Of all the interesting and successful people I’ve spoken to for this series, I was probably most excited to meet Grant Cardone. His legendary career in real estate has provided a road map for me that has guided my own career. I truly admire his direct, forthright approach to business and his willingness to tackle the tough subjects head-on. I surprised Grant by wanting to talk about something other than real estate. What I really wanted to discuss was Money.
Money is a taboo subject in our society. We’re taught from a young age that it’s not polite to discuss it, and this advice is passed down the generations, doing a lot more damage than good! In order to understand money, to make money and to keep it, we need to be educated. We need to be able to talk about money! I knew Grant would agree with me on this, and that no topic would be off the table during our hour together.
So, what does a highly successful, wealthy entrepreneur say about his relationship with money? Here are a few thoughts from my conversation with Grant Cardone.
“I spent years, from the age of about 8 until I was 51 years old being afraid of money, afraid of using it and afraid of losing it. I was hustling and trying to gather money but I didn’t know how to use it, I was terrified to invest it so I just stored it and the more I stored and hoard, the more scared I got.
“Then every 18 months or so, I’d make some dumb move and decide I’ve got to invest in the stock market or I’m going to go into a mutual fund or oil or commodities. They never went up enough or I never took a big enough position. But when I did, I lost. I bought stuff when it was on the way down because I’m chicken.”
“Money might not make you happy, but it will give you courage.
“Money has to flow. The moment you hoard and protect money, you can’t play defense and offense at the same time. Money stops. You don’t need to create money, you need to connect with money. Who’s got it? How do I get it to come to me? A house is not an asset, it just ties up capital and costs you even more money for 30 years. Money is not flowing in a house. It just sits.
“Rich people don’t get rich by buying low and selling high. They buy great assets. Warren Buffett has bought great assets, typically at a premium. He bought Apple stock for $183 per share. All his investments have one thing in common. Cashflow. If you don’t cashflow, say no.
“I don’t believe in diversification. People should quit getting advice from millionaires. They are the most grumpy, scared, miserly people. Being a billionaire is different in every way. The way those people got there is not by diversifying. With most of them, it was one deal – Warren Buffett, one deal. Steve Jobs, one deal. Bill Gates, one deal – and once you’re there you can start diversifying.”
“Houses are not assets and cars are not assets. A car has a better chance of being an asset. At least it will get you someplace.
“Renting is going to become the new home building of America. Back in the 50s and 60s, the big homebuilders were building big suburban houses. Now they’re all building apartments. 300-unit complexes where people can pay $1500 a month.
“There are 89 million millennials that are or are going to be, renters because there’s no money. They don’t have money and they don’t want to lose mobility. They want to travel and do things with their lives. They don’t want to be tied to a property for 30 years. The baby boomers have already owned a home. They don’t want the hassle anymore.”
“Holidays and weekends are brutal because when money gets bored it wants to go play. You need to make it work for you. Bored money will leave you.
“The problem is often that people try and buy things before April 15th so they can write it off. It’s always dumb stuff. I only buy dumb stuff with passive income, so this is a little thing that I’ve added to my financial model. I like dumb stuff as much as the next person. I like watches. I bought two Rolls Royces. My three rules are One: that if you can’t buy two of whatever you want, with cash, then you’re not ready to do it yet. Two: it has to come from passive income and Three: you have to know it’s dumb. Call it what it is.”
“I was hooked when I sold my first house. I bought a house with 3 grand down. I had a $200 a month cashflow. I had it maybe six months, I sold it and made 6 grand. It was a 100% return on my money, and I was like how many times can I do this.
“My next deal was 38 units in one location. The second was 48 units, 30 days later, both in California. The third deal 90 days later was 92 units so I had a couple of hundred units. I’ve got 6500 units now. I have more vacancy today than I had ownership back then.”
Finally, I wanted to know the one word Grant would use to describe money. He couldn’t describe it in just a word, and said: “money is useless until it is used”. I agree with that. If you want money to flow to you, you need to keep it moving. Income from rental properties such as Grant’s is always flowing in. He hasn’t parked any of it in a place where it would stop ‘working’ for him. I learned more in an hour with Grant than some people do in three years of college. He spends smart, invests well and has perfected his craft. He isn’t afraid to talk numbers and to call out less-than-smart financial behavior. We could all learn a few things from Grant!