Get Rich With Real Estate | Start TODAY!! -Robert Kiyosaki [Rich Dad Radio Show]

this is the rich dad radio show the good news and bad news about money here's Robert Kiyosaki hello hello this is Robert Kiyosaki the rich do a radio show the good news and that is about money and of course for those you're old enough to remember our now president Trump that was his theme song from the show The Apprentice which means today we're going to be talking about my favorite subject which is called real estate and for all of you who are there who love real estate who like in my opinion the best investment you can in asset class you can invest in all your real estate buffs there please tune in simply because everything is changing and the same is true with real estate news question is how is technology affecting the business of real estate and I think you may have just see that Amazon is now in the real estate business and the question is what does that mean and there's crowdfunding now you know how do you raise money for real estate because that's the biggest thing I always hear about or get the motor you know and today we're gonna find out how technology is affecting number one the business of real estate number two is the funding of real estate and three possibly get to it is how you manage real estate because I think the management of real estate is the hardest part of the real estate deal unless closed you're a flipper and I'm not a flipper so our guest today is dear friend longtime Rich Dad advisor on real estate Ken McElroy he and Kim and I have done many many deals together I would say he is one of the primary reasons Kim and I are financially free is because Ken as a way of doing you know we started out doing deals right off really for a long time now but that when the crash hit in 2008 with we thought we died and went to heaven because they dropped interest rates and the prices of real estate plummeted after the subprime crash so real estate is more than just buying sticks and bricks and so today we're gonna be talking to Ken who is definitely the smartest guy I know in the world of real estate and we're talking about how technology Millennials and real estate and Amazon all come together and crowdfunding so welcome to the program Kenny hey thanks Robert always great to be on the show for Hitler well you at such a dimension because one of the things I talk about is you're gonna have real teachers and a real teacher is somebody who does practices what they preach every single day twice on Sundays you know you go to sleep thinking about real estate so you're the real teacher when it comes to real estate so before we let's just start with one quick question and we got this article on how Amazon is now in the real estate business what does that mean to you well first of all it's not surprising to me I think what happens a lot of times you know I I watch everything I read everything every day as you know we have acquired over a billion dollars with a real estate in the last 15 years and so it's not surprising to me there's a lot of very big companies that are in the space and you know Amazon is just a big household name so but in you know from what I read there's been tons of money that have poured into real estate it's becoming a commodity the way I what I tell people is it's it's no different than what the airline business went through or the travel agency business went through when it went from you know you had to use a travel agent and then all of a sudden now you can just you know get a flight you know in an hour basically online everything's moving online Amazon is just the latest player they're the biggest name and they obviously have a lot of money and but there's a lot of money being thrown at real estate right now and and your start we're starting to see apps location services you know now Zillow's a household name but you know if you really look still hasn't been around that long they have no company called really track they have you know real or calm and so everyone's moved what used to be you know kind of paper pushing to a electronic platform online Amazon what they did is they just partnered with another group that was already public in that group that had been acquiring businesses and so really what they became as the financial arm of a real estate partner so that's actually what happened either the financial arm or the location arm you know what I mean that other than marketing arm so they're gonna do both for sure I mean they're but you know they're they it if you read the article you know rheology they bought Coldwell Banker century 21 barbecue quarians company you know and their public and so what Amazon came in and did is they're you know they're they're in the article says the Amazon is not getting into the real estate business they're leaving that up to the partner but they're they're going to help them with the technology and certainly the money and it's gonna be a very interesting thing to watch it and mostly it's gonna start off in residential for sure obviously it's gonna start off in a single-family homes which is honestly almost already commodity you can go out like right now and look at any neighborhood anywhere pretty much and you know find out what it was sold for what it's listed for you know everything's gone online which is in my opinion it's been really really great it it levels the playing fields for almost anybody if you can't get rich in real estate now yeah you're complete idiot I'm still the idiot out there but anyway what does that say let's say your boys your two sons said I want to become a real estate agent what would you say to them well I think what real estate agent means now you know you know you and I it's interesting we've traveled a lot together and and we see well we're seeing this also in the financial planning world you know John McGregor has you know a good friend of ours and fellow advisors you know you will tell you that everything even even investing in stocks or anything it's become so easy and that's why you have all these day traders etc so I think it's gonna be very similar to that in other words and so my kids ask me that question I would say do it because of the education you know there's a lot rules and laws of things that you really need to know so it's just you know learn about real estate in high school or college generally unless it has you know some colleges have it as a degree but generally you're not going to have that and so you know digging down and and the real estate licenses in the broker licenses I think is still a good idea because you know these are really really educated there's there's a bunch of things that happen as you know between sellers and buyers especially trying to buy something that's complicated or it has clouded title or it has survey issues or has environmental issues and all those kinds of things those are really important things to know if you're representing somebody but real estate itself is all the internet now and so finding deals and doing deals it's so much easier and having the knowledge behind it you know that's just the wisdom and the experience you know you know to me is still the old-school thinking that I still want to see the foundation I want to see the roof I want to check out the plumbing and you know the siding and the neighborhoods and all that other stuff so maybe that's just too old-school thinking but that's - there's more to realization just in numbers I mean what do you think about that oh yes no no at all that yeah that wasn't important that's super important the new diligence and you know the actual physical inspections and all that stuff is really really really important but here's the cool part like even my company today we have about 250 employees you know anything you know everything's done now through Yelp and you know and and these these services that rate contractors and stuff I got so you could literally you know you could literally pull up to a house today pull it up on the internet take a look at it you go on Yelp and and find some local contractors literally call them you know once they're in your local area have them come over you know it's just so much easier and fluid down to build up find people to you know to do those kinds of inspections and things like that even realtors in the areas you know I mean you know they work certain areas and you couldn't you can see that can you you know you can you can see kind of who stones specializing in certain areas and and I think what it's going to happen is you know there's algorithm and things that show like already just like buying a car you know I don't know if you've ever got on cars car but I bought at least a dozen cars officer they're not directly off the website but it found different cars through cars.com it's kind of the same thing where you know like if you're buying a Ferrari let's say I look at the entire country you know and and so it's the kind of the same way when you're looking at a neighborhood you know you you basically are taking a look for outliers ones that are too high once ago too low you know and you're you know like you and I we want to look at the ones that are too low and so you know it's it's great to have everything on the internet so that you can you can actually focus on stuff that might be value add and you can compare like am I paying too much am I not paying enough etc etc and so the realtor the real earn have the advantage anymore because all the information is on site like when I buy a car it says good deals fair deal average deal you know what I mean it kind of do it does all that work for you you know yeah yeah yeah that's amazing cuz you know when I started out there this thing called MLS write multiple listing services and they of these huge books and I'd have to sit there and look at pictures and scan the numbers and use my brain for a change this is a quick question is you know I was watching the watching television they said all you have to do now is send us a location of your house and we'll send you a an offer I mean how'd it do that it's well I actually tested that service and you know it's pretty smart what they do you know there are people that need to sell stuff right away for who knows what reason divorce or sickness or health or job location or job you know relocations or whatever that might be so so what they do is they just lowball you so you know they take the Zillow number or whatever number they use and they just have a formula and you know they you know trust me there's a it's a big discount not it's not a market rate you know what I mean right right right so it's what works it's sort of what we used to do when we were just starting out we'd fire you know we've fire ten lowball offers and hope nobody killed us for being so obnoxious about yeah yeah I know you you love to negotiate on stuff and so is B you know it's like something-something cost or whatever you you lowball it right I just right I just bought it tricked out I I just bought a tricked-out Jeep that way right yeah yeah you know I offered the guy you know thirty grand less than I wanted right we ended up you know actually getting it for that so you know it's just it's just that's part of the negotiation so that's what that is it's there it's a way for somebody to cash out quickly but at a big discount and then they that's where they create the value okay hey Kenny we're gonna take a break but I'll go more into how you know big question always is is we're deferring to money and then when now we have crowdfunding and I want to ask your opinion on what how you do a crowdfunding because that's something I would personally would never do but I'm an old guy you know plus I don't have to do that and then the second question well I forgot the second question is but one is crowdfunding and they will get back more into a property management I mean because property management is your strength which gives you know you have you have two strengths you know Ross is the bank guy and you're the property management guy in MC Partners I think that gives you guys an unfair advantage in that marketplace and I guess my question is how does that how does that fit in to the new age of technology you know we have we had the property management which is as you know you then make it or break it in property management but also is the funding which which Ross being a former banker gives you guys an unfair advantage out there also so we come back we'd be talking about the in my opinion the two really sophisticated parts of real estate which is the funding finding the money for it and secondarily is how do you manage it because as you know one bad property management and you're all your profits are gone in a split second so we come back we'll be talking more to Kenny Kenny McElroy he's the author of number of really great books the ABCs of real estate investing which I recommend anybody know how many times have I told us as idiots out there say oh well get Kenny's whoo no I just told me what to buy I see ice was told you to buy Kenny's book you'll save yourself all pain and misery so that's his first book the second fact ABC is a property management which is you and I know is the key for a long-term real estate and then three is the advanced guide to real estate investing and that's where you I don't hate to use the word trick but that's where the magic takes place is in the financing and the whole structuring of the structured finance deal so the three books are ABCs our real estate investing ABC is a property management and the advanced guide to real estate investing and I unabashedly say Kenny McElroy is the reason Kim and I became very very rich when he became my partner about 20 years ago so we come back we talking more to my my partner and Kim's partner Ken McElroy and the subject is real estate plus technology we'll be right back welcome back Robert Kiyosaki Thursday ready to show the good news and bad news about money and we broadcast from beautiful downtown Scottsdale Arizona where it's either heaven or hell and right now it's pretty close to hell it is hot because of the risk a radio program anytime anywhere on iTunes or Android and all of our programs are archived at Rich Dad radio.com we archive them for one big reason as we are a financial education company which means we don't recommend you buy or sell or do anything and the reason we're reason we reckon we archive the program is if listen to this program again you'll learn twice as much you know you know this like you don't learn golf to gain one golf swing the more golf swings you swing the more you learn so that's why we archive the program so you go to Rich Dad radio.com if you have friends or family or interested in real estate or business partners please listen to this program again because our guest today is for Kim and I are special partner Ken Conroy's a rich debt advisor guinness three books are the ABCs of real estate investing the ABCs a property management which is the key and the advanced guide to real estate investing you know that's where everybody wants to get to I want to do some of those tricks and how you go how you make a million dollar to no pay although the self you know but you've got to start with the basics ABCs real estate investing ABCs of property management and threose advanced guide to real estate investing the Ken's book they'll make you Millions but also prevent you from losing millions and that's the part of the biggest thinkers real estate it's not like buying a stock the problem with real estate is illiquid you the moment you sign that dotted line you're on the Titanic you leave the key floating it will take you down with you and that's why real estate is much much different than buying a mutual phone or you know Apple stocks or something so once again we're talking to Kenny his company's MC companies and we're talking about how technology is affecting the real estate business especially the business of real estate investing it's different when you're buying a house to live in for you know consumption but when you're investing in real estate like I said real estate is extremely illiquid it's hard to get in and even harder to get out if everything reverses on you so you can anything any words of advice you want to have for the listeners out there what this has been buying real estate and buying a mutual fund well starting to become not very look the difference isn't it as white as it used to be for sure so what's happening you know people always use I don't have the money as an excuse and real estate and that's that's basically gonna be going away soon because yeah it's so easy to raise money now online it's there's a lot of legal issue around it so you got to be really really careful so there's there's two buckets of investors one is an accredited investor like yourself Robert and then a non accredited investor and there's a big difference and the laws around those are very very different and so when you're talking about investing in a mutual fund most of the time that would be a notic rather than investor so accredited investors you know they have certain things that you have to requirements you have to meet but now there's the crowdfunding is it's commoditizing everything so you basically can invest through funds online like fund rise and really mobile and grouts war for example and they're these are these are services that have been around not very long like five six seven years and you can invest only 500 dollars and so like fund rise for example which is the largest right now there there are one point four billion dollars in investments and these are loans and there are multifamily developments and office buildings and new construction homes and acquisition loans and construction loans and so basically they're taking your money like a bank online and they're investing it and they're giving you a return but you can invest that's like something like a money market fund than that where they actually move your money it is money manager yeah you know you're you're coming in in here you're investing 500 boxes some of them have thousand dollar minimum so the point is is that you know they're you know you basically just hey or transfer your money over to this group and then you don't really know what they're going to invest in so it's not that much different than a bank but it's their pre regulated obviously just like banks are and you know much different than an accredited investor that you know is we do a hundred thousand dollar minimums for those but this is you can you can do five hundred five hundred dollars and you know I did a podcast on this on my I am a podcast called ken macro official and we did we brought in a securities attorney cuz it's super complicated and you know I don't think we want to talk about people getting into the money raising business but it's what we really should be talking about is that it's so easy to get money today like you know there's so much money going to real estate in so many different ways this crowdfunding is just incredible to me that you know people it's literally like investing or putting your money into a bank and then they take and go invest you know yeah good good good good and then like I said your partner is Ross and he is he comes from the banking industry S&L crisis well they're gone now but anyway that gives because MCM is a leverage but also then we talk about property management and the last time I talked to you you were talking about you went to this conference and you're noticing how technology was also affecting property management which is in my opinion the hardest part of the real estate business so how is what do you see happy at technology and property management well good point so a lot of people like by the mutual fund is super easy right like right you buy it and you you walk away and it performs like it performs well real estate is not like that you know you buy a single-family house in the middle of Ohio somewhere has maintenances have a renter you know and it has all these things as capital needs and regular ongoing maintenance needs and so it's it's not you know a passive investment it's an active investment so and so the there's a lot of really really cool things that are there coming out right now that we're implementing in our company around payment of rent which you know as you know used to be super old-school you know is you know they would drop off the payment at your office or you would have an office and then come in with the check or cash and you know there's a whole system now that is all completely streamlined as you can imagine so just a collection of money it requires almost no time you know it's all direct deposits or you know you can you can take a picture of a check and put it in the bank that day so the the transition of rent and collection and all the way all the way and which is a property management function is is really really streamlined which has been amazing and same thing on the expense side so you know there's all kinds of services and absence that we've done for our maintenance that you know you can manage in you know we're tracking anything and everything that's actually going into the property like a water heater or plumb you know or a washer/dryer refrigerator or a carpet or whatever that's all now done online so you're getting these you know they should expense reports that you know are super sophisticated which has never been done before but then from a resident standpoint you know just the you can literally text are you know go on your app and put a work order in for for anything immediately and so the communication used to be so old school where you know they would go into the office and say you know I'm water leak or I'm my toilets running or whatever and then the office would write up a work order and then work harder be given to the maintenance guy you know maybe they got to it that day or the next day or hopefully but now it's instant just like a text and so it's really really really neat the sophistication and so what what I was talking to you about is I wasn't spoke to a thousand Millennials in Seattle about two months ago which is of course we were right near one block from the Amazon headquarters and a lot of it a lot of the folks in there were from Amazon and them you know that obviously Seattle's a very tech city and so it was very very cool to hear the way that people are running you know hundreds of homes you know on an app you know with virtual assistants and all kinds of things like the technology is really really really helping the efficiency and the customer service for the actual residence and and for the for the landlord it's you know they're outsourcing everything these days it's pretty wild so I says I save you a lot of personnel time and money and pay and all that stuff yeah around 20 years and you know we came over from old school and so we're wrapping our heads around you know that right now how can we be more efficient but also not necessarily just to save money at the company level even though that is the Viper it's really about customer service and taking care of the resident coz if you have a great wrestler in a house or an apartment you want to keep them there and you want to provide a high level of customer service to them that's really the reason and it's just like you know I remember you you and I have talked about you gave you that book about autumn is a ssin and AI and how all that's working it's the same thing in property manager you know you know it's just it like an advertising for example Robert I mean we used to pick when I first got it in the business we used to pull an ad out in the newspaper you know and then it would then they started having like you know homes and Realty magazines like in the corner of simple case or 7-eleven or CVS and and now those are all gone and it's all online and so essentially it's all done through blogs and you know yeah and Facebook and Instagram and things like that it's all now on these social media platforms and so you know just even that on how a person looks at a place buys the place or rents a place online it's a lot of times what's happening they're not even they don't even have to like like let's say we have something at Phoenix and they're moving from New York they don't you know most of the stuff is done online through virtual tours and things like that you can do a credit app online you can you can have your credit run online you can have your BIC all that stuff transfer online and you literally can can buy a home or rent a home and so quickly these days and and not even ever have to even visit it thank you I've got two quick questions again we're going out of time number one is how do you handle that nasty thing called the eviction because that's a big part of it and the second part is have you noticed a difference between millennial renters versus the old guys like baby boomers have you noticed any differences yeah oh good question there's no question so Millennials are they require a lot less space there they're pretty mobile you know everything offices offices are you know like Google you know they're all outside you know people there they move around there people don't have offices and so so people are running businesses and doing consulting work and sales jobs and things like that from their laptops or iPads or whatever and so they're doing it from coffee shops and and you know you know we're starting to see things look you know like we work and these shared workspaces and things like that and so that's that's what that means Robert is that the old-school hey we got two thousand employees that work in this building and therefore there's you know you know buying an apartment building or a rental across the street is can be a good thing while it still might be a good thing it's not what it used to be in other words you don't have people showing up at 8 o'clock and pouring out or five anymore and so these folks can be anywhere they want and so that you know the mobility is a big big deal and you know you know if you're really boiling it down corporate America has not been very loyal in my opinion to our generation or even the Millennials and so they know that and so they're jumping around you know they're looking at Lee might work somewhere for you know 10 months a year year and a half two years and then go somewhere else it's nothing for them to go from Seattle to San Francisco to New York to Chicago or whatever so yes and honestly one of the trends that's happening in the real estate business is these small apartments you know studio units of 300 to 400 square feet basically they just need a bed small kitchen and a bathroom and yeah that's it and so those are starting to pop up all over the place you know as as as there's a little bit more more mobility good good okay and then how do you handle the eviction in this thing so that's always been the same you know it's actually also coming of age you know so people's credit their rental history you know and they're their financial capability that also as you can start to see with these new credit score services and things like that that's also become you know technology has brought that to a head and so believe it or not it's actually easier these days for for us to to run credit on people and it's really understand whether or not they can pay or not and and so the key to we actually we have 10,000 tenants we have very very very very little evictions because the key is just like anything making sure that they can pay in the beginning and so if you do that first in other words what happens is a lot of times when people are trying to fill a vacancy they they rent to you know somebody through the newspaper or Craigslist or something like that without doing the proper background checks so those are the horror stories that you hear but if you just tell a renter hey I'm gonna run a credit check on you you know and they have let's say a criminal history or something or or bad credit they're gonna run they're not gonna even have you run it so just say that and you know and you'll eliminate 90% of your problems right that's good so it's you also you also talk about credit and criminal background checks right well we actually do credit criminal and sex offender checks believe it or not you know sex offenders are horrible obviously and so if you move one into a property different cities have different regulations but you have to notify the neighborhoods for example that there's a sex offender eliminating the neighborhood and so obviously that can be super disruptive I've had it happen to me because you're gonna evict it because of that oh my god Jeffrey Epstein we had a guys we had a nice we had a guy move from Texas and he's supposed to register in Arizona moves into a property in Flagstaff that we own and they notified you know hope the whole community either is a sex offender that lives in this community there's a 300 unit apartment building well you can imagine the disruption we have you know because if you have a your mother our family with you kids and you live next door or even two three or four doors down that's not what you want so you know and so you know we had we had an apartment we had up moving in him out but and he obviously was because he thought you're supposed to register in the state first and then and then it comes up when you pull their credit and their criminal background check out all that so the criminal background check is another thing different than credit obviously and but yes we don't want people that have felons you know they're convicted zones and things like that we we can you know decide not to answer those people okay thank you so this is low this morning over time one quick quick question you mentioned Seattle and Cl that's one of the biggest homeless populations LA is huge homeless populations from your from your position you know as being in the apartment business multiple multi family business what's causing the homelessness all across I mean wherever I go homelessness is everywhere like in Honolulu is just massive and Seattle is a massive LA its massive yeah I know I grew up in Seattle so I got to watch it slowly over a long period of time and it honestly has the most to do affordability so Seattle has because of you know Amazon Microsoft Boeing kind of started at Starbucks you know it's a super progressive city and you know it is what it is it's like Manhattan its constricted by water and mountains and everything is super expensive and Seattle's now not it's it's not undiscovered like it was when I was growing up so it's expensive you know you're looking at to $3,000 $3,000 so two-bedroom and so that is usually the issue is the the they can't afford to live anywhere so let me ask this question if if you have higher wages you know like right now they're proposing $20 minimum wage and all this stuff the higher the wages the more unaffordable property it becomes yeah correlation highway yeah I'm not proponent of that I don't think I don't think there's a big correlation I think what happens is you know just in any market you know prices jump and then they fall and same with rat rats you know sometimes just rent girls and sometimes there is it sometimes it it goes negative so the key what we do of course is we try to buy when it's low and and and and try to get down that way then and so so what you're seeing is if you're the officer that although this is them this is the downside of super expensive cities you know there's other ripple effects for example emergency services for teachers firefighters police they can't live in the city because they can't afford to you know and so and so now that's what you start to see this affordable housing and rent control and you know tax credit those kinds of things are coming into the markets that's the big thing right now is affordability so what we had is we've had a tremendous amount of rent growth we've had a tremendous amount of appreciation of property growth and that is squeezing out the people you know that are locked in on their wages and so you know that you're starting to see more and more and more on this home let's just say you brought up earlier right right well thanks again Kenny and we come back with Michael that go to ask Robert do you have time is taste stick through I mean hang around asked question asked for but you know more about real estate than I do so just be biessing them anyway yeah thank you for this part of the rich dead radius show again as I guess as Ken McElroy it's a great to stick around to the next point which is ask Robert so we'll be right back walkabout robert kiyosaki they're so ready to show the good news and bad news about money take a listen to risk a radio show anytime anywhere on iTunes or Android and all of our programs are archived at Rich Dad radio.com we archive them so because we're a financial education company we make no recommendations you buy or sell anything but we're an education company and one of the best ways to learn is via a repetition so if you listen to this program again especially vicious in real estate because real estate is one of those mystical projects that if you buy it and you make a mistake you're stuck with it it's like buying a Titanic just before it goes down and you don't want to go down with it whereas a mutual fund is better for amateurs because you can buy and sell it's very illiquid real estate it's not liquid the same as the business is not liquid so a real estate is takes a lot more sophistication so I guess today is my business partner investment partner Ken McElroy is the author of three great books ABCs of real estate investing the ABCs at property management and then vas advanced guide to real estate investing and we're talking today about how technology affects the business of real estate in front of me you know technology makes certain parties but there's some fundamentals that you still must follow simple again for that same reason real estate is not liquid you make a mistake you're stuck with it so once again can submit your questions to ask Robert at Rich Dad radio.com and Kenny has so graciously agreed to stay with us and answer the questions because he knows more about real estate than I do I was asked the person who knows the most the Melissa what's the first question for ask Robert our first question today comes from rusty in Austin Texas says Robert are you concerned with possible legislation inflicting rent control and other legislation that would be directly negative to yourself and other landlords is your strategy to stay out of those markets or do you find that there are still good ways to make money in those markets it looks like Austin might be headed in this direction with all the coastal cities moving here rent control is one of the most terrifying words I - terrifying words for me because it means the government becomes my partner in my business so that's why I'm glad Kenny's on there because rent control is something I've had direct experience with because my uncle and aunt live in the Upper East Side of New York City and thank God for rent control because enough for rent control they'd be on the streets now on the other side of it if I owned the building I'd be upset because my uncle and aunt lived there for 20 20-something years they couldn't raise a rent on them this was a spectacular Upper East Side apartment in Manhattan so I've seen rent control coming in in Los Angeles and other parts of the country so Kenny what do you think about rent control well I agree with you first of all red control if you really look at it has it worked so what Rick control was supposed to be is and there is a need for this it's it's it's supposed to be for people that can't afford rent and so and so the government the idea I think was sound but what like is Robert's example in New York the trust me when I say rent control is not right now in New York you know it doesn't help people that can't afford rent it you know it's being passed down generationally and you know there are very wealthy people living in rent control apartment so it just hasn't worked so what's the mean is that they rent it to their kids or something like that or yeah these red control bills right yeah exactly right right it's I think it started out initially correct and so there's different kinds of rent control but the the actual issue around rent assistance of some sort is actually an interesting topic it's definitely needed you know there's section 8 which you know people have heard a lot about that actually is a good program there's these tax credits that they give developers to build properties that provide affordable housing inside of a bigger building rent control itself has not actually worked and it's you do see it in LA Oregon state of Oregon just passed a big rent control law and they're working through some of the details on it right now and so it's a great question because the RET affordability is a big deal because of this we kind of touched on this in the in the interview with you Robert these cities they need they need you know service workers and teachers and and and police officials and fire firemen and you know they need people that are you know making less and to be able to live in the city that is a problem and so these are the issues that the cities are trying to address and rent control is kind of the buzz word for it and it's it's definitely an issue and certainly in Austin Austin is super expensive right now I started buying there in the early 2000s and so I I personally have witnessed what's happened there obviously we made a tremendous amount of money by being there but it's happening all over the country and I met with the Governor of Arizona two months ago and to talk to him specific about rent control because we're even looking at it in Arizona and you know and there's there's ways to handle the affordability issue and I just don't believe it's direct control good so as an investor how do you look at that I mean it either I mean that doesn't that put a cap on how much money to roi and the property there's no there's no question and that's actually part of the problem it loose it directs investment away and so you know this it'll be interesting to watch the state of Oregon it's gonna be honestly on stage for this issue to see what happens but if obviously can you imagine if you if your institution private equity or just even a real estate investor and you and the state has a rent control policy or law and you know you probably are going to pass by Oregon and move to you know somewhere else right so so they don't realize the ripple effects because I personally would not invest in an or again until I understood the full law and because yes it does cap your income and you know that's basically what they're doing they're keeping things they're telling you that you can't rent your place for market right and that's the reason you know Kenny's third book and I do recommend one two and three them you know the basics and the property management but the advanced guy to real estate investment rent control would blow apart the debt structure finance structures right oh for sure I mean just ready imagine you buy something I can tell you for sure your utilities are gonna go up your and your labor management costs are gonna go up your labor is gonna go up your your maintenance costs are gonna go up your advertising costs are going to go up your property taxes are going to go up but then the government says we don't care about the expenses we're going to tell you that we're going to cap your income so so you're gonna you know you're gonna have this you know people people focus on rent growth a lot but what they don't focus a lot on is the expense growth and that's actually where I spend most of my time you know you're over your expense growth is real and so you that's a factor and so what you want is obviously your rent growth to cover your expense growth and what the what the but what they're doing is they're saying hey we're going to cap your rent growth or your income growth and Neil certainly they don't care about the other part that that's part that scares me your risk your expenses are definitely going to go up over time and all then what happens you start to get into maintenance issues you know cuz you don't have the money to fixed fix things yeah yeah well thanks and then what's the next question there our next question comes from Frank and Rhode Island this is Robert we keep saying there is a huge crash that is eminent and I don't disagree I do believe our economy is very inflated my question is about buying property right now I just purchased another three unit for a very good price of one hundred and sixty thousand I plan on fixing it and bringing it to market value and refinancing it and pulling my money out if I do this and the property still cash flows positive would I still be at a serious risk if there was an economic downturn PS I just finished fake and really enjoyed it so thank you that's great very smart guy the thing about crash I don't know what the big deal is I mean every 10 years markets crash and for most people they live in fear of that but for Kenny and myself and professional investors crashes are the markets having a sale so that's like Walmart having a sale on t-bone steak or something you know and if they were cutting the price of Oz t-bone steak from $10 a pound to a dollar a pound he'd be buying t-bone steak well that's why I think about crashes but what can it can is a different point of view on that what crashes versus jobs right Kenny when you look at any kind of investment yeah yeah and I love the guys I love the fact that he put this example out there so he bought a three-unit 460 granite in cash flows well that just tells you right there that there are still deals out there that people can do but you and I we always go to cash flow period and without jobs there's no cash flow so you know you gotta follow the trends and so if you could still buy in there's cash flow you know and good cash flow and you're not super leveraged I think that you know there's still some room in there but there are definitely markets I think sometimes what happens people say you know hey the real estate market is gonna crash well I can guarantee you it's not going to crash in Detroit right and you know it might crash and yeah a little it might crash in Austin in my craft in San Francisco but it's not crashing in Phoenix and so you got a and then even in this there's sub markets inside of those markets that are very very very different you know you've got good areas of Phoenix and better ease of Phoenix and areas that are hot there is they're not hot Air's they're being redeveloped and or is there not being redeveloped so there's lots of dynamics and so the fact that he found $160,000 place three units and cash flows it makes me smile because that means that you know what you teach Robert and what you've been telling people to do is working he's going to refinance you can get his money back out you just need to make sure that it's still cash flow but you're right about the crashes you know right now we are have an affordability issue we are having price issues all over the United States and that is a potential at some point there's going to we're going to start to see a ceiling and there's going to be some kind of a bubble you know we talked about this on the credit side these credit bubbles that are pouring in the real estate so I don't know when but I think all markets are not the same you know well there's something else that you know what I sent Kenny this I should have brought it with me but this article about how pensions are gonna drive the next crash you know that defined benefit pension plans for the estate for the firefighters police officers and teachers the pensions are gonna crash the market but anyway I sent that to Kenny and I said thank you to him because about three years ago you bought this huge property in Tucson and then the private equity guys come in and they offer you ridiculous amounts of money for property because there's so much credit coming in to the property market today so at that point you were you began to sell that enjoyment we've almost never sell but they're offering you so much money you had to sell is that correct yeah yeah so we have we've sold yeah we own this very interesting topic as this guy is afraid of of this crash whoa so what we're what we're doing is we're we're selling in it's just like stocks you know for us you know we have 40 apartment buildings 10,000 units you know which one should we'll be selling and maybe we're to top maybe or not but we're certainly we've done very very well on them so it's dollar cost averaging that's all that's all we're doing we're we're taking some chips off the table keeping our properties that we think are the best located and have the best debt on them but what I think a lot of people don't understand is if a firefighter is working in San Francisco and they're putting money into a pension that pension has a pension manager that pension managers job is to put it into different kinds of investments real estate being part of those kinds of investment so that fire fire has no clue actually where their money is actually going and so that's what that article said Robert they sent me is it's it's the same thing we're really with the banks except in the banks are giving you you know a low interest rate with the pensions you're getting whatever the return is based on whatever that pension manager invested these Pinscher managers are very very smart people but they're giving money to guys like me you know we go to pensions to get money for multifamily real estate in the form of construction debt in the form of permanent debt in the form of equity you know it's just a bucket of money we don't really care where it's coming from it's what it's you know what what's the price of the money and so you know and so that's what I think a lot of people don't understand when they when they stop them when they put their money into these insurance policies or these pension you know it actually ends up investing you know in multifamily potentially right and I think the point here is it's a bubble when we had to start selling the junk because yeah it was because we couldn't you know it was we were at the top we couldn't make it cash flow anymore so Kenny called up he says look we have to sell and that goes counter to all this flip your house guys because they all want to flip property and when Kenny and Kim and I met you know 20-something years ago Kim and Kenny and I we love cash flow we don't flip so the market is so hot right now in the last couple three years we've had to start selling our non-performing that mr junk and that's what these pension yeah going into that's what spooky yes Lord take another step Robert I don't know if I told you the story but you loved it there was a property that we own did used to Texas it's a couple hundred units that we bought and we owned for five or six years and we had done some work on it so we had made some money on the equity you know we knew it was worth more but we were having a heck of a time on the management you know getting squeezing out the cash boy it was cash flowing but it was it was super tight and and you know just you know we made a mistake perhaps on the location or whatever whatever it was but it was still cash flowing we had made money and so that was one of the that was one of the deals on the on the chopping block for us we say hey this is something that you know on the management side we struggle with we don't see any rent growth here and we're getting killed specifically on our insurance with the Hurricanes down there in Houston that took a lot of our profit away you know and so so we decide to sell it so we put it on the market we got it in escrow there was a buyer and then lo and behold guess what I got I got the package from the buyer soliciting me to invest in my own deal look at this property that we you know we're an escrow with with this fire and so it's the same old same old like oh yeah the management sucks you know we're going to put ten thousand dollars a unit in here ever getting a $200 Rhett increases and and honestly I hope they do it but the point is is that we had tried and tried and tried and tried to move the needle on that property and here I was looking at the next guys pitch oh yeah it was like oh this is a big value-added and honestly I hope I hope you know we just sold that six months ago and I hope it works out for them but the point is is that people are invested people invested in that you know and I had already tried so I again I really really hope that the people invested in that property do well and maybe we missed something but the point is you know you can do anything you want you can you can paint any picture you want on anything and say it's going to be better next year and that's the you know that's the mistake I think a lot of people make is next year is definitely going to be better than this year and I've always as you know I'm I'm a I'm not quite the optimist around that I've always tried to look at how is next year if we lose everything next year what position are we going to be here hey once again Ken McElroy bristow radio show thank you for asking your questions as Robert you can submit your questions to ask Robert asked Robert a rich dad radio.com Kenny thanks for sticking around because like I said you you know a far more than anybody else I know about real estate so thank you for enlightening people of course it's always fun Robert thanks for having me on again okay talk to you later everybody thank you for listening the rich narrator show and good luck in the business bye

Channel: The Rich Dad Channel

Views: 204,782

Keywords: TheRichDadChannel, robert, kiyosaki, rich dad poor dad, motivational speakers, business ideas, make money, how to get rich, network marketing, how to make money, how to invest, passive income, cashflow game, real estate investing, how to invest in real estate, real estate, robert kiyosaki

Id: iscb3jixu-E

Length: 53min 50sec (3230 seconds)

Published: Wed Sep 04 2019