KIYOSAKI'S REAL ESTATE INVESTING STEP BY STEP: HOW TO HAVE INFINITE RETURN ON YOUR INVESTMENTS

hello my name is robert kiyosaki and i'm probably best known for writing this book here called Rich Dad Poor Dad which was first published in 1997 and my wife and I created this board game cash flow and the purpose of our work is to increase people's financial IQ so you know question people often ask us you know what is a good return on my money you know some people say a 10% return is good well so that means if I put in a thousand dollars and I get $100 back per year that's considered good but what you're gonna find out today that that's that's actually chump change it's not that much money so we're gonna be talking about how your financial education and a higher financial IQ can actually teach you how to make money out of nothing something called an infinite return so I'm gonna bring up my sweetheart Kim and Ken McElroy a business partner in our real estate deal he's also a rich debt advisor author of the ABCs of real estate and they'll be actually talking about a real real estate deal that we have done where we got an infinite return hi i'm kim kiyul saki the co-founder of the rich dad company along with my husband robert and i'm also the author of a rich woman this is a book for women on money and investing because we women need to take care of ourselves financially and be prepared for whatever comes our way and I'm Ken McElroy rich debt advisor and property investor and we're going to talk today about principles in this book which are basically how to buy properties at cash flow and produce infinite returns and when Ken and I and Robert first met the reason we got together is because we are so aligned on our philosophy especially about cash flow and management right when I read Rich Dad Poor Dad I said this is the only book I've ever read that likes property management so this is a deal that we've actually done we did this in 2004 in Tucson Arizona these are numbers we're going to show you today that are real actual numbers so let's just start off on what this property was yeah what it was is it's a hundred and forty four unit property that's located in Tucson Arizona and it had ten acres of land right next door and so it had the ability to build an additional hundred plus units on it so that's really why I brought it to you guys and and why you ended up investing in it so the reason I like this deal is because it was 144 units plus land so we bought the property for a 7.1 million in the land for five hundred thousand and I knew that the bank would give us four point nine and alone and I needed two point seven in equity so you came to us and to raise money and what we liked about the deal is number one there was that big opportunity of the land but also there was 144 units rented that gave us cash flow right really which was very important when you're raising money to have cash flow again so then the second part was is we go to the bank and we say okay we've got these ten acres and we want to build you know one hundred plus units on it and we ended up getting a construction loan with another for another five million dollars and with that construction loan we built one hundred eight units so at that point we had 108 plus 144 two hundred forty fifty two units that were built and it took us some time to get it up and running to get at least get the cash flowing and once we could get the cash flow more income was now coming in and we were able to then at that point go back to the bank and refinance yeah yeah so it takes about a year to build it and about a year to lease up that property so once the whole property is what the bank calls stabilized then you go get a new appraisal and that appraisal came in at fifteen point seven million fifteen point seven so of the fifteen point seven how much of the bank loan did we get well the bank gave us 80 percent which ended up being about twelve point five million in a new loan okay so we got a new loan now with twelve and a half million right and then we had to pay up the old one which was nine point two million including the construction right and that gave us a remaining three point three million dollars correct and from that from that we owed all the investors their original equity which was two point seven on top of it so that leaves another six hundred thousand so for Robert and me we put in a million we got our million back plus we got an extra hundred thousand from the refinance right right so at that point everybody's out everybody's out and we're still getting cash flow from the property we have no money into it and that's an infinite return and we still own it today at cash flows about three hundred thousand a year so once again it takes financial IQ financial intelligence to make money with nothing but making money is only part of the story the next question is how do you pay less in taxes for the money you make so with that I'm gonna bring up my friend rich that adviser Tom wheelwright he's also the author of a book called tax free wealth so with that here's Tom to talk about the last two on how we pay tax on very little tax on it so we before begins are the numbers and taxes Thomas you give the audience a little bit of your background please sure I have a master's of tax degree and then on top of that I spent seven and half years with one of the four largest accounting firms in the world Ernst & Young and I spent another four years as the in-house tax advisor for a fortune 1000 company before starting my own firm that I've been running for the last 16 years and this guy loves taxes so let's just summarize here Kim and I put in 1 million we got 1.2 million back in every month we get X number of thousands of dollars every month income so it's an infinite return but how does that look for my taxes like it's wonderful from a tax ID because the cash flow that came back as you were getting the monthly checks totally tax-free on top of that the 1.2 million you got back is also tax-free because that 1.2 million is really debt and debt isn't taxable and then on top of that when you put the money back into a new project the money from that the cash flow there is also tax-free and in addition because there's so much tax benefits in these real estate deals you also got to use tax benefits from the real estate to offset other income in the government actually wrote you a check right and the thing about it the government wants you to do this because number one right we provide housing okay and we use debt because they want us to use debt they want us to money that that's exactly right that the tax law is merely a series of incentives for real estate investors other investors and business owners and so the government wants the the private people private investors to do their work for them basically they want to make sure they provide housing provide jobs provide commercial buildings produce oil and all of this is done through provisions in the tax law to provide incentives to people who put their money in that and risk their money really in order to do that the great thing is and these deals is that that money is risked for a very short period of time then it comes back and you're back to an infinite return so the last thing is people oftentimes say well you only do that in America is that true what's great and in my book tax-free wealth I talk about how this applies to every country there are lots of countries that have these exact same provisions and the tax law in every country is really just a series of incentive plans that's all it is so with that that's all part of financial IQ is how do you make money and how do you pay minimize taxes legally you

Channel: The Rich Dad Channel

Views: 472,670

Keywords: TheRichDadChannel, rich dad poor dad, robert kiyosaki, rich dad, entrepreneur, cashflow quadrant, cashflow game, financial iq, financial education, rich woman, kim kiyosaki, property managment, how to pay less in taxes, rich dad advisors, ernst young, real estate investing

Id: LrSr0u_CAP8

Length: 7min 59sec (479 seconds)

Published: Mon Jul 17 2017