Stress test for buying real estate:
1. Does it provide cash flow with at least 4-8% a year (if it provides more than 8% you need to look with some magnifying glass cause there is probably something wrong!)
2. Time/money – is this going to be worth your time?
3. Do you love it?
4. Can you exit? Can sell the deal at any time?
If a deal makes 28% but that’s only $100 that’s not a good deal.
How many doors/units/tenants you have is the most important number in real estate.
Classes of properties:
A – (could be triple A) new or 1-3 years old
B – 3-20 years old caters to mix of white and blue collar, overall nice mix of cashflow and appreciation, returns of 5-7% before appreciation
C – 20 + years old
D – Inner city, tough markets
At Cardone Capital, we look at 100 deals to buy 1-3 deals