings because they’ve generated the highest returns from where I’ve looked in my location. And because I’m not buying $5,000,000+ places in LA, the under-4 units make the most sense.
To sum things up, I don’t disagree with Grant but real estate is so location dependent that one technique isn’t necessarily better than another. It’s highly personalized and at the end of the day, I go with what brings me the highest returns for where I want to invest. It all comes down to personal preference and where you get the best value.
Thanks again for watching!
For business inquiries, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
My own dad f’d me
Lately youtube has showed me your videos from 2017, and I really like them, I started watching your channel at the end of 2018 early 2019, so I didn't watch this videos before, they're good.
Misinformation! lol The upside profits in commercial real-estate is far grater than multi-fam residential. Not the same at all!
Wow Graham, you used to be really repetitive XD
He has billions of dollars in real estate you don't. You might want to learn from someone way way way ahead of you instead of trying to make any type of arguments. You are not a even close. You should pay for mentorship from him. Small minded. You have been renting in a very strong market. Let's see where you are in 10 years vs. Grant Cardone
I legit thought this guy and meet Kevin were the same person
Cap rate
Mate, you know what? you repeat your self a lot!
graham lowered his voice here
lol you don’t buy it , coz you cannot afford to put that much money and second you are scared to take that much risk.. hence this massive difference between your networth and his
You talk way to much, get to your point
Cryptocurrencies, forex trading the digital finance market as a whole are reposeful means and chances to make a remunerative living nowadays, if you can’t see that at this point is time you learn more about it. Austin @surefiredaytrading on ¡nstagram is in the very best sit to welcome your consultations
Cryptocurrencies, forex trading the digital finance market as a whole are reposeful means and chances to make a remunerative living nowadays, if you can’t see that at this point is time you learn more about it. Austin @surefiredaytrading on ¡nstagram is in the very best sit to welcome your consultations
Sounds like the sweet spot between the two options is anywhere between 2-7 units.
DISSLIKE UNSUB
Please get rid of the annoying background music… please!
That was a great video Graham. You broke it down really nicely! I own single family, duplexes and multifamily properties +5units and i am always debating if I should concentrate on one specially or just keep doing what I am doing. At the end they both generates similar returns.
Glad you stopped adding background music to ur videos. 👍
“SunCor Financial MPI review” "
You repeat alot
Graham don’t sell yourself short, your real estate knowledge is lot more than Grant. He a great salesperson but not a real estate expert. Any body who been in real estate for while know he full of it. These newbie who think if they follow home and people like Tia Lopez will get rich quick. Who am I just guy who started with one rental and now over 7 million in real estate with no debt.
I am surprised he did not mention the appreciation.
Why is he repeating himself a million times
For everyone saying Grahams speaking nonsense, listen better!
Got one word for you. SCIENTOLOGY! < Huge reason for Grants success. Wouldn't be surprised if his church (who don't pay taxes) act as a private investor for him.
Graham- you are trying to defend your position too much and ended up repeating the same point. It's very simple. Apartment is for bigger investors with: 1) stable stream of income net of all spending (i.e. doesn't need to use this money) 2) good credit score 3) have other properties with equity 4) the acquired property yield positive cash flow either as is or using bigger down payment 5) adequate knowledge of running a business. What you are doing is great for normal people who want to build up their portfolio one or a couple at a time. It is fairly low risk and manageable.
Lockdown comes…90% my renters gone back to their countries. Killing me…need lots of cash to cover cost
I agree with you . I start with one then..two ..then 4..then I manage others babies..50% 50% my own . To avoid risk
I love how you don't use this opportunity to trash on him, to mock him so as to stand on his shoulders to make yourself more attention (like meet Kevin does). But instead, gave an awesome explanation of your viewpoint with regards to this business and how the way you do it is also valid. Respect!
You repeated the same phrase like 20 times. Start with a bullet point list and move through them quickly. Concise. To the point. This reminds me of business meetings where I walk away thinking, that could have been accomplished in a 5 minute read email. Time is money.
Miss you
Well done Graham 👍🏻👍🏻👍🏻
Hey I got fish
Dude, Grant is a scammer, dont be so reverent to him.