Real estate mogul and entrepreneur Grant Cardone has never been one to shy away from controversial topics, especially when it comes to the housing market. In a recent video, Cardone shared his thoughts on President Joe Biden’s proposed plan to cap rental increases at 5%, and his take might surprise you.
Cardone, who runs Cardone Capital, a real estate investment firm that owns nearly 15,000 apartment units across 41 properties, stated that the proposed rent cap would be “the greatest windfall to my real estate portfolio of anything that could possibly happen.”
While the Biden administration’s intention is to make renting more affordable for millions of Americans, Cardone argues that this policy could actually benefit large-scale landlords like himself. He explains that a guaranteed 5% annual increase would significantly boost the value of his portfolio over time.
To illustrate his point, Cardone broke down the math. Starting with an average rent of $2,000 across his portfolio, he calculated the compounding effect of a 5% annual increase over ten years:
- Year 1: $2,100
- Year 5: $2,552.56
- Year 10: $3,257.79
This compounding effect would result in a substantial increase in rental income for Cardone Capital. “It would make me an extra $30 million a year in rental income, and increase the value of my portfolio by over four and a half billion dollars,” Cardone stated in the video.
In a recent post on X, Cardone made further comments on Biden’s proposed action, saying it will reduce new supply, resulting in less competition. “The solution is never more controls but more supply. Supply and demand control pricing, not regulations.
Regulations for affordable housing in LA, San Francisco, San Diego, Oakland, and San Jose have made California the five most UNAFFORDABLE real estate markets in the country.”
Cardone’s success in the real estate market is well-documented. His company, Cardone Capital, has been on a buying spree, recently closing an all-cash acquisition of a 468-unit property in South Florida. Over the past six months, the company has closed nearly half a billion dollars in all-cash acquisitions and is set to close on additional, similarly sized transactions in the coming months.
Cardone Capital has successfully raised over $1.35 billion from retail investors across its investment funds, attracting both cash investors and those using self-directed IRAs. This crowdfunding model allows average investors to access institutional-grade real estate deals, a strategy that has paid off handsomely. Over the past 12 months, Cardone has distributed $68 million to investors, equating to an annual cash yield in excess of 6%.
While Cardone’s perspective on the proposed rent cap may be controversial, it shows that solving the nation’s housing crisis will take more than piling on more regulations.
