Grant Cardone, a prominent figure in the real estate investment world, is making headlines with his innovative approach to blending real estate and cryptocurrency. As the founder and CEO of Cardone Capital, which oversees a staggering $5 billion in real estate assets, Cardone has recently launched a fund that aims to channel cash flow from properties into Bitcoin (BTC).
A Unique Investment Model
In an exclusive interview with CoinDesk, Cardone emphasized the uniqueness of his investment model: “Nobody else has ever done this to scale. Nobody’s ever done this particular model,” he explained, noting the overwhelmingly positive response from investors.
He recounted an anecdote about a longtime friend who had previously shied away from both real estate investments and Bitcoin due to perceived risks. After learning about Cardone’s fund, this friend invested a whopping $15 million, illustrating the growing interest in this hybrid investment strategy.
How the Fund Operates
For the first pilot project, Cardone acquired an apartment complex on Florida’s Space Coast in Melbourne for $72 million, adding an additional $15 million in Bitcoin to create a total investment of $88 million. The cash flow generated from the property will be dollar-cost averaged into Bitcoin every month over the next four years, until the fund’s asset allocation shifts from 85% real estate and 15% Bitcoin to a more balanced 70% real estate and 30% Bitcoin.
Cardone has optimistic projections for Bitcoin’s future. He believes that if Bitcoin rises to $158,000, the fund could experience a 25% increase in value. If it reaches $251,000 in two years, the growth could soar to 61%. Cardone’s ambitious forecast includes a potential Bitcoin price hitting $1 million within five years, which could significantly enhance Cardone Capital’s reserves.
Aiming for Expansion
Cardone is not stopping with just one project; he plans to launch an additional ten similar initiatives by June, aiming for a total investment of $1 billion. Should Bitcoin appreciate as he predicts, Cardone Capital could amass a Bitcoin reserve valued in the hundreds of millions, primarily funded through real estate cash flow.
The Influence of Michael Saylor
Cardone has been an established player in the real estate sector for over three decades, boasting a vast following on social media platforms. His firm currently manages around 15,000 units, with a substantial portion crowdfunded from over 18,000 investors. This success enables Cardone to distribute $80 million in dividends annually, all without institutional funding.
Despite his conservative approach compared to many in the cryptocurrency space, Cardone found inspiration in a conversation with Michael Saylor, co-founder of MicroStrategy. Saylor’s insights helped Cardone see the potential of integrating real estate with Bitcoin investment, leading to the development of his new fund.
Faster Capital Raising Opportunities
One of the key benefits of this innovative fund is the ability to raise capital more swiftly. In addition to attracting new investors, Cardone plans to issue corporate bonds to secure long-term financing, mimicking Saylor’s convertible note strategy. He also envisions leveraging combined mortgages against the projects, despite the absence of existing Bitcoin mortgage products.
Cardone is confident that as he invests hundreds of millions into these hybrid projects, traditional lenders will be more open to providing loans against a portfolio comprising both real estate and Bitcoin assets.
A Future IPO on the Horizon
Looking ahead, Cardone is contemplating the possibility of taking his firm public by 2026. His strategy for purchasing Bitcoin is notably price-agnostic; he intends to buy Bitcoin within 72 hours of receiving monthly cash distributions, avoiding any reliance on spot exchange-traded funds (ETFs). Instead, the plan is to securely hold the cryptocurrency through an institutional custodian.
A Cautionary Perspective
While Cardone is enthusiastic about the potential of Bitcoin, he maintains a cautious stance regarding its volatility, especially for younger investors. “The place I’m at in my life, I can take this chance. I don’t need more cash flow,” he admits. He acknowledges that for those in their twenties, seeking immediate cash flow, Bitcoin may not be a reliable solution, as it carries inherent risks and does not provide the same stability as traditional investments.
In summary, Grant Cardone’s innovative fund represents a bold intersection of real estate and cryptocurrency, aiming to leverage property cash flow for potential significant gains in Bitcoin, all while navigating the inherent risks of the cryptocurrency market.
