DO THIS TO BUY REAL ESTATE WITH NO MONEY DOWN - Robert Kiyosaki ft.Ken McElroy

[Music] but the idea was not to make money the idea was to train my mind to think that I want a hundred percent dead we're talking about debt that's paid by a tenant you know death is paid off by somebody else I signed up for a little real estate course I've told this story before my guitar listen to myself it was through $85 it was three days that was a start so I signed up sign my name sat down the course three days later at the end of the course he was a great instructor because he was a real real estate investor he didn't need the money and that's when you know the guy is real because he was you could tell you didn't need the money you liked teaching you liked inspiring people she was just like my Rich Dad since you don't need the money so then the next thing he said at the end of the program he says when you leave this program is three days Friday Saturday Sunday says your education begins now what you do at the end as Kenny says he gets through the process I'm three days and you start again that's the process so he says at the end when you end Monday morning your job is look at a hundred properties a hundred properties in 90 days take everything I've taught you and look at 100 properties that was a start so naturally I'm 30 guys in 40 guys for 35 guys in the class y'all say okay yeah well I'll do it we all break into little teams and as you know by Tuesday they'll quit because they're too busy you know that the gotten to the school they didn't start here again but there's three or four other guys and I we stayed through it and we went to went to real estate agents went through the little files was really antiquated ways of MLS multiple listing services we're looking for a little dinky deals small deals because that's all we could afford we'd have any money so I kept looking you know I'll go knocking on doors and real estate agents have you know Realtors they're not the best of masters are they know there are all the focus on commissions yeah normally and I go knock on the doors to the first thing they say to me you can't do that here this is Hawaii you can do that in mainland in California Nebraska but you can't do it and that's the first thing that when the first thing is my adviser said is that's what losers will tell you you can't do that here look somebody is doing it here may not be the real estate agent but it might be you so I knocked in the doors we find these deals we have to go look at him to wait to write down you know it was a 3-bedroom 2bath than 65 back then was 65,000 was a lot of money away now they're 4 million and so in the 90 days we had a hundred of these it was day and night we just kept going until we got it done and that was the process right at the end of the process I've gone through a hundred deals it was like wow I learned more going through the process talking to real estate agents knocking on doors looking at different properties and finally I was desperate this guy says well I got I got what you're looking for an Allen of Maui now most people think Maui is too expensive how can that be how could molly be affordable but that's your blocks I flew over to Maui I found this little 1-bedroom 1-bath condo right in keine Pali the richest place on earth a little one-bedroom one-bath condo for $18,000 holy mackerel but the deal was I could not use any of my money that was the adviser says I'm gonna teach you so you'll never need to use money at your money I get if you can raise capital you'll always be a rich men okay so go the pool a little $18,000 unit little dinky thing $18,000 so what's the price on it he says I mean how much to put down he says two thousand eighteen hundred ten percent down was a foreclosure I get broke up my credit card and I bought it so I had no money in the deal and I made $25 a month no minor deal $25 a month in my brain would it shook oh my god I'll never need money again I can never say I can't afford it and I can never say I can't do that and what oh my god and that's how I got started so Kenny took off after that and we still make millions of dollars when the market crash made even more but the process is the same right yeah it's absolutely better than one bath - how many units did you do us last year a thousand five thousand units same process but you have to learn the process as a matter of fact if you think about it the whole system is designed to use bank financing I mean you know all these hard people that are all these people that are working so hard are actually putting all their money into the bank well that those deposits are a liability they're an expense to the bank so if you put money in the bank it's an expense to the bank because they have to pay you interest I have 100% debt you know my first property was $18,000 I put $2,000 down with a credit card and I was making $25 a month I think that's the best example Robert because essentially the what you did was you didn't use any of your own money so the only costs that you had was whatever your debt was and whatever your whatever it cost the $1,800 on your on your credit card was right this is but the idea was not to make money the idea was to train my mind to think that I want a hundred percent debt most people I want to get auto do it I want to get out of debt I want to get out of debt and what what we're saying here is the debt pays all your expenses and gives you some income that's really as simple as I get so we started with this so if I have no money in the deal it's 100 percent debt and making $25 what is my return on investment it's infinite is this right I mean you have you basically have no investment and you're making $25 a month the reason why we want so much debt is because if I'm borrowing right now I'm borrowing it say four or four and a half percent and inflation is say four four and a half percent then I'm using basically your money pension fund in you know mutual funds mutual funds insurance savings I'm using your money to hedge inflation and buying buying assets so that's how the that's how the system works and that's how the wealthy get really wealthy you see the best thing about doing those hundred deals is I was learning to think about debt is good as long as you have in your mind death is bad I want to use my equity ry goes down that's a good point and there is bad debt of course bad debt would be credit card debt or or if it was costing me $25 yeah exactly right yeah so there are there's definitely debt that you don't want to get into but we're talking about debt that's paid by a tenant yeah you know debt that's paid off by somebody else so that's a that's a really important point so if you're borrowing money you're gonna want to make sure that you have the rent to cover it once if I hadn't done this myself I would not understand what Kenny said it was a hundred and forty four unit property that was existing that had it was 95 percent occupied with tenants so that was important piece and the next door had another ten acres and so the deal was is that I was going to build a second phase on the ten acres and then we were gonna have one property that was two hundred and fifty six units and so that's what we did so we took the first 144 units and and the land and we went to the bank and we got a construction loan to build the second phase and then we built the second phase and through management through good management we filled up the property and all and then we went back to the bank and we refinanced the whole project and got one loan on it so we use debt to build it we use debt to take out that construction debt we had this property as window yep and it was pumping about three hundred thousand yeah so Kim and I every year we're receiving three hundred thousand dollars in cash flow from the tenant income most of it tax-free yes because of depreciation and all that all those things you have to learn so three hundred thousand dollars from most people's a lot of money the problem was Kim and I had I mean 1 million in it right yeah I think so we had 1 million equity in it so what Kennedy is when they refinance it he gave us our million back so Kim and I got all of a million dollars back right yeah through a refinance and we still have this right so we're saving 300,000 with money into a jail to me that's that's great deal yeah and people might ask how so there's a lot of things that happen inside of here one was that this was over a five or six year period the rents had gone up we had increased the value and during that time interest rates went down if you remember I think we borrowed the original at somewhere around seven percent and then we refinanced somewhere around five so we actually saved on the loan on the on the interest rate of the loan and so what we had was we had a property that was worth a lot more and it's still cash flowed very close to what a cash flowed before and we got the million out and the million was tax-free because it's a refinance so when you pull money out from when you put a new loan over an old loan and you pull that money out that's tax-free so with that million dollars we gave it back to Kenny another deal Manik same process goes out goes out goes out and now it's huge yes it's what we call the velocity of money so now at that point Robert and Kim were still in the deal they were still cash flowing and then that million was also it works somewhere else and so I'm not saying it's easy and all that but again it starts as a process yeah it's funny people ask because now of course edgewood is infinite there's no investment in the property and it produces a great deal of cash flow or you're raising the rents right that's right yeah we're raising the rents especially now in this market but now people come to us and say do you want to sell do you want to sell and and we're the the question is is why would we because it's producing all this cash flow and we have no investment so all it would do is create a taxable event so all word we don't want the money for I understand that right right yes there's millions of dollars in equity in the project but we're not interested in that we're interested in the cash flow it's a big difference in the way we think so I want you to all to understand this starts here yes you know and if you don't start you don't go through the process and well oftentimes talk about it is when I went to flight school in Florida I couldn't fly entered here Kim pilot that's the process but if you don't go through the process you stay here but the most important thing is how we think I'll give you one more thing where it takes absolutely no money or it does take some money what I was thinking about 15 years ago I wanted to I wanted to have a little ranch and Kim says why they don't ranches don't cash flow right that's right yeah so I said that came up I can get a ranch from free would you be happy and she says show me oh yeah but the point here is this it's only up here you know so I went round I went wandering around all over the southwest and tombstone and Bisbee Arizona and all this I'm looking for a property I can get for free that was a challenge she said you can have as much land as you like as long as it's free because it doesn't cash flow he was 80 acres in Bisbee Arizona so I walked up to it I was looking at the property I knew it cuz his beautiful property was tall mountains oak trees all over it a little stream running through it and all this and the problem was it was a hundred and fifteen thousand dollars there's no property there's nothing no improvement the building on it except for there was a little road running through it like this and it was a little building here and this was a stagecoach depot at one time with Wyatt Earp and all those guys to go past this is Tombstone Arizona over here this is Bisbee Arizona here so I'm staring this property and I said to the realtor doesn't know what he was so homeless has probably been facility so ten years hey I said what's wrong with it you know the questions he says I don't know I looked around I said oh that's what's wrong with it the sign was down nobody could see that they drive by it all all day long they could never see the sign so I said these guys they really want to sell I don't he says yeah hey desperate and I said well where they live it says Florida no all of this is good news okay this is good news okay make them an offer and Kim's watch me said this is the offer I'll pay you full price because by now they want the discount because they're not selling I'll give you a full price but I have to have this property for free and I will pay you in one year I'll pay the whole thing in one year so basically it's called I took a note right I got a note $415,000 I take control of this property this little building here I put $25,000 into it and this was the stream was running like this through it and I built a little cabin right there so this and this we fixed the whole thing up and then about nine months later I was finished I put it up for sale and we sold that we sold thirty acres this house this dream I had fifty acres left and I sold this for two hundred and fifteen thousand so at the end of the deal it's only going on in my head we get this we got that we got fifty acres and I put after expenses let's say about eighty eighty thousand dollars in my pocket and I had that land for free so these guys are happy I'm happy my fifty acres I never see it anymore still beautiful but that's how money is made from your head just by understanding things it's all education and this here happens every day somewhere every single day that could be a mobile home park it could be a corner for a for a gas station on a commercial lot it could be a piece for apartments it could be a piece for single-family but this is how master plan developers make all their money they buy a big piece of land and then they sell off parcels to the individual builders and all the way down people are taking chunks and at the end you know who makes you know who who pays for all the consumer its whoever you know however these guys on the thirty acres made their money or is actually pays for the whole project well this I had to understand loan-to-value and all those things they talked about here but I knew this would be valued around this much with an improved house and this I knew the best I knew my target would I had to set it out for so these guys I went got the loan they pay they borrowed whatever they borrowed but I got the money here 50 acres the point here has done all the time the one point I just wanted to make was I think when I first started off in the business I I wanted to just do it all myself and that was my biggest mistake was I thought I needed to know everything about everything and and that that actually prevented me from starting and so now I started going to these it's funny you go to these seminars and you go to these different places and you see these people that are all trying to do the same thing and they all have that spark inside of them and everybody leaves and they don't follow up with anybody and really inside of that room it's really their own team so I would just encourage everybody to just start asking you don't need to know about financing you just need to find somebody who does and go ask questions and put them on your team and you don't need to even you don't even need to be a realtor you need to find somebody who is and go fine you know and you start you start putting this team together and the next thing you know as you start to meet that things start to happen momentum starts and and that's how you get the ball rolling and it truly is all about education and and you'll learn from other people but you know the last thing you want to have is for you to you you to be the person who has to make all the decisions on everything and know everything because that will limit you severely

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Keywords: Robert Kiyosaki, how to invest in real estate robert kiyosaki, real estate investing for beginners robert kiyosaki, real estate investing tips for 2020 robert kiyosaki, real estate investment strategy for robert kiyosaki, how to invest real estate with no money down, how to buy real estate with no money robert kiyosaki, robert kiyosaki real estate investing, robert kiyosaki real estate, rich dad poor dad, real estate investing, real estate, ken mcelroy

Id: _KstVkj3Bac

Length: 16min 50sec (1010 seconds)

Published: Fri Feb 07 2020