Grant Cardone created his real estate investment program with the intent of offering passive income to his investors. Cardone Capital purchases and manages multifamily properties as well as providing advice and training about real estate investing to over 4,700 clients globally; many have achieved financial independence thanks to him! His company boasts an active social media following and was featured in Discovery Channel’s Undercover Billionaire series.

Cardone has achieved prominence in the world of finance as an author, mentor, sales trainer and TV personality. His success can be found through real estate development as well as consulting firm Cardone Enterprises; revenue earned from online courses and mentorship programs has added up to over $600 Million according to Forbes.

Although his real estate program may appear to be an attractive investment opportunity, it may not live up to expectations. First of all, Cardone Capital funds are a type of syndicated investment which pools investor money into one property – meaning if that fund goes bankrupt you could lose all your investments. Furthermore, they use substantial amounts of debt when purchasing multifamily properties which allows them to obtain larger loan amounts than would normally be possible. Furthermore, management fees from Cardone Capital often range between 5-20 percent of profits generated from each property managed.

One of the main issues with these funds is that they rely heavily on rental income as their source of profit, but this has become increasingly difficult for Americans due to high fees charged by Cardone and other fund managers.

These funds also impose higher interest rates on their investors, which stands in stark contrast with the low fixed-rate mortgages that most people have today. As a result, profitability may decline substantially over time for these funds.

Cardone’s property purchases are funded with variable-rate loans with interest rates typically between 3.75% and 5%; this figure exceeds the current average rate of about 7% and would significantly increase operating expenses of these investments if increased.

Concerns are expressed both for the financial health of these funds as well as their effect on the housing market. As these funds expand, their growth will lead to an increase in rental properties available and likely force some existing homeowners out. Added rental properties will add to national supply thus driving prices higher and making homeownership less affordable for most Americans – this trend mimics that taken by Blackstone, Vanguard, and other large institutional owners of real estate who use economies of scale, tax advantages, and other means to maximize returns while mitigating risk.