Should you watch the free Grant Cardone real estate training?

If you ever searched for real estate or business ideas, it is likely you’ve seen ads on your feed for a webinar. This weekend I spent two hours watching Grand Cardone so you can only spend 3 on deciding if it’s worth it. Today I’ll share the key idea from the webinar, plus a tiny bit of analysis.

On the most recent Webinar, Grant suggest a business proposal something like this (some numbers mine):

1. Arrange to get a loan with an 8% interest rate, that you can only need to put 5% down.
2. Find a property that returns a Net Operating Income, or NOI, of 8% of the property value. NOI is the cash the property throws off after exepense, Capitalization Rate is NOI divided by the value of the propety. Thus, a $1,000,000 property needs to throw off at least $80,000 of free cash flow. Plan to borrow $50,000, or 5%, from someone. Now you have a deal you can buy.
3. The value of the property is set by the cash flow. You can make minor cosmetic improvements (landscape maintenance, for example), then raise the rents. If you raise the rents so the apartment complex returns 10%, it will now be worth $1.25 million at a 8% NOI. Now you can take a loan out against that 1.25 million for $250,000. Pay back your uncle that loaned you $50K, and you just made $200,000. That is a loan, so it is…