Over the years, many people have told me that they find real estate investing confusing and complicated. So my goal today is to demystify your FIRST deal and share my most successful real estate strategies in a simple, straightforward way… 

You’re going to learn:

  • Why Goldman Sachs said they weren’t interested in me (and how I caught their interest anyway)
  • The most important things you need to KNOW about a deal and how it works in 7 steps 
  • How to ANALYZE your first rental property deal, plus understanding the importance of T-12 statements

So listen up, because this story I’m about to share with you is KEY to all my other real estate investment strategies.

How I Got Goldman Sachs to Pay Attention

Five years ago, Goldman Sachs paid no attention to me at all.

I was in a meeting with their bankers one day.

Back then, I was worth about $300 million, and the lady next to me was worth $2 billion.

So they were ALL focused on her.

I told the banker, “Hey, look. I’ve got $300 million, and my businesses are worth ¾ of a billion dollars and growing. I’m buying all this real estate –”

He cuts me off and says, “Grant, we’re not interested in you, because you’re never liquid.

But you know me. I never give up.

I continued to pitch my deal and said, “Look, this is what I’m buying.

He sat up a little straighter and asked, “Is that River Oaks? Houston, Texas? Goddamn, is that Hanover right there?” 

“Grant, you’re working on THAT deal?”

Goldman Sachs wasn’t looking at my net worth, my illiquidity, or my credit anymore.

They were too busy asking questions about the GREAT DEAL I brought them:

  • Where’s the cash coming from?
  • How will you piece this deal together?
  • Will it cash-flow enough to afford quality property managers?


You have to know how to talk about your deal.  

You have to know the terms involved in real estate investment strategies.

And you must also show them you’re capable of your own due diligence and research.

Finally, you have to be able to analyze deals.

Only then will you get their attention like I did.

What You NEED to Know Before Your First Deal

Remember that not all deals are equal.  

You can still lose money on deals and go bankrupt in both residential and commercial real estate, especially if you don’t know what you’re doing.  

More importantly, you have to know how to identify deals that don’t lose money, provide you with cash flow, and appreciate over the long term.  

Must-Know Strategies for Understanding a Real Estate Deal

By understanding all the real estate terms and what constitutes quality real estate investing opportunities…

You’ll be better positioned to hit the ground running and spot the best deals in your real estate market with confidence and certainty.  

You’ll know how to: 

  1. Analyze the cash flow of a property.  This number is the HOLY grail of finance and should always be POSITIVE.
  2. Use cap rates to find great multifamily properties.  The lower the cap rate, the lower the return, the lower the risk, and usually, the better the property and location.
  3. Calculate net operating income (NOI). The higher the NOI, the lower the debt, the more cash flow you and your investors receive.
  4. Use debt service coverage ratio. Your NOI should be 25% greater than your debt load, creating a typical DSCR of 1.15 to 1.25.
  5. Underwrite a loan. Underwriting helps the lender determine how much risk they are willing to accept.
  6. How a deal works and how to exit. This refers to how you as the owner are going to sell or refinance the property in the future. You should not overlook this critical strategy, because this is how you and your investors make money.

How a Deal Works in 7 Steps

Generally speaking, there are 7 steps to a deal.  If you follow them in an orderly manner, you could save yourself a lot of pain. If you’re not 100% sure how to execute the following steps on your own, you should always seek a professional’s help!

1. Find a Deal

What happens when you find a deal? All the pieces fall into place. You remember all the deals that didn’t work, the deals that you passed on, you do your calculations, and all the hard work pays off.

You’ll have certainty in your mind on buying this income-producing deal.

2. Contact the Broker or Seller to Get Control of the Deal

The next step is to lock that building down under contract or get a Letter of Intent (LOI), which gives an overview of your offer to the seller indicating your intent to move forward with the deal.

3. Analyze the Deal

Do your calculations and due diligence, which is usually completed within a period of 30 to 45 days.  This will determine whether you can pay the purchase price or if you need to walk away from this deal.

4. Know your Financing

Let the buyer know how you’re going to get a loan, and who your lender is.  Give them confidence that you can get the financing for your loan.

Consider personal crowdfunding — going to your friends and family to raise your down payment. Make sure you get a lawyer’s support to put these crowdfunding structures in place.

5. Close the Deal

Don’t negotiate the price till the very end, and close the deal with 100% certainty.  The top brokers don’t have time for unconfident and fickle buyers.

6. Manage the Deal

Hire a property management company.  Know how to raise rents and get the right tenants in your property.  Refinance it when possible to pull all your money out of it.

7. Exit the Deal

Market the deal for sale, know how much to exit for, and know who your buyers are.

How to Analyze a Deal Using the 4 Quadrants of Real Estate

I don’t move forward with the deal unless I fully understand the four quadrants, and you shouldn’t either.

Use the 4 Quadrants of Real Estate to help you analyze a deal:

  1. NOI
  2. Down payment (Equity)
  3. Cash Flow
  4. Price

Don’t get locked into 1 quadrant. Each quadrant is influenced by the movement of others, and all 4 matter.  

Also, having 4-5 variations of these quadrants is KEY to having a sound real estate strategy. For example, plan for the worst and best case scenarios, paying a higher price to win the deal, or paying more for the down payment.

If you’re fully prepared for all 4-5 scenarios, it’s a good sign that it’s the right deal for you.

And remember, if the deal doesn’t feel good, don’t buy it.

Take Action on These Real Estate Strategies Right NOW

  1. Check out sample T-12 statements online. Remember that this is an important document showing ALL information about the last 12 months of revenue and expenses for an apartment building. It’s more important than the pro-forma because it shows the actual history of the building, not the projected property value.
  2. Familiarize yourself with the types of income and expenses you would see in these types of statements. See if you can identify the real estate terms you’ve learned from your flashcards.
  3. Ask yourself: Does the investment property in the report look like a good deal to you? The more you practice asking yourself this question, the better prepared you’ll be to act on a great deal when you spot one.

Know this: a confident multifamily real estate investor is certain of the information they have, the due diligence they’ve done, their numbers, the property’s valuation, and the future.  

If you can achieve this level of certainty, you’re on your way to potentially making passive income with real estate. Eventually, you could gain financial freedom.

Be Great,

Grant Cardone

Disclaimer: This content is intended to be used for educational and informational purposes only. Before investing, you should always do your own analysis based on your own financial and personal circumstances before making any investment. Grant Cardone is an industry expert who has been investing for over 30 years and his opinion is based solely on his own personal experience and circumstances. Individual results may vary. You should perform your own due diligence and seek the advice from a professional to verify any information on our website or materials that you are relying upon if you choose to make an investment. Investment involves great risk and there is no guarantee of performance or results.

We are not attorneys, investment advisers, accountants, tax professionals or financial advisers and any of the content presented should not be taken as professional advice. We recommend seeking the advice of a financial professional before you invest, and we accept no liability whatsoever for any loss or damage you may incur.

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Star of Discovery Channel’s “Undercover Billionaire,” Grant Cardone owns and operates seven privately held companies and a private equity real estate firm, Cardone Capital, with a multifamily portfolio of assets under management valued at over $4 billion. He is the Top Crowdfunder in the world, raising over $900 million in equity via social media. Known internationally as the leading expert on sales, marketing, and scaling businesses, Cardone is a New York Times bestselling author of 11 business books, including “The 10X Rule,” which led to Cardone establishing the 10X Global Movement and the 10X Growth Conference, now the largest business and entrepreneur conference in the world. The online business and sales educational platform he created, Cardone University, serves over 411,000 individuals and Forbes 100 corporate clients throughout the world. Voted the top Marketing Influencer to watch by Forbes, Cardone uses his massive 15 million plus following to give back via his Grant Cardone Foundation, a non-profit organization dedicated to mentoring underserved, at-risk adolescents in financial literacy, especially those without father figures.