(upbeat music) - [Narrator] This is
The Rich Dad Radio Show. The good news and bad news about money. Here's Robert Kiyosaki. - Hello, Hello, hello, it's Robert Kiyosaki,
The Rich Dad Radio Show, the good news and bad news about money, and today, Kim is in South Carolina, I am in Scottsdale, Arizona, and we have a very special
guest today, Grant Cardone, CEO of Cardone Capital, international speaker and entrepreneur, but more, he's tearing up
the real estate market. Anyway, welcome, Grant. Kim, anything you wanna say
to Grant before we start? - Thank you for being on the show, Grant. You know, these times right now, all I keep hearing is, oh, the price of real
estate is so expensive. It's so expensive, and like in Arizona,
well, yes, it's expensive, but relative to other parts
of the country, not so much. So really interested to get your take on today, what's going on in the real, you're the real estate expert, - [Grant] Yeah. - What's going on in the world, and we've got a lot of
subjects and ground to cover, so, excited to have you on the program. - Well, and just, I'm a huge
fan of both of you guys, so, can you get it out of the shot, guys? - [Woman] Yeah, absolutely. (laughing) This guy does this every time, and I think he wants my attention. - This is the Grant Cardone
Show, not your show. - Yeah, exactly. So, look, I think that, I've been buying real estate for 25 years. I think we're in a super cycle that has never ever happened
before in our lifetimes. And Robert's laughing right now. He's saying, oh, that's too optimistic. But truly I do, I've been talking about this country would become a renter nation. I've been talking about that for 10 years, it's happening right now. Also I do not think real
estate is overpriced today. I think cap rates will compress to 50% of what they are today, and I think that people
are underestimating the 3 trillion, $4 trillion
that's been printed. If you look at the amount of
money that has been printed, and compare that to the
amount of appreciation of real values in real estate, the property values have not kept up with the printing press. And we would have a long
way to go before we're over, we're in any kind of bubble territory. Last thing is, the people that
are buying real estate today are completely different than 2010. This has nothing, not even similar. These are wealthy people
buying second and third homes. This is not a first time buyer. People are paying either
cash or putting 50% down. In many cases, they're putting down more than they've ever put down. And you also have investors that are buying real
estate from end-users. They're lining up all over Scottsdale. There's 25 offers, this
story is told every day. There's 25 offers on a single family home. Everything's going over asking, and the guy that gets the deal is an investor that has no
intention of living there, but is gonna Airbnb the property. - Okay, so and the other thing is that Grant's in Miami, with the
hottest property market around, Kim and I are in Scottsdale, and we just closed on a
property in Austin, Texas, which is the hottest of hottest. - [Grant] Yes. Yes. - But the point we wanna get to here is why people are moving,
first of all, the migrations. And if I could shamelessly
plug my book here, it's called "The Capitalist Manifesto". It comes out, you know, it's not really a real estate book, but it's about why communism
is taking over America, and has taken over cities
like San Francisco. So it's not about San Francisco, but one of the reasons people
are leaving San Francisco is they have a chart of
human feces. (laughs) Where are people living more
human crap on the streets and people are leaving in droves. (laughs) And it's kind of an interesting market. you know, that that would happen. Kim and I had to close
a property in Portland, get out of it, because the tenants couldn't get to it because there was so many
homeless stacked up around it. Is that correct, Kim? - Yeah, and this was surprising, Grant. So, I called the broker thinking, you know, the market's gonna
be pretty depressed up there because of all the riots,
and the homelessness, and everything that's been going on. And I said, so we'll probably
just take a, you know, take a loss on this property. I'm okay with that. 'Cause we just wanna get out. And she goes, "Are you kidding
me? This market is on fire." - On fire.
- Yep. People aren't necessarily
moving into Portland, they're not moving into
Portland from other states, but people in Portland
are buying and moving up. And so we didn't even have it listed. It wasn't even listed and it sold for, actually we raised the price 'cause we had so many
offers and so much interest, we raised the price and sold
it without even listing it. But Portland, Oregon. It didn't make sense to me. - But Grant, our tenants were complaining because they couldn't get to the property. - That's crazy. That's crazy. That's why we've been very selective about where we're buying. I mean, we're buying mostly blue states. We are in Austin. You know, I've been wrong about
Austin so many times, like, (Kim laughs) I'm like, you can't
get any more expensive. And it's gonna. It's because we don't understand the amount of pressure being, the amount of money and
people moving to places that protect them from
what they're leaving. You know, New York, Illinois, New Jersey, everybody knows this story, but they're not betting on the story. And I would just suggest to people, this story is not gonna change. The more mandates they put out, the more crazy politics that people make, the more they pressure landlords, the more eviction moratoriums they do, all of that stuff is pushing people and money out of New York,
New Jersey, California, - Oregon, Seattle. - Anywhere the politics are crazy, regardless of what side you vote on, if they're not protecting the money and the people investing money, that money will move and it's moving to Arizona, Utah, Nevada, Florida, the Carolinas. Like it's just gonna explode down here. Texas is on fire. - Thank you. So the other thing we're
talking about here is this, you raise a lot of money. And I meet so many people who say, I'd like to buy real estate
but I don't have any money. I say, you idiot, the
reason you buy real estate, you're supposed to use
other people's money. Any comments you're gonna
say about that, Kim? I mean, do we, there's plenty of money out there, you wanna use a little of your
own money as possible, right? - Yeah, and I'd like to
hear Grant's take on this and how you started with raising money, 'cause I hear a lot of people they think, oh, I'll just raise some money. But without the experience,
without the knowledge, you gotta take care of
other people's money much more carefully than
you take care of your own. And it's a huge responsibility
to raise capital. So, how did you start raising capital? - So, the only other
people's money I ever used was the bank's money. Like, you know, the idea of me going, borrowing money from my brother
and my sister, my uncle, or much less the public, was so terrifying to me because you know, I knew that my money wasn't at risk when I was buying multi-family. To me, like I'm not a gambler. I was in Vegas this past weekend and I'm betting $50 at a table, everybody, or the other two
guys are betting 2,000, 5,000. And I know I'm worth 100 times what both these guys have worth together, and they're looking at me
laughing like I'm a coward. (Robert laughs) And one guy says to me, he's like, "Man, I can't believe you're
only betting 50 bucks." Like he knows I got 12,000 apartments, we have $4 billion worth of real estate. And he's like, "Why are
you only betting 50 bucks?" I said, "'Cause I don't gamble." And I don't gamble with
my money, or your money. And so when I was buying multifamily, I didn't wanna have to
explain it to people. I've been a pro like crazy
multifamily guy for 20 years, believing in it, and probably before it was
really what it is today. And the first 4 or 5,000 units I bought with my own money. I basically used my other
businesses to fund that. I went out, worked hard,
grabbed money, and bought them. And then about six years ago, or five years ago, I guess, I guess my wife said, you need to let the people that
follow you invest with you, along with you. And so we started looking at it, and we raised $6 million for
a deal in about 60 minutes, and I was like, "Wow, that was easy." And it's not family funds. Like you got, I'm not
going to wealthy people. I'm not getting money from
Blackstone or a family fund, I'm getting money from people that actually need the opportunity and can't buy these big deals, they can't find the big deals, really Americans, and you guys know this, most Americans get the
leftovers in real estate. They get the single family house, you know, that we call "the dream", that you both know is a
liability not an asset. They're hoodwinked and
tricked into believing it's some big asset that
they have, when it's not, which I'd love to talk about that, because that makes people's heads pop off. And the second thing they get is the duplexes and the 4-plexes, most of which all went
back in 2010 to the banks. The stuff that we're buying,
these are massive properties. 80 million or $150 million. This deal I had up behind
me a few minutes ago was $230 million. This is Blackstone quality, Goldman Sachs, JP Morgan-quality stuff. And we're raising money from
accredited and non-accredited, using Instagram, Facebook, this was not even allowed years ago. No brokers, no middlemen. Merrill Lynch can't call
me, Fidelity can't call me, family funds are not allowed
to call me and give me money. It's like, you guys could call me and say, hey, I wanna put a million in your deal. Or, we just opened this up, $1,000. And we're literally changing the way people can invest in multi-family, 'cause Kim, I agree with you, that to think that
somebody is gonna go raise 2, or 3, or $4 million
on their first deal, probably not real, and they
probably shouldn't do it. - So let me say this, much as the people, the actually easy part
is raising the money. The hard part is managing the property. And I think that's what people forget because when Kim and I first started out, the managing of property is
the biggest business of all. But it all, if you're just a mom and pop, you can only manage so many properties. So what is the secret to
going from a small investor, to managing let's say 150 units at a time? - Yeah, well, I would say, first of all, just skip the small stuff and go buy big deals. Even if you have to
collaborate with somebody else to do the big deals, big deals always work
better than little deals. Multi-family as you guys
know, it's all about math. It's multifamily. It's
not one unit or two units. - But you make a good point Grant, because if you're gonna start, I mean, so I started with a little two bedroom, one bath house, 'cause that's how I learned, but if you're gonna start with a big deal, then I would say, you
wanna definitely have an experienced, knowledgeable
partner in that. - Yeah, you're not gonna get the deal. You're not gonna get, in this market you're
not gonna get the deal if you don't have the experience. - Yeah, exactly. So like, even in the 26-unit, and 30-unit, and 80-unit deals, you're gonna pay a premium so
heavy today to get that deal. This is so competitive now. There's so much money chasing this yield. - No, that's not, Grant, hang on one second. I wanna be very clear with people. I don't recommend that at all. If you cannot manage a property, you don't know the legals, ins and outs, because you have a
contract with your renter. And if you don't perform on your contract, and also the renter
tears your property up, so just say you can just go and buy a 150-unit apartment house, You can do that, but there's not many people who can. My point here, I want
you to hear this with me, the raising of the money is
easy part, especially today. It's the managing of the property and making it turn a
profit for the long-term, and also protecting the asset
with the legal contracts is where people fall down. - Yeah, and look, when everything's good, everything's good. But your COVID hits, you're gonna find out if
you're a manager or not. - We don't manage properties. - Yeah, I don't either. Like I don't manage my properties, but somebody's gotta manage the manager. - And that's what I'm saying,
as that's, in my opinion, it's easier to raise money today. If I was to say to somebody to buy a 400-unit apartment
house and just manage it, I think they're gonna, you know, best keep with the Titanic. One of you, any comments on that, Kim? - Well, I mean, that was our situation. So we, you know, managed our properties, we had onsite managers
and we managed them, but I can only manage so many by myself, and then we couldn't buy anymore 'cause I couldn't, I didn't have the time. We still had, we had the
company and all of this. So that's when we found
our partner, Kenny McElroy, and he said to us, I said, can you manage our properties? And he's like, no, I only
do 150 units or more. And so then we had to step up our game, but now we had property management, experienced, knowledgeable, he started in college,
managing properties, and he's still doing that today. And now of course,
developing and acquiring. - Yeah, so I just wanna be clear on our message here, Grant. Your message is probably
different than ours. But to me, it's the
management of the property and making it turn a profit
is the hard part to do. Raising the money is easy. There's a lot of financing for it, people are gonna throw the money at you, - Yeah, I don't know how, I mean, I don't know
that I'd say it's easy. We've raised $700 million. You still gotta manage
people, phone calls, you know, like it's not, I mean, when you say
it's easy, it's not easy. Like we do it with no ads, Robert. I haven't spent any, I think I spent 50 grand
in ads for 700 million. No brokers, no middlemen. I still gotta get a message out, right? So the hard part of real estate today for me is getting the deal. - I can agree with that. - It's even getting control of an asset. Like what I'm competing today, we're buying a deal in Fort
Lauderdale, it's $230 million. Like who's gonna buy that deal? It's a handful of names. AIG, Blackstone, JP, Goldman, like these are big, monster,
trillion-dollar companies, not billion-dollar companies. And you know, the thing they
can't do, that I can do, is they cannot write a check
the day they look at the deal. They can write a check
for the whole amount three weeks from now, I can't close without cash,
you know, quarter of a billion, but I can go hard with 2 million today. And they can't do that because of their fiduciary responsibility. So these big guys that
we're competing with today, like if you can't move fast, you're not gonna get
the asset as you know. - Yeah, Grant, hang on. Not many people are gonna do what you do. Our audience wants to know how
they get started right now. Please be respectful
to our audience, okay? Any comments there, Kim? - Well, I was matching
my question to Grant, was how did you get started? 'Cause you started with
nothing, as we did. How did you get started? How'd you get into that
whole real estate game? - Yeah, I got started with one unit. Like the same way, like and I'm not being
disrespectful to anybody, I'm telling your audience, they're better off partnering
with somebody on a big deal than going going one unit by yourself. Because the problem with one
unit is when they move out, as you know, you're 100% vacant. And all of a sudden real estate starts to hit some new reality. - You would start with 500
units at a shot, first deal? - I started with one unit. - I know, but are you recommending they partner with somebody
on a 500-unit deal? - I would, at 1000%. - Wow. (indistinct) - Yeah, that's a different
strategy, because we-- - We don't wanna do that. - We want the knowledge,
and the experience, and the education that goes
with the hands-on management. That's our philosophy. - I would tell people, I would tell people the
best thing for them, I don't think you have to
go 500 units the first time, but 200 is a great number. And I would tell people, the first thing they
should do with real estate is invest in real estate to learn it. If you wanna play the Bitcoin game, go buy some Bitcoin first, then start learning about it, because you're not, too many people out there are learning, and never actually make an investment. - Okay, so we gotta go for a break. Look, I just want everybody clear on this, Grant recommends buying a
large unit to start with, we do not. I agree with him, the hard part is finding a great deal, closing the great deal, financing it, but also then managing it, because if you don't manage it well, that's when you lose the deal. So when we come back, we'll be going more into how
you get started in real estate, and this great migration
going on throughout the world, where are they moving from, but even if they're moving from there, as Kim says, even in Portland, Oregon, where we had homeless
sleeping outside of our unit and our tenants couldn't get to it, they still wanted to, the property is still held its value. So we'll be right back. Welcome back. Robert Kiyosaki, The Rich Dad Radio Show, the good news and bad news about money. This is the Rich Dad Radio Program, anytime, anywhere on iTunes,
or Android and YouTube, and please leave us a
review wherever you listen. And all of our programs are
archived at richdadradio.com. We archive them because
we don't sell anything, we don't sell investments, and we just basically are
education and information. And so if you have a
friend, family member, or associate who wants to
learn more about real estate, go to richdadradio.com
and replay this program. Our guest today is Grant
Cardone, CEO of Cardone Capital, international speaker and entrepreneur, and he is the best selling
author of "The 10 X Rule", "If You're Not First You're Last", as well as a sales trainer,
speaker, and entrepreneur who has worked in the real estate industry and auto industry. Grant is a real estate mogul who has built into a
$1.9 million portfolio of multifamily properties from scratch. And so I just want to be clear on here, is that what he's saying, is that Kim and I do not recommend
you should listen to him. Because this is the big
difference with real estate. It's not liquid. And liquidity is one of the biggest things you need to realize when you're investing. For most people, they should
just buy a mutual fund. You know, or a stock,
or a bond, or an ETF. The reason for that is because
paper assets are liquid. You make a mistake, you can, you make a mistake in the morning, you can be out of it that night. You make a mistake with
a piece of real estate, and it's a really bad deal,
you ride that sucker down. And where the mistakes just pile on, pile on, pile on, pile on. So in real estate, the most
important thing as Grant says, is how do you find it,
how do you finance it, and how do you manage it? Those are the three pieces. And you make a mistake
anywhere along those lines, you get crucified. So the word is liquidity. I wouldn't recommend starting with a 200-unit apartment house, because you make a mistake, I
don't care how smart you are, you'll still make a mistake. - I think what a lot of
people don't understand is how do you, what is a good deal,
what makes a good deal, what makes a bad deal? - And how you manage it,
how do you finance it? - How do you manage it,
how do you finance it? So, one of my questions is like, for example, for us, when
we're looking at property, we always want to go where they're jobs, which is a little more tricky
today than it used to be, but that's a criteria because if they aren't
working, they can't pay rent. So I'd like to know from you Grant, how do you tell a good deal? What's your criteria for a good deal, and what are the mistakes of a bad deal? - Yeah, so, you know, thank you. And I just wanna go back a second. I would suggest that liquidity for people today is a problem. And it's not a good thing
for people to be liquid, because then they end up losing money. They don't invest their money, they end up buying stuff they don't need. Liquidity funds emergencies, liquidity is an old Wall Street game so that they can convert money. I wanna be illiquid, Robert. Personally I want my cash
to be in something real that I cannot access. - Grant, hang on. So I was saying, how fast can you get in
and out of a bad deal? That's all I care about. - Oh, well I don't want a bad deal. So this goes to Kim's question, okay? If I'm extremely disciplined, jobs are very important.
Location is valuable. So, like we are extremely disciplined on what markets we go to,
and when we go to a market. Austin, Houston, Scottsdale, Fort Lauderdale, Miami. These are pro-business states,
positive job migration. We buy real estate in locations, we pay a premium for our real estate to be in a location where our renter does not exceed 20% of their income. So we are buying like
really great locations with strong job bases, we never over-leverage a property, and we're buying as big as
we can, as nice as we can, and I would recommend that for everyone. - So are you investing
in high-end properties? - We've done everything. We'll do anything from value
add, all the way to trophy AAA. We've done them all. As long as that location will support it, Boca Raton, for instance. I bought 1970 stuff the same year I bought 2020 product, in the same market, in the same year. - So are you right now
fishing for investors? - No, I close these deals
with my cash, Robert, and then I open it up after
it's closed to an investor base. We're open to non-accredited
and accredited investors. 1,000, to, our average non-accredited
does about 25,000, but they can start at $1,000. - So I have a question,
given in these times. So you've got high end, you've
got value add properties, and you fix them up and make more profit. How did that all work out during COVID? - We had actually, while the newspapers and the media was
reporting a 72% collection, we collected 98.9% on a 95% occupancy. Our collections went up
in our markets, not down. Our renewals doubled. So, the renewal is, you know, the lease is terminating, and COVID actually stopped
people from shopping apartments. So, COVID was actually, you know, in disguise, looking backwards, was a blessing. - I think also to, I mean, back to the
point about management, I mean, you've gotta have great management in order to do that. Our management team with Kenny and Ross, I think we were at like 91%. Most of the properties,
Scottsdale, Texas, yeah. - So the lesson here is that
management is a big part of it, raising money is a big part of it, finding a property is a big part of it, and that's our message. So Grant, I wanna thank you, and congratulations for your
success on this program. And then we'll come back, we'll be talking more about
what different markets we're in. Okay, we'll be right back. Thanks for being on the program, Grant. - Thanks, Robert. Thanks, Kim. - Thanks, Grant. I appreciate it. - Okay.
- All right. Take care. - Welcome back. Robert Kiyosaki, The Rich Dad Radio Show, the good news and bad news about money. Once again, listen to the
Rich Dad Radio Program, anytime, anywhere on iTunes,
Android, and YouTube, and all of our programs are
archived at richdadradio.com. We archive them because we're
a purely educational company. We do not raise money,
we don't sell anything, and so, repetition's one
of the best ways you learn, so if you'd like to listen
to this program again, go to richdadradio.com, and inform your friends,
family, and coworkers who need to learn about
especially real estate today, 'cause it's such a hot subject, go to richdadradio.com. And again, I wanna thank Grant Cardone. The message here is that
everybody has a different formula. As my rich dad always said, there's a million ways
to financial heaven, and a billion ways to financial hell. And right now, many
people are going to hell because they really don't
know what they're doing. Without financial
education, they do not do. So back in 1996, you know, Kim and I created
the CASHFLOW board Game so you can understand how
financial statements work, The balance sheet, statement of cash flow, the difference between employee mindset, self-employed mindset, big business mindset,
and investor mindset. And all that, so it
was purely educational. And I'll be up front about it. You know, Grant recommends you just start at 200
units with a partner. I would not recommend that. You can invest with him and do that, but I would personally not do that. So Kim, why don't we just
start with how you got started, because you know, I started in Hawaii and then I started, one of the most dangerous things, they say you never teach her wife golf, and don't teach her
about real estate either. But I mean, when I introduced
Kim to real estate, she took to it like a duck to water. But you started really,
really small, didn't you? - I did. And I think one of the differences in our philosophy versus
Grant's philosophy is we're about financial education. And the best way to get educated is to get hands-on and to get in the game. And so, I think for us, for me, for you and me, Robert, for somebody to start on a 200
unit building with a partner, the education's gonna be
very, very, very different, and to me, that's kind of, that's very risky. So, we're all about starting small, get the knowledge, get the
experience, get the education, and then build from there. I think that's just the
difference in philosophy. - Kim, have we had problems with partners? - Oh yeah. Especially when it comes to money. I mean, money is a psychotic subject. And so, if you're only
going into real estate for the money and the return, then probably Rich Dad is not
your philosophy to follow. But if you're in it for the
longterm for the education, and to grow it, and to hang onto it, then yes, yes. So as you were saying, I started with little two
bedroom, one bath house. - In Portland, Oregon. - Portland, Oregon, $5,000 down
payment on a $45,000 house. Nervous, scared, scared
about making a mistake, what if the market turned,
what if the tenant moved out? All of that, all of that. But it was these small properties, then we went from another
single family, single family, went to 6-plex, went to a
12-plex, went to an 18-plex. And every time, more mistakes, more
learning, more knowledge, but now, now we can do the big deals, because we've got that foundation of education and experience behind us. - Right. And for us, you know, the question is how do
you find a good deal? Well, you gotta look. But you gotta know what
you're looking for, and that takes a while to learn, right? Yeah, what kind of real
estate, and where is it? I mean, the landscape has
changed so dramatically in the last two years
with all the migration, as you talk about, Robert, people moving out of states to get to more non-regulated states where they want their freedom. As Grant said, the blue states are very, very popular right now. - Right, and the other thing too, is interest rates going near zero. - Excuse me, the red states are popular, not the blue states. They're moving from the blue
states to the red states. (laughs) I get my colors mixed up. - So anyway, with interest
rates dropping so low, that's why people are kind
of jumping into real estate because it makes them affordable. But when they drop interest
rates, prices go up. And so today, if you
could talk to most people, we're in a bubble. And that's the dangerous part, because if, I'm not saying they will, if they raise interest
rates, the bubble bursts. And that's why I was
talking about liquidity. Liquidity is how fast can you sell it? For example, if I buy a new
pair of, let's say, shoes, and I pay 100 bucks for the shoes, how long will it take me to
sell those pair of shoes? It'll take me a while,
'cause nobody wants them. And that's the same with real estate. If not doesn't, if people don't know what it feels like to have a piece of real
estate nobody wants, for whatever reason, they don't want it. - Well, look at, Robert, look at the commercial
office buildings now. They're all empty. If you can find a way to repurpose them, great, that's what's needed right now, but I wouldn't wanna own a big office building right now anywhere. - No, you have to, I mean, I highly suggest
because real estate is, once you buy it, you bought the Titanic. You know, it'll take you to heaven, or it'll take you down to
the bottom of the ocean. And thank God we've never
had that happen to us, but also what happened was when Kim, as we got more successful
buying the property, and Kim was the property manager, and then what happens? Property management consumes you. You know, it's just like
your dad said to you, I don't wanna fix toilets. Well, nobody wants to fix toilets, but that's what the property manager does. Plus, it's a contractual agreement between you and the renter. And they can violate, and
they can trash the property. We've had a property
manager steal from us. You know what I mean?
It's just one big zoo. It's a Jerry Springer show on steroids once you get into property management. - And it's, you know, it's harder to self-manage
your properties, but the education and
the knowledge you get, 'cause even when we had an onsite manager, we're still the owners of the property, we still make the final decision. And I'll never forget
many, many, many years ago getting a call at 11:30 at night, and this tenant was trying
to move out with our stuff. It was a furnished house, and they were taking the
refrigerator, the stove, and the police had to come, and I was like, I look at that experience, I wouldn't trade that for anything. - And you know something's
wrong when there's a U-Haul or front of your property at
three o'clock in the morning. So what Grant is saying is very accurate. You know, he's looking for
accreds and non-accreds. Accred is a definition
of a class of investor, and a non-accredited means somebody who not
accredited, and should be careful. But if you want to invest
with Grant Cardone, then he's the perfect guy to give a thousand dollars to, or 10,000, or whatever you wanna do, and he'll do all the work for you. That's a different type of investment. So at Rich Dad, we always recommend you learning by experience
to do what you do, and then you can go through the process, because it's a process. Remember that guy, Kim, I still remember he
wasn't paying you rent, and I walked up to the place and Kim had to evict the guy, and I gave you so much credit 'cause he was about, let's say 35 years old, pretty muscular. And Kim's standing there, and the sheriff serves
the guy for the eviction. I tell you, if you
haven't evicted somebody, it's pretty interesting. So the guy is coming down the house, he's emptying the property, and he's given us a stink-eye. He goes like, "It's Christmas time, I've got two kids." You know, but he still
didn't pay the rent. As he's being evicted, and every time he moves the
stuff onto the sidewalk, he gives us a stink-eye. And I felt for you, Kim. I mean, you know, Kim is
just, she's not very muscular, she's very attractive, but not muscular, and this guy's giving her the stink-eye. (laughing) This was the funniest thing. Kim says, it's worth the misery. So this guy is giving me a stink-eye, it's Christmas time and
he has got two daughters, he's dragging his Christmas
tree out and all his stuff, and he comes up to me, and he's still giving me
the stink-eye and he says, "You know, it's Christmas." And Kim just holds the line, "And what am I gonna do with my furniture? "You know, it's all on
the sidewalk out there." And this truck pulls up, and they loaded his furniture
onto a truck. (laughing) - They thought it was rubbish. (laughing) - Kim and I sat there talking to him. I'm looking over his
shoulder and these guys say, "Oh, it must be Christmas." And they're throwing out his furniture and his Christmas tree on their truck. And I said to him, you keep talking to me, pretty soon you won't
have anything to move. (laughs) Remember that, Kim?
- I remember. And you know, that goes back to another really valuable
lesson in that same situation is you also have to understand the rules around rental properties. And some states are very pro-landlord, and some states are very pro-tenant, and Arizona was very pro-landlord, so when I took that case to
the circuit court for eviction, she actually, the judge
actually reprimanded me, and she said, "This person
hasn't paid rent in four months. "How come you have let them go this long?" And I'm like, well, I'm
trying to help him out, I'm trying to be nice, I'm trying to, it's getting near the holidays, and just trying to help him. She's like, you have to enforce the law. You have to enforce the rules, and you should that evicted
him three months ago. And she read me the riot act, but it was, again, had I
not had that experience, I wouldn't have understood how the laws operate and
what needs to happen. So yeah, that hands-on, you know, doing the real thing, it's where real learning happens. - Yeah, and she's still a
personal friend of ours, isn't she? - Yeah. - She's great. She says, "By the way, I
read Rich Dad, Poor Dad." It was a crack up. But that's how we learn, and so today, Kim, we don't manage it, Ken McElroy. So how do we transition to Kenny? What did he say to us? - So, when we met Kenny, we were managing, the biggest property we
had was about 35 units. And when I, and we couldn't buy any more 'cause I couldn't manage
anymore, I didn't have the time. And so I was so happy to find Kenny, 'cause Kenny's philosophies
in real estate and cashflow are totally aligned to ours. And we're like, "Oh good, can you start
managing our properties?" And he said, "No, I can't, "because I only do 150 units
or more in management." And at that time they were
just property management, now they're doing development, and of course acquisitions. And so that forced us to up our game and to find a 150-unit property, and then he and his
team manage that for us. And they have since managed, they're managing all our properties today. - We're now up to about 10,000 units. So he is very similar, Kenny McElroy is very
similar to Grant Cardone. If you don't want to manage, and find, and go through the headaches and the legal battles of property, then you give Grant your
money and he'll do it for you. it's the same as Kim and
I right now, we just give, we just call Kenny up. See, we need debt. This may not make sense, Tom Wheelright writes a
book, "Tax-Free Wealth". We need debt to offset our taxes. It doesn't make sense to most people, but I'll call Kenny and I said, "Kenny, I need about 20 million in debt." So he'll buy a property
and borrow the $20 million so I can amortize and
depreciate the property. That's the game of real estate. So, Grant Cardone does some things very similar to what Kenny does, and I would recommend
investing with Grant then if you're so inclined, but you gotta be still, you still have to do your due diligence. - You still gotta do your homework. - Yeah, you still gotta do your homework. But real estate is not like a mutual fund, or a stock, or a bond. You buy it, you own it. And if you make a mistake,
you really own it. You know, nobody else does, that's why. So, real estate is a very different game. We love the game. I mean, it's the best game in the world, but you have to decide, do you wanna be good at it, or do I just wanna give real estate, my money to somebody like Grant Cardone? And that's the big difference here. Okay, Sarah, any comments before we end? - [Sarah] You know, it's
just different philosophies. And we've always said, you know, like Kim always has the example, If you get in the game of silver, you just have to put a
little skin in the game. And I like the philosophy
of starting small, but everybody's philosophy is different and how they get rich. So, I like the two different views, but you know, I'm used
to the Rich Dad message, so I understand starting small. - But you're looking at it
right now yourself, aren't you? - [Sarah] Yeah, actually we
just put in an offer for, and we'll Airbnb it, it's
a property on a lake. Where on the lake? - It's on Sylvan Lake in Indiana, so it's cold right now. I was just out there and
there's snow starting. But, and before people think I'm crazy, my brother has two other
houses on the same lake, and they're packed all summer long. However, because we're on the shore side, we'll have hunting, ice fishermen, so I see the opportunity in it being a year-round opportunity. - Already selling, I love it. (laughing) - [Sarah] So it's my first one, so I expect a lot of
mistakes and a lot of pain, but you know, I've been
sitting on this idea for, you know, a couple, you know, I've wanted to do it, and I finally decided, I've gotta get over my fear of failure, I've gotta just do it. And so, I'm doing it. - So, that's what I mean, and she'll soon find out what she knew and what she didn't know. But what you don't know
will pop up really quickly. - [Sarah] Totally expect
that. A lot of headache. - I'm like a proud father going, oh, oh. You know, I wanna protect Sarah, but if I protect you,
you don't learn anything. - [Sarah] Well, and if I
just sit on it, I might feel, if I just sit on the sidelines and watch, you know, we have a lot of relationships with other investors
and that sort of thing, and I just get to watch all
of their failures and success, and to me, that's not fun anymore. Like I want, I'm ready. I'm ready to fail. - So, are you gonna Airbnb it? - [Sarah] Yeah, it'll be a weekly short-term rental opportunity. - Well, welcome to the insanity. (laughing) - [Sarah] My hair's gonna
suddenly go more gray, but no, I'm really excited. And we were talking a
little bit in the show about partnering with
somebody who's done it. My brother has been doing this
for 10 years on that lake, He has, what's great is he has a handyman, he has a property manager,
he has a house cleaner. So he has all those.
- Good, good. - [Sarah] Yeah, so that'll
make it a little bit easier, not that I expect it to totally be easy, but so that's the benefit in partnering with somebody like him. - Very smart, very smart, very smart. So anyway, I wanna thank Grant Cardone, different philosophies in all this. He raises a lot of money, he buys it, secures it,
and then securitizes it. That's where he talks about
the accred and un-accred. Non-accredited come in, and that's why he makes
more money on that stuff. So just, that's kind of a game. Again, as my rich dad said, there's a million ways
to financial heaven, and a billion ways to financial hell. And if they raise interest rates, millions of the guys
will be going to hell. So you gotta be very, very careful, and that's why we talk about liquidity, is how fast can you get
out if you make a mistake? And that's what we're talking about. Final words, Kim. - This was a good discussion, I like it, and it's always good to know. I just always wanna keep
paying attention to the trends and what's happening with real estate, where people are going, and you know, the whole
thing with the jobs market. Things are changing every single day. So I wanna keep my finger on the pulse and learn as much as possible. Kenny and Ross, they're educators as well. They're always educating me and you Robert about the properties, and I just want to stay
on top of the trends. - Yeah, there's two books, three bucks I recommend from
Ken McElroy, M-C-E-L-R-O-Y, people interested in real estate. Well, number one is ABCs, it's the basic, how you invest. Number two is Property Management, and number three is Advanced, is how you use finance to
do kind of what Grant does. But we highly recommend you study first, 'cause let's say the
book costs you 20 bucks, so you got 60 bucks invested, it's better than 10,000 and finding out you're the
idiot who bought the Titanic. (laughs) Anyway, I want to thank Grant Cardone for his contribution to the show, and thank you all listening
to The Rich Dad radio program. Thank you. Bye.
- Thank you.
