How Reg A Crowdfunding is Disrupting the Real Estate Industry

My love for real estate started early in my life. My uncle, who is in the industry, instilled in me the  belief that investing in real estate was a stable way to earn income and build my wealth. I started on my own, buying properties that I had access to at the time. I bought a single family home and rented out the rooms. I then moved on to quadplexes (4 units) and continued to acquire rental properties. At one time, I owned 21 properties and as a pilot with a commercial airline, it became a bit of a hassle managing the properties on my own, but I did not see any other options. I knew I needed to be invested in real estate and it was really the only way that I could do so at the time. 

I wanted to invest in larger properties. I had always reviewed 20, 30, 50 unit + deals but they always felt out of reach. When I hit 30 - I knew it was time to take the next step. 

It wasn't that I didn't enjoy flying anymore but I knew I had more potential and I didn't want to be a glorified bus driver for the rest of my life. I want to own my own jet. Why not? Don’t hate!

Once I realized this I knew I needed to get around someone who was already investing in large multi family deals. 

That somebody was Grant Cardone. I ended up interviewing with Mr. Cardone and two weeks later I had everything packed up and I shipped out to Miami, Florida. Keep in mind I did not start as a Captain/Pilot or a Portfolio Manager for Cardone Capital but rather as a sales rep for Cardone training technologies. Sales training for car dealerships etc. 

Yes, I gave up the four stripes/captain hat to get around a true captain running five companies and buying large multifamily complex for 50M +

I wanted the experience.

Here’s one of my favorite quotes:

“The quickest way to get X is get around somebody who already has X and add value to the team”.

Now fast forward 12 months. As Grant's pilot, I was around him almost every day and he realized that my passion and energy for real estate was literally 10X. After a few arm twist I talked him into letting me join the real estate team and the rest is history… I wish!

Now Keep on mind at this time the rules of solicitation were changing with congress passing of the JOBs Act in 2012.  Very simply put -  you can now use social media to announce and let people know you are raising money/selling securities online.

The JOBs Act allowed for private companies to raise funds for their businesses from individual investors, that did not have the same income or net worth requirements as some of the investments opportunities allowed in the past. This also allowed for real estate investment firms to crowdfund, allowing casual investors the option to partner with established firms to invest in real estate. Large properties, that were historically only available to large institutional investors became available to everyday, non-accredited investors. 

These real estate funds are referred to as Regulation A and are tightly controlled by the SEC. Each sponsor has to file their funds with the SEC and the approval process can be arduous and costly. Sponsors are vetted and their documents reviewed to ensure their legitimacy. There are two levels of the Regulation A funds, Tier 1 and Tier 2. The first tier allows for a sponsor to raise $20M, with no requirements for minimum investments. The second tier allows for a firm to raise $50M, and although there are not restrictions on the minimum investments, non-accredited investors are only allowed to invest more than 10% of their annual income or their net worth, whichever is greater. 

With a sponsor raising $20M-$50M, they can purchase upwards of $200M in real estate assets and it gives individuals the opportunity to own a part of it. Not only is real estate a stable investment that will give investors gains due to appreciation, it also provides for consistent cash flow. It is a win-win, a no brainer and now individual investors, like me, do not have to try to acquire and manage properties on their own. Once offered this opportunity, I sold all of my real estate investments and partnered in a fund, which has allowed me to make 10X what I would have on my own. 

To learn more, visit cardonecapital.com