How to Attract Investors and Use Other People’s Money - Robert Kiyosaki, @Ken McElroy

this is the rich dad radio show the good news and bad news about money here's robert kiyosaki hello hello hello robert kiyosaki the rich dad radio show the good news and bad news about money and today we have great news about real estate all you guys out there who um think you're the next donald trump or some tycoon this is your show real estate's in a bubble stock markets in a bubble bond markets in a bubble so i just caution you on that because um as some people heard me before the best time to buy is after the crash right i mean that's that's right so just be careful right now so take what we say right now just realize we're at the top of a bubble right now we are at war with russia and we got a running our country [Laughter] it doesn't mean you still can't get rich though so i am here on this show with my one of my best friends ken mcelroy been 25 years been fast we have made frickin millions together and we pay very little in tax and um so i'll tell you how we met is when i came out with rich dad poor dad right we traded the cash flow board game and some people how do you sell this board game well i think i'll write a books i wrote a book called rich dad poor dad and naturally the publishers in new york said you don't know what you're talking about what do you mean your house is not an asset what do you mean savers are losers what do you mean the rich don't work for money and it just violated everything that these academic types are taught and the reason is because they went to school they're a students and capitalists don't really need that stuff so anyway i'm catching hell all this and then i meet kenneth mcelroy and he goes hey i like what you're saying yep right yeah that happened well how'd that happen well i gotta tell you you know um like millions of other people robert um i loved your book i i i it was exactly the message that i hadn't read anywhere and and it was true and and so um i was lucky that i got to meet you after after reading it and and i i i you know it's it was what i was doing but i there was no book about what i was doing i just knew that cash flowing real estate using bank debt and all those kinds of things um worked yeah because everybody was saying get out of debt live debt free and all that and for most people that's really good advice if you have no financial education live debt-free and all this but the biggest mistake that people make is they call their house an asset and if you understood a financial statement which is rich dad poor dead assets put money in your pocket whether you work or not and liabilities take money from your pocket so the average person even they have a phd from harvard they're buying liabilities they call assets like a 401k is it an asset or liability no it's a liability because the money's going out of your pocket that's right i just don't touch that stuff so it's because wall street and the federal reserve bank and all those guys are telling you what to do that you think your liabilities or assets oh my my my father poor dad he always said yes son that house is in our name and it's my asset and my rich said was your father may be a phd but he's an idiot you know and so when kenny comes walking up to you one day says i like your book i'm going to thank god but there was another reason can i like the book is because the key to real estate is management property management and what were you doing at the time well that's part of why i loved your book is i was managing property for other people so i had a i was on-site manager i was collecting rents and and paying the bills and and then if there wasn't enough money the owners would get mad if there was more i would pay it to them and they would be happy it was really that simple that's how property management is if if you return cash flow to them they leave you alone if you don't they don't leave you alone so so in the property management world i was living the the the principles in the rich dad poor dad book i literally was managing for people that had you were using debt they were using other people's money for the equity they were buying real estate they were putting because i would meet all the partners they would come through the buildings and i would meet them all and they were just normal doctors and cpas and lawyers and and and i was like how this is why how all this works and then you start to put the pieces together because i was in the business long enough and and um the principles in rich head poor dad were true and that's why i enjoyed the book so much but the funny the hardest part of real estate is finding a property manager because if you can't find a property manager you're it yeah right yeah well and i didn't know that until later you know i was i started managing properties in college you know for free rent basically and then you you learn pretty fast like who pays around who doesn't pay rent you you know and the problems that can come from renting something too quickly and not doing credit checks and all those little things that all add up to no cash flow and so that's what gets most new real estate investors in trouble is they don't know how to manage the property and there's a lot of legal stuff to it yes well yeah so so here's what i see the big one of the biggest mistakes is people could look at it like a stock or a stock market or just you know they invest their money and then they walk away like all of a sudden magically these great tenants are gonna show up and and you know you're gonna be you know getting three bids for the landscaping and the painting and the cleaning and all the things and the utilities and looking at all the bills and all that stuff they just think that just happens that's what property management is or they say um kim's father would say he was a stock guy you know like and stock guys are different than real estate guys they're very very different very very different he says i don't want to fix toilets i said what makes you think i fix toilets but they can't get past that so it's property management that's the key so kenny and i started but kim kim was managing our properties and boy it's it is really a bear it's hard and then uh so kim was begging kenny please manage our properties please manage our properties and kenny said the magic words i can't help you what did you say to kim you guys are thinking too small and she it was like a bullet going through her brain she was just what do you mean i'm thinking too small what did you mean by that well you were buying small units like 10 and 12 units yeah yeah and you were doing it for that reason and you you know because you could drive over there and put a tenant in there look at a unit and but the truth is um if you have a manager managing a 10 unit building it's too expensive yeah it you also have a manager managing a 200 unit building so the the difference between a manager that's going to accept a 10 unit building into a 200 unit building is experience and wisdom and somebody that really understands the business and so when you start buying bigger properties what happens is you attract better people that and they make more money and you pay them more money and and all of a sudden life becomes a lot easier um the bigger the the properties are and that's what i meant when i said it and so so ken prevails mckim he says okay i'll take over and he walked on to some of our properties the biggest fees for property managers and i i wish i hadn't seen that before but i have i i mean we you know at this point i had managed i don't know 20 30 000 units uh you know up and down the west coast so i knew i'd seen a lot of things and and this so when you as somebody who's done that for a while when you step onto a property you can see the signs yeah you know like i remember one unit i opened the door and it's filled from floor to ceiling with appliances and electronics and and you know leaf blowers and and lawn equipment and this is our property right yeah oh yeah this is your one this is one of your vacants um and uh it's full of stuff from like ace hardware and home depot and lowe's and and and i'm like okay this guy's stealing that was that property manager son was stealing from us using our credit card to put stuff in storage from a's hardware and he was fencing it yeah so those are things that i've seen before oddly enough i've seen your manager steal money you know i've seen all kinds of things as you are just like anything no matter what profession you're in if you're in it a while you start to see things from clients and customers and vendors and and so you know so it was super easy for me to within 10 minutes i was like okay you got a problem here we're gonna have to extract your management team here put new people in and that's what kim got she's like no forever because the gal you had managing the property was very nice but she had to know because there was a vacant unit full of stuff and she was just covering for her son so she was very very very nice um try not to get our son in trouble but he ended up getting in trouble yep and then we've had our property manager when one night one of the tenants called us and says hey your property manager's a truck in front of his house and he's moving your refrigerator out yeah our property manager we gave them a big house on our property and one of the tenants called says the guy is moving furniture out of your house the refrigerator at night yeah yeah i've seen that i've seen tenants do it uh you know there's all kinds of things that happen in the property management world that don't get discussed a lot but you know the signs are there and they're pretty consistent and um and so within honestly you guys made a really good decision on the property itself and the location but so it was literally a month before we had that thing turned around and re-rented in full it was not that far off so so can a um took pity on kim and myself and we still have those properties and he sent his best team in there to clean the whole rat's nest we had several small like 18 units and 25 units and he cleaned out the rat's nest yeah and the ratness with the property manager and some of the people they had in there too so you know that's the other piece you know i've had everything man i've had drug dealers we've had prostitution we've had we've had you know we have a lot of crime uh at properties before that we've taken over and and you know so i've seen a lot and once you you know miraculously once you put somebody in there that's pays rent and works like your life gets a lot easier so it's really not that difficult but it's common sense so one more warning we're at the top of a market right now and kenny and kim and i were buying at the bottom of a market and that's why it kind of made sense be careful and you just don't go and buy like i won't mention his name but he's very famous in the [Music] real estate world he says go out there start with a 200 unit apartment house and i went are you kidding me i think it's what 15 20 million dollar attorney in an apartment house that's how you start and and you know sarah knows i got into it with him right on this rich dad radio show i mean would you start with 200 units at 20 million bucks no no no you you know you got to start with um small deals make small mistakes just like you would do anything so i remember that show oh i remember that show we don't talk to him anymore no i mean i don't think he'd answer my call even if i tried so we at the rich side radio program here we'll do our best to make sure that we are up front with what we say so i'm going into the top of a market top of the bond market top of the stock market baby boomers are retiring so be very very careful and you just don't go out so i'll become donald trump and i'll buy a hotel you just don't do that stuff so we come back we're talking more about kenyan's latest book it's called the abcs of raising capital because one of the beauties of real estate is that as it says right here only lazy people use their own money so if you're listening to those programs well i could get into real estate but you know i don't have any money and you you f and rich guys have money and all this stuff we didn't have money either so this there's only lazy people yeah with money comes one of our teachers frank crary he was teacher for kim kenny and myself and he would laugh at us he was in his 90s and he'd say only lazy people use their own money yep and so the book that kenny is coming out with now is fourth in the series the abcs of raising capital we'll be right back [Music] inflation is at a 40-year high the fed is tightening up and top firms predict returns under 5 for the next decade no wonder a recent j.p morgan report declared alternative assets are no longer optional and of all the platforms for alternative investing there's one that's a no-brainer it's called masterworks masterworks has solidified itself as the platform for investing in contemporary art you can access exclusive investments from names like banksy and picasso for just a fraction of what billionaires paid to diversify their portfolios since 2020 masterworks has sold three paintings with each returning over 30 percent net irr to investors and their new offerings usually sell out in hours 30 that's pretty wild if you want to get in early go to masterworks dot io create an account check out what they have and invest in their offerings and our subscribers get to skip their wait list at the special link in the description below welcome back robert here second rich dad radiation the good news and bad news about money our guest today is ken mcelroy and he and after kim and i made millions and millions and millions of dollars in tax free and we still own our real estate we don't sell we don't flip we we're buy and manage forever type real estate people kenny wrote three books for us in the rich dad series so what are their first three books so yeah the first one was the abcs of real estate investing and that that that was a basic book and and that obviously was the best seller and did really really really well so i start stuck with that book yeah yeah then the next one is a little more advanced so that's something putting more complex stuff together syndications you know talking about irrs or you know and and those kinds of things you know how you refinance you pull out money tax free yes you see guys like dave ramsey said live debt free not us we want debt and that's one of the beauties of real estate yeah so it goes into more detail about how to use that number so that's book two yeah and then the third one of course which we talk a lot about and we talked about in the first sec the sec segment was the property management piece the abcs of property management and because i've seen lots and lots and lots of investors especially in the property management world they buy something and then they hand it over or they try to manage it themselves and they run it right into the ground that's the and but those are the biggest investments opportunities those are the greatest deals to buy when you find an amateur like us running them that's when kenny steps in yeah but anyway so your last your latest book the fourth book is the abcs of raising capital only lazy people use their own money i knew you'd like that one but you've got to read the first three books first right so what does this book cover here so essentially at this point you know i i think that if you're getting angry and hearing you know well you know i need to save my own money uh that that's an excuse you know i hear it all the time i have so much equity i have this i have you know i don't have enough money to invest that's literally an excuse that's like um i'm fat and and i'm not gonna go to the gym you know it's it's that it's in that same category and the truth is is the people who raise capital um know that this is uh the way it's done and so if you think if your financial planner raises your capital they make fees off of you the entire industry is set up this way it's set up to attract capital to invest into things and you can do this too and so this book is a step-by-step um book on exactly what to look for and how to do it and the questions asked so what are some of the points you cover in the abcs of raising capital well the first thing of course that we always talk about is finding a deal you know once you know if if you can find a deal and this has nothing to do with raising capital if you can find a deal and you can get the bank to finance it and you can get investors to invest in it and it produces cash flow then you can just replicate that rinse and repeat that's it and when i started years and ago this was 74 my real estate agent my real estate teacher says you have to look at a hundred properties yep and i looked at a hundred properties because they might find one and i and i i had to write a report on 100 properties this was my assignment from that class in 74. and all of a sudden as i'm writing this report up you know the good the bad the ugly of these each of the deals i said oh my god there it is so my first deal was 18 000 on the island of maui and everybody says well you can't afford maui but there was maui 18 000 nothing down that's right i made 25 bucks a month that was an infinite return because i made 25 bucks on nothing and by the way that what you did do is you you use the bank financing so so it was other people's money and and that is the point but i had to look for the deal right now the question is getting how many deals that you look at before you find one a lot i mean that's the thing you know and what happens is if if you're if you're investing let's say i could buy a stock right now on this show literally from my app on my phone and and so that is super lazy you know hope i hope it goes up what's hard is looking for deals and finding equity and debt for those deals that's what's hard and being able to see them so that you can educate investors and so that's what we do now right and so that's why your first three books are essential the abcs are finding real estate the abc's of financing real estate abc is a property management because that allows you to see and then you can raise the capital but blah people are lazy you know they are lazy and this is you know this i knew you'd love this quote because most people believe that they have to have the capital raised or they need to have you know come from a rich family and those are literally excuses right and and it's just not true what i've found the biggest issue that we all have right now and most of the people that we associate with are deals deal flow and tonight you know like you know my 32nd and camel back that uh yep apart mean it's a it's a old age it's an old age home going up you know how i made my money on that one yeah our friend sal got it rezoned from three stories to four yeah change of use that's called a change of use absolutely mecca we make so much money it's shocking but then the property in front of it where tarbells and tommasos is tonight i'm meeting with mark tarbell and we want to take a run at that corner but that's how you find a deal well the thing is guys is you drive around and you see let's say three office buildings on a corner and the fourth one has a home you could pretty much assume that the height you know uh in that area is already zoned for you know something bigger so that home is all of a sudden very expensive and that's what you're talking about right right and as you start to see these things you can raise capital for them right but it took me with that eighteen thousand dollar unit in 1974 looking at a hundred deals analyzing a hundred deals i had to write a hundred papers up yep and suddenly i could see it yep it's repetition it's like anything you you are not gonna get the wisdom unless you go out and start looking at deals start getting emails start looking at stuff start getting on the phone start walking units start going to neighborhoods you know and start calling people it's just not going to happen and the most amazing thing we you know we have a video that we've done are you what did you call it when we just did sarah with the video uh with kenny and i just in the in oh like a promo or a short video yeah with and so you can how will they find that video that'll be on their platform rda rich dad advisors okay so you can go you can see that on yeah i'll put a link i'll put a link in the description yeah so just just look at that but it takes a while to get that good you know and but it's worth it because i talk about it kenny's problem right now is finding deals because guys like me have so much money coming in from the last deal you gave us i have to give it back to kenny i said kenny i can't take this money and he's all his capital raising gets easy because there's so many guys like me well you've made so much money for i'm trying to give it back to you right never in my life would i have believed that i would have more money chasing me than deal flow and in the beginning i was it was i thought i knew you were chasing guys like me before yeah i was and and that's how you start and and then what happens is as you start to return money like to you i just gave you a couple million bucks last week uh tax-free cash out refi and as you start to do that and by the way to hundreds of investors you know we're always refinancing projects and and and returning capital to them because that's why they invest with us or our team or our leadership and and when you start to do that then the confidence and the trust goes up as it should and as you start to perform to the business plan that you told them you were going to do um you know and so it takes a while and after 20 years you you have now um you know a comp a following and so so now we do have more money than we have deals and so our issue is deal flow and and you know i'm i'm just somebody that started managing a 60 unit property in college and learn this from from zero so anyone can do this well it takes does takes a lot of practice here the point here is this that's why we i love property but i don't like the management part about it so that's where kenny started and i'll say it again if you can't manage property don't go into this business it's a bear i mean it is a bear because that's a business then yeah it's like anything you guys go into restaurants some are managed well even the same franchise some are some are clean some are not some are friendly some are not same thing with property management tenants are good they're not good you know the management's good they're not good so it's the same so one of the things here is that what goes from frank crary was alright one of kevin is my teacher only lazy people use their own money and frank was teaching me how to find gold mines yeah so frank sent me all over the world looking for gold mines of all things you know and i i we love that guy oh he's the best he was the best he had such wisdom and you know i whenever i can get around somebody that's been investing for 50 60 years and you know you should say nothing you should just talk uh or listen and ask them questions by talking and just ask questions and ask questions and try to get as much glean as much as you can from them because that's what i did with frank frank would come over to our house and we'd sit there and just ask him questions yeah because he's done it he's done oh my gosh so much but my point here is this is that so finally i put my deal together with frank it was a gold mine in china the biggest gold mine ever found i raised 27 million dollars on a toronto stock exchange we found gold i was a billionaire for about a year and we had so much gold and the chinese government said thank you very much yeah they took it from me and i really understood country risk but that's how you learn you know they go holy miracle they just let that hate the chinese people but i don't like the chinese communists they just took my gold mine so it looks like we didn't make any money but the whole story completes last week too so kenny calls me up he says i got two million dollars i go jesus what am going to do with this money i mean the problem is you got to keep moving that money and so my friend called me from vancouver he says guess what i have a gold mine and it's in utah so sarah knows right i just moved that tumor right into that gold mine and then kenny's part of the deal and all this it never makes it outside please hear me when you see that you know the from the cash flow going on esp and the i the best deals never get outside am i correct yeah in fact we say the the bigger the brochure the worse the deal if somebody has to sell you with this big brochure and all this information in there the it's probably there's probably some sales been shipped uh in that and we would we would do uh literally all over the back of a napkin over a beer or something yeah like here here's the high level here's what it is here's what it'll do in right and the reason if we say that is because when if you're watching television and all these guys are pumping this stock deal this mutual fund and all that run because the more promoted it is it's probably the worst would you say that's true yeah i i really would you know it's the the it's it really is a game of um being inside of um a bunch of team and in industry and and understanding deal flow even last week um i was in the middle of nowhere i was in perum nevada you know doing some tactical training and there were real estate guys there and we were talking about one guy was doing um land leases for billboards and you know it's just he had he's done 16 of them and they're just kaching kaching and i was like oh that's a good idea and so what happens is you start to ask questions find out what people are doing and you know we don't know everything and and so there's lots and lots and lots of ways to do this lots of ways to raise capital lots of ways to do real estate deals with really no management even and and um and so that's that's it and once you're in the these circles then you just get wiser and wiser and wiser yeah so look at the cash flow quadrant e s b and i i stands for insider you want to get to the inside and when you get there and people trust you have a good reputation there's no advertising the best yields of skills like i said oh it's tonight tonight i'm going to go talk to mark taylbell we're going to take a run at this uh corner it's a great quarter 32nd and camelbak it is a great corner and so we don't have the money we don't but we're going to figure it out we're going to take a run at it but that's how it's done and the and our friend cell decision when he took my building from three stories to four stories what did that do for valuation this happens all the time you guys need to understand like like if there's a home on a corner and there's a four-story office building next to it you can go four stories and once you can add another story of course it adds the value to the land so somebody can build something higher because i was talking to these two young women who are now they think they're donald trump or something they bought themselves a single family they're starting you know i mean they're starting and i said you see that building there that's my building what do you see they go and all around that are all these three-story buildings they go it's a building i said this one has four stories what does that mean you know they can't see it but it's sitting right in front of them yep my friend owned a self storage on las vegas strip that he owned and um a casino came to him because they could go 40 stories and so all of a sudden he's like he bought this you know self-storage building that was producing whatever and and all of a sudden because they can go 40 stories of course that that sub storage is gone it's ripped down and they go they go vertical this happens all over the place so when you look at the cash flow quadrant look at rich dad poor dad look at kenny's three books plus this book you'll start to see things that the average person doesn't see because they're too f and lazy i mean i have to look at a hundred properties in 1974. you know it was a lot of time looking at 100 properties and then all of a sudden i could see stuff yeah and the other thing is a lot of people don't realize is when you put money in a bank or you give money to a pension or you give money to a financial planner they now have a problem because they have to invest it somehow and so that money is your money and then they they need to find people to invest that money so that's how the world works they're just middlemen to your money and so that money makes its way to real estate deals that money makes its way to businesses and and so um why not be on the other end of it well instead of giving somebody the money and then having them look why don't you figure this out for yourself because and then try to get that money from those same people to do deals that's how this whole system works right so once again this is the fourth book in the series of kenny's books abcs of real estate abc's of financing you know advanced guide to finance the third book is property management and the fourth book the abcs of raising capital all are essential if you're lazy don't start because it takes a while right it does take a while it's it's it's not something you're gonna learn you're gonna make some uh mistakes just like we have and uh you'll have a lot of wins um and i tell everybody just hit just focus on hitting singles because there's a there's way more money than there are deals and if you can see the deals you'll get the money money flows in money just flows in on you so once again you know if you don't want to do all this work then follow dave ramsey's advice live debt-free call your house an asset and enjoy life hey kenny thanks very much hey my pleasure thanks for having me on and thank you all for listening sarah final comments on that thank you so much kenny for your time and coming in um because you just you just bought your first property right right on it's a it's actually two cabins on a lake in northern indiana perfect uh so i'm prepared to make all the mistakes um but it'll be a great adventure but it's so far it's it's been fun and interesting i am doing all of the maintenance so far myself the remodel good um so i'm learning how to install toilets sinks how to fix water softeners i mean it's a dessert i mean this is that's how we all start yeah no it's a good experience too because when you have a contractor now you're going to know what to say i can speak the language that's very important so so yeah it's it's fun it's been a fun ride so far so congratulations that's great that's the most important thing sarah has started so thank you all very much and thanks for listening to the rich dad radio show [Music]

Channel: The Rich Dad Channel

Views: 371,800

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, how to raise capital, opm, robert kiyosaki, ken mcelroy, real estate investing, robert kiyosaki real estate investing

Id: wdk5PCvXkNw

Length: 31min 42sec (1902 seconds)

Published: Wed Apr 20 2022