Ken McElroy got the invested capital back and still retained ownership of a 680-unit apartment property. Grant Cardone breaks down how the deal worked.
Ken recounts buying the distressed San Antonio property from a bank for about $21 million, improving operations, and refinancing after roughly two years to repay investors. He estimates the property’s value at $70-$80 million at the time of this conversation.
Grant and Ken also discuss recapitalizing older properties, moving capital into newer Class A apartments, buying below replacement cost, and finding opportunity in the rent roll.
In this conversation:
• How a half-empty property became a long-term hold
• Why location mattered more than the property’s condition
• How refinancing returned invested capital
• Why older buildings can demand more capital repairs
• What Ken looks for in newer apartment acquisitions
CHAPTERS
00:00 Money back, 680 apartments retained
00:18 Buying the distressed bank-owned deal
01:44 The roughly $21 million purchase
02:14 A bad asset in a good location
02:30 Stabilize, refinance and repay investors
03:06 What is the property worth?
03:26 Grant explains the “infinite return”
04:31 Recapitalizing existing properties
05:04 Why older buildings get expensive
05:44 Pulling capital out while staying invested
06:31 Moving into newer Class A apartments
07:24 Why accept a lower cap rate?
07:47 Replacement cost, cash flow and rent upside
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Figures are the speakers’ recollections and estimates at the time of recording. Capital returned through refinancing does not mean a property is debt-free. This discussion is educational; investment results vary.
