Exploring Strategies like Cash-Out Refinancing for Real Estate Success – Robert Kiyosaki
Video Transcript
Subscribe To Big Money [Applause] [Music] what i what i learned really really really quickly is that the system is set up actually it’s kind of the same everywhere we go is that you know people make a paycheck and then they put it in this you know and into this thing called a bank let’s say and um that’s pretty much the way the system is so and they also take your money through insurance products or you know pensions or whatever you want to call it it doesn’t really matter what word you use it’s your money it’s everyone’s money getting put into some kind of financial system it could be a pension it could be insurance it doesn’t really matter but then what happens is all these people the bankers the wealth managers the pension funds the all their uh the uh all the securities that are all over here that are basically taking the money from the masses they need people to invest it that’s how the system works so that little quarterly statement that you guys get you know that maybe you open maybe you don’t open so it’s invested somewhere somebody somewhere is investing that money so the same thing with a bank now so what what traditionally what the bank calls it is debt of course or a mortgage or you know whatever you want to call it it doesn’t really matter it could be credit card debt it could be an auto debt it could be debt for your home it could be debt for investment it can be debt for an airplane it doesn’t really matter it’s just debt but it comes from you so what happens is they they give you the bank gives you you know let’s just be generous and say one percent which is actually less than that as you guys know but then what they do is the bank then i go to the bank with my property here let’s say and i need debt so then they go we’re going to give you this debt which is actually your money so this is why this is why we call it opm other people’s money but what they do is that they charge me let’s say four percent so now the bank is making let’s say three percent on your money so they see when you give money to a bank it’s a liability to the bank it is they that you’re looking for interest on that money they’re housing your money for you and then their job is to lend it out so they give it to guys for businesses for all kind for autos all that that’s how the whole system works and so that’s why when you drive down the road you see the banks have all their names on all these big buildings be this is it this is how the system works in fact showing pictures yep so so you make some money here you pay your taxes and let’s say you put a hundred dollars here it’s the bank’s liability but on your balance sheet it’s an asset it always has to balance that’s why balance sheets are everything so they they have let’s say one of your dollars here and the fractional reserve system they can ramp it up ten times let’s say so your one dollar becomes ten dollars and then kenny walks in and borrows it so they now have an asset called kenny’s debt loan so it always has to balance in scientific terms it’s called counterparty who’s at risk here so kenny they need kenny to come in and borrow that money then well yeah they need you too that’s the whole that’s the way the whole system is so the entire system is predicated and by the way uh you know i’m borrowing from insurance companies i’m borrowing from pension groups i’m you know like the retired teachers or firemen or police they all put their money into pensions and then those pensions it’s just they lend it out again so what they’re always looking for is they’re always looking for people to put the money into the system and then then the financial planners the the wealth managers the money managers whatever you want to call them their job is to actually go out and find people like you to lend it for to open businesses to to put up a a beauty salon or or a you know a stylish shop or or an esthetician business and that is how the system works so the the money is sitting here it’s it’s opm or other people’s money and it needs to be lent out now the issue that they have of course is you do you have the financial capability to pay it back and that’s what rich dad really stands for is you know so this this system exists whether you do it or not it doesn’t matter to them so what they’re trying to do is take a look at you know are you an asset or are you a liability so when you go into the bank and you can’t get a loan which happens to all of us for some reason there is a reason there is a reason and typically that reason is me or you and so uh what i had to do is i had to learn how to borrow this kind of money and and to raise this kind of money to be able to invest it into these things which are now for me apartment houses and so i was just telling robert um i don’t think i told tom yet so we’re right now we have uh let’s see six about 300 million in construction in arizona and so we need both debt and equity to do that because obviously my partner and i we don’t have that sitting in a checking account no one does okay no one so you know so the strategy of being able to go out and find land buy a master plan create a master plan or find some kind of a deal and put it together this is what the system wants it they want it they need it they need to deploy that money now the problem is is that as it starts to get returned back so as i pay back the debt and as it goes back to here there’s all kinds of fees so this is why some of you might have quarterly statements that aren’t really changing very much because it might be making a little bit of money but you got to pay attention to who how it’s being allocated and the fees because what happens is if it starts at the bank it goes through a various stages of money management before it actually makes its way down to here so um so the the deals that that that we’re doing in arizona right now and we’re we are pretty much uh texas oklahoma nevada oregon uh washington and arizona primarily uh arizona and texas primarily so i be i buy existing properties in um texas so we own uh quite a few there we just this year we bought 1200 units in austin and houston and and um using this exact same model but with new construction it’s very different different team different set of education it’s very different so i have two different buckets of dead so i have the bank debt for the new construction but we have more sophisticated institutional or even fannie or freddie mac that for our existing properties so what you find is that the debt gets categorized by risk as well because building something new is a lot riskier for the debt for the bank as they represent you than buying an existing building that already has a tenant in it so it’s uh so you just got to take a look at how debt and equity are priced and and once you start to understand that and learn it then you can talk the language but it’s honestly it’s just like riding a bike once you once you understand it it does not change literally it doesn’t matter who the banker is who the money manager is it all is exactly the same so the while the deals might change the language around debt and equity and this here is exactly the same from country to country from uh from state to state from city to city and so the game is all about using debt here’s the cool part as as as tom knows my partner and i we haven’t paid tax in i don’t exactly know at least 10 years and the reason is because what the what you get when you buy housing is you get what’s called depreciation and so so what they allow is they allow 27 and a half years of depreciation on this apartment house so as an example let’s say this apartment house was 30 million dollars and two and a half of it was land so you have to take the land out because they don’t allow you to depreciate land but the 27 and a half million that’s left they allow you to depreciate one million dollars a year and why is that important it’s important because this apartment house is producing five six seven hundred thousand dollars in cash flow but you have a million dollars of depreciation so you report a loss so that’s how it works so this obviously you were trying to buy properties at cash flow so if the property produces let’s say seven hundred thousand dollars a year and you have a million dollars of depreciation you actually report legally a three hundred thousand 000 loss as the partnership so you’ve got 700 000 in your pocket but you report a 300 000 loss and the reason that they do that is because the government needs housing they’re not good at housing you guys can just we just can tell you as they’ve tried it before in all kinds of cities and all over the country and they’re just not good at it even other countries have tried it and they’re not good at it so the the housing at the moment at least is all um done at the private level so so this is why we teach what we teach on the real estate side because there’s a massive need for real estate um housing and you know we’re heading into a very very very difficult time for renters and and you know next year we’re projected seven percent rent growth i think the year after that is going to be at least that so this is not good this is out of balance what’s supposed to be what’s supposed to uh what’s supposed to happen is they’re supposed to be the right amount of housing for the right amount of people that’s how it’s supposed to work and when that’s in balance it’s healthy for everyone when the government gets involved that second tier and they start to they start to reduce the the they start to put regulations and things on the housing and i’m not saying some of those aren’t needed but when it gets so bad that you can’t build like we’re seeing in la county as an example and that you see the homelessness go up because of density or whatever else and we can go down the road on this but the point is is that when they start to get involved the bureaucrats it drives the price of housing up which only can drive rent up and so right now we’re in a situation where we have high land costs high supply chain issue high construction costs and high rent and scarcity so we have a lot more renters because of the pandemic and you know all the things that are happening around that and if we’re having a massive affordability not to mention inflation so all of those things are happening right now but we’re we’re in honestly we’re in the first quarter um we’re at the very very very beginning of this so we’re going to start to see some massive affordable issues we’re already seeing them people are going to start next year people are going to start to move to affordability and pro you know they’re going to they’re going to look for the governors the governors are going to you know how the states are run are going to be a very very big um piece of where people are going to go that’s why texas and arizona are growing right now and um and florida and idaho specifically so um so all that’s happening right now so the point is it’s a lot of information there’s a massive need for housing there’s we’re going to be in a big affordable issue this is not rocket science once you learn it it really is not it’s needed and you can do very very very well you can get lots of cash flow and you literally can defer your tax if you hold it for a long long time part of the reason why i don’t sell is because i’ll have a depreciation recapture capital gain and all that kind of stuff so we’re a very much a buy and hold company and so everything we’ve done has been buy and hold tommy add anything uh sure so um this is this is worst case i mean one thing you haven’t shown ken is is how the the bank’s making four percent but how much are you making yeah right right so so ken’s got to make more than four percent otherwise you’re screwed right so you’ve got to make more from four percent but but the thing is is that you get the depreciation even if the property goes up in value wow even if the property goes up in value you still get depreciation because depreciation is wear and tear that’s what it’s meant to be it’s meant to recapture the wear and tear on the building it’s basically if you actually did it the way it’s intended kenny would take that one million dollars of depreciation every year he put it into a fund and that fund then 27.5 years later would redo the building right or or or or by the building that’s the idea that’s the economic idea behind depreciation the government’s idea is and this started with ronald reagan the government’s idea behind depreciation is let’s use this as an incentive to build the housing that needs to be built yeah one more thing kennedy operates in the tens of millions can it work with a single unit it it can we see we see people who are doing it with ten thousand dollars down forty thousand dollars of debt and buying a fifty thousand dollar house in indiana yeah all the time so it’s not the size it’s the it’s appreciation depreciation amortization debt management okay then the next piece is the refinance piece which is actually the most fun so um so i’ll just give you a quick scenario i’m going off of memory here so um so i bought a building for 19 million um we got 15 million in debt and we had 4 million in equity let’s say now the bank what they do is they give you a loan based on the net operating income or the income minus expenses so the net operating income when we bought it was about 700k and so the bank said okay we’ll give you 400 grand in debt now this is the payment and so this property made about 300k annually now this yeah of income so there’s a lot behind this and i’m doing this really quick but the point is this um this 400k was the payment on the 15 million that’s essentially what it is this 4 million is equity that’s money that i raised from other people this this 300 000 is the return on the 4 million so what is that about an eight or nine percent return okay pretty simple pretty straightforward but what i had on this property uh we also had a depreciation of about 500 grand which showed our on our loss of 200. so we had 300k of income 200k of loss so the partners showed a 200 000 loss but we were distributing 300k but the what we were really trying to do was fix the property up so we bought like i just bought a property in austin the the owner had it for 17 years so i’m sure for the first hour long it was in in good condition but when i when we bought it it was not in good condition so same thing here this property is in flagstaff that i still own today it’s about not quite 300 units so i’m like okay so when you buy a property that hasn’t been well maintained there are opportunities in there there are rent lift opportunities all you got to do is you know clean it up a little bit put some love back into it and the inside on the outside whatever it is sometimes we do gates on the outside because there’s security issues maybe sometimes we do a lot of landscaping we put dog parks in we just you know we put new appliances and new flooring and all that kind of stuff and that all equates to a number whatever the number is but only what the market will support so you would never over improve a property so this property it had a washer and dryer opportunity in other words it had it had hookups and an actual room but no machines so so the residents were going down and using the laundry room so we’re like well if we buy washers and dryers and stick them in the units then we’re going to be able to we’re going to be able to charge a little bit more and it’s a convenience for for the renter and so we did that and we we got about 40 bucks there per unit it took a while because you put them in and it takes about a year year and a half before you get them all in and then we upgraded the vacants as they turned and what that did is it raised our net operating income to 1 million so now that sounds like a lot but on 200 units a hundred dollars a month with all that stuff the washers and dryers and the upgrades is not that much but times 200 times 12 you can see how the math works so we’re pretty darn close to that plus this was about three years later it all took a while but this is a slow project that you just that you just methodically move along and manage so then we go back to the bank and i said okay i’m i’m now cash flowing obviously a lot 600 000 right but i go back to the bank and i say hey i got a million bucks now of n-o-i because the bank this is what they lend off of they say what’s the property producing what’s your business producing you know how many how many how many uh sandwiches versus your overhead what’s your net this is the net okay so the bank says we can give you we think the value of the property is 25 million now because i was able to grow that and we’re going to give you 20 million in debt so this is how the game works so this is what we call a value-add opportunity can we add something though is as an investor i he does that i get all my money back yeah so that’s so that’s what i want to show you now so this 20 million pays back the 15 million obviously that’s out pays ballot pays back the investors they’re 4 million and i still have an extra million this is a cash out refi that’s all it is so i was able to do it through breathing you know through a strategic program of increasing the value of the property through rent growth through spending some money now i have no equity at all so i don’t owe investors anything at this point so i borrowed the 4 million i paid it back at the end of three years i think it was in the fourth year okay and i still own this building by the way so but the investors still own it too the investors still own it too of course yeah so now but of course the payment goes up and i think it went up to about 700 or something i i can’t remember i’m going off a memory you know because you if you borrow more money your payment goes up okay so now my cash flow is still 300 and my depreciation is still 500 and i still and so on and so at this point we have what we call an infinite return surfinito that’s what that means so then fast forward this market you know we got life back in the market i bought this in 2005. so i’ve owned this a long time so i’ve actually refinanced this three times so um so we were now through rent growth we brought it up to 1.2 and then the 1.5 okay so all we do is the bank just says okay now it’s worth 30. now it’s worth 35 based on this and a y growth and this some of this is luck some of this is buying in the market at the right time and and uh and this is kind of the point of where where the renters are heading right now so this is why i’m aggressively aggressively buying right now and so what happens is when you start to put another 25 million on here or let’s say 27 million um that’s this is all just extra extra cash all tax free yeah let me explain that just for a second why that’s tax-free it’s debt so you owe the money back you don’t get that money forever you owe the money to the bank and because you owe the money back that’s not taxable to you okay if the bank forgave it you don’t tax on it but as long as you owe the money then there’s there’s no tax so all of these times he took out five million dollars and then another five million dollars and then another two million dollars all of that was just debt okay but that money came out tax free because you do owe that money back at some point so this is why investors want to if you guys can figure this out and you can trust me this is how you raise capital i already had this planned while i was raising the money i didn’t just think it was going to go up i knew that the property had been under managed i knew that i was going to be able to grow my net operating income a million bucks i knew it was going to take two to three years and part of that is because i’m in the game so i you know when i went and pitched the four million dollars to you know the various uh investors that we have because we now have close to three thousand investors um they um you know they they put the money in quickly and then because they know they’re going to get it back within a certain period of time so this is this is how this is how i continue to use debt i borrow this and this and this and this and this and we pay um little to no tax and we’ve pulled out um this is original equity so it’s not profit so we had one million plus uh maybe and we pulled out another eight million in tax free income and that goes you share with the investors also yeah yeah yeah we we we distribute that out so i understand because i never get my money back you’re going to refi i’m going to get more money and pay no tax people line up to give them money yeah so kim and i have a standing order he just calls i need this it’s called tom boom done because that’s how we get richer and richer and richer with debt right and so all we all we simply have to do is is um set our investors down and say would you rather do the deal we just did or would you just rather put your money in the bank and that’s it because the people that are seeing with their money in the bank right now are afraid of inflation and so um they stick it in the bank and that you get less than one percent well anything worse than that what is what is the tax on interest oh it’s it’s your regular tax rate so if you’re in a 35 tax rate it’s 35 percent so that’s why in rich dad and rich dad poor dad i said savers are losers because they teach you in school to save money why would you do that right right it makes no sense the people who are most at risk are actually the banks right now because they’re they’re lending you money hopefully you guys are doing fixed-rate debt uh and inflation’s running higher so they’re actually um what they would rather have you do is do a variable rate debt because variable rate will will go with with the market what you want to do is you want to do fixed rate debt so you want to you want to fix your debt you want to hedge your number now so that you know what the payment is especially with with inflation at five six percent so so the the fed transitory means just like what you would think it means it’s temporary so they were at two a year ago right two percent inflation now they’re up over five six and and so that is their narrative they’re saying that there was an article that came out last week that said inflation is good for the middle class i haven’t figured that one out yet but um it doesn’t uh again you got to be careful of the spin the media spin on you know all this stuff the fed as we know is the third central bank is not us it is not federal it has no reserves there’s nothing it is a cartel owned by the rothschilds so if you understand that and you understand why guys like ron paul say and the fed and all this but the other part about it is so what happened in 1913 the fed was created and the 16th amendment was passed because money had to come in through taxation so when they print money the only way to get it back is via taxes which is why time is here so here’s our four quadrants how much tax you pay depends heavily on which quadrant you’re in so if you’re an employee and you make a good salary you’re probably going to pay about 40 percent this is worldwide too it is it’s really interesting it’s we we travel all over the world and we i always get to look at the tax law when we go somewhere and the rates are remarkably similar the brackets are different but the top rates are about the same if you’re self-employed you get more education you decide to be you decide to start your business you’re up to 60 but a big business owner is down around 20 this is why warren buffett famously said that he pays a lower tax rate than his secretary she’s an employee he’s a big business owner that’s the fundamental difference there and then if you’re a professional investor you get down to zero that’s what kenny was talking about okay he’s a professional investor hasn’t paid taxes so basically if you look over here this is biden right this is harris attorney and this is trump you know trump new york times said trump uh 10 out of 15 years paid no tax and two years paid 750 in tax and somebody asked me what do you think about trump paying 750 in tax i said his account should be fired because why is he paying any at all because trump uses so much debt there’s it would it’s so hard for him to ever pay tax because he does what kenny does but on a larger scale right that’s his business so love him or hate him this is this is the way the tax law works so the tax law is about itself is about six thousand pages and there’s one line in the tax law that says all incomes taxable unless we say it isn’t there’s another line that says nothing’s deductible unless we say it is there are a few pages that tell you how much tax to pay but the rest of it almost literally 99.9 of it is just an instruction guide on how to reduce your taxes it’s very much a road map and the reason is is because there’s incentives and when you look at who’s who does the government want to incentivize okay well not employees employees trina consume it earlier consumers pay a lot of tax this is why savers are losers they’re consumers okay so if you consume it if you’re an employee okay well they’re just going to pay tax as a self-employed if you don’t pay attention you’re just going to pay the same amount of tax they do plus plus extra but what happens is that that the government says well wait a minute what would we really like well over here what we really want is we want to incentivize job creation so that’s why this is 500 employees or more okay once you get over 500 employees now now you’re really creating jobs the government wants jobs created that’s one of their number one goals what about down here well they want housing kenny talked about that but what else do they want energy agriculture and technology so they incentivize all of those that’s what they incentivize so once you once you get in your mindset that the government i get to choose right where i’ll partners with the government i get to choose am i my asylum partner over here or am i an active partner over here doing what the government wants done okay these people you know there’s been a lot of discussion lately about rich the rich people cheating on their taxes my experience is the rich don’t have to cheat because they have all the incentives the people who are cheating frankly number one cheaters in the world are right here that’s true and these are the people they’re your they’re your uh they’re your stylists thank you for admitting that they’re your stylists they’re your they’re your they’re your contractors that say here pay me cash and i’ll give you a 20 20 discount what is that well they’d rather give you a 20 discount to pay the government 60 in tax that’s all that is that’s just money under the table under the table from the government so that’s where all the cheating is okay so don’t don’t don’t believe this these people don’t need to cheat you know trump i love this so i love that new york times article i know he hated it but i loved it because basically it said it said he made 400 million dollars on the apprentice that’s his s that’s his ass income but what did he do he did just like robert was talking about he borrowed rolled it into real estate and what do you get back a 70 million dollar refund wow he rolls it into real estate his hotels golf courses etc and once he get back he gets a 70 million dollar refund that’s why they’re complaining they’re complaining to the wrong person right you want to complain complain to the government because they’re the ones who make the laws all we’re doing our job and my job is just to explain how the laws work and then we get to choose now you get a choice right you can pay taxes over here if you want but you don’t have to once you get the education you can pay taxes over here does that make sense so far yeah okay so let’s go to kenny’s side of things okay this is the financial statement that robert has right over here cash flow this is financial statement we have income expense asset and liability okay what happens for most people money comes in and it goes out it’s taxes so what’s happening is they’re either consuming it or they’re saving it and people who are consumer save they pay taxes on 100 of their income that’s the rules you consume it or you save it you pay 100 percent tax on your income there’s one more thing about the 401k how does that tax work that’s even better so so the 401k you you put money in but you pay tax on the at the highest rate coming out you don’t pay tax at lower rates you pay taxes the highest rate coming out it’s it’s earned in its ordinary income so when you retire it comes out ordinary it comes out as ordinary income even if it were invested say i mean some people tell me well i’m going to invest in kenny’s deal through my ira i’m going that is literally the dumbest thing i’ve ever heard okay and i hear it all day long okay well because what’s happening you’re losing all the tax benefits that kenny’s been we were talking about with kenny but when it comes out it’s taxable as ordinary income so you like turned a non-taxable event into a taxable event yeah that’s dumb okay that is not it doesn’t not rocket science to figure out that i don’t want to do that right so what greg does and he was telling me goes well i’ve been putting all my money back in my business right if you put your money back in your business you pay no tax that’s called a deduction that’s just called a deduction and if we have time i’ll show you how to make anything deductible okay so hold on to that thought this is this is really common all business owners know this you guys are deducting the money that you spend on your business right your business expenses you’re deducting that that’s that’s just an expense here okay what robert does differently than most people is yeah he’s still doing this with his business but then what he does is he takes what’s left over and he puts it into real estate energy right that’s commodities right or a business and if you do it any of those three because those are government favored investments then you pay zero tax the difference between what robert does and what most people do is most people looking at an expense one expense the difference between expense and asset is an expense the purpose of an expense is to produce income okay but expense produces income once an asset produces income for years and years and years and years so if you had your choice between putting your money into an expense which produced income once or produced putting your money into an asset which produces money over and over and over again who would choose putting money into an asset raise your hand right and especially now where the tax benefits are just as good here in fact they’re even better here because what robert does and kennedy is they add debt so they’re actually compounding their tax benefits they’re compounding their tax benefits so by doing that you get an asset that produces income over and over and over again you don’t pay tax over and over and over again okay and you constantly have that cash flow but you still have the asset the asset lasts as long as you as long as you want to last as long as you you make it last okay so i’m going to finish up for a second and then i want you to have a little discussion here who can tell me what’s the purpose of income what’s the reason for income purpose income is cash flow if your income if how many of you have people who owe you money in your business raise your hand okay that’s not cash flow is it they owe you money there’s no cash there they owe you money that doesn’t there’s no value to that money to that income until the money comes in purpose of income is to create cash flow the purpose of an expanse is to create income and the purpose of an asset is to either create income or reduce an expense the only reason you should ever ever have debt is to produce an asset but the what the debt does it increases my depreciation right increases your depreciation and increases your returns right that’s what i mean it does both and here’s where people get scared of debt how many know people who are scared of debt raise your hand maybe you maybe not if you’re afraid of debt what is it that you’re really afraid of no you’re not afraid you’re not you’re afraid you won’t be able to pay because you don’t trust the asset it has nothing to do with the debt you don’t trust the asset kenny trusts the asset does kenny sound like he’s afraid of buying real estate and putting 600 million dollars of debt no why not because he’s done this over and over and over again he knows the asset will produce the income he don’t worry about the asset then therefore he wants as much as possible but if you are not trusting your asset okay because you don’t have the systems bi trangle you don’t have that in your business for example okay greg can go out and borrow money in his business because guess what how many think greg pretty much knows what he’s doing when it comes to his asset his business right he tr you trust your asset absolutely right i just borrowed five million dollars there you go he trus he trusts the asset so when you trust the asset you no longer have to worry about the debt it’s irrelevant if you don’t trust the asset don’t be buying the ass in the first place forget that don’t be buying the asset his asset right here how much does it have to produce for him not to be in trouble over four percent right he’s paying four percent so if his asset doesn’t produce at least five percent he’s in trouble okay but he’s not selling the asset okay if you’re selling the asset it’s not an asset it’s inventory okay just to be clear if you have something like let’s say you’re flipping houses that’s not an asset that’s inventory okay that’s different that’s part of your operations that’s uh that’s an expense inventory is really an expense because it produces income once so flipping a house is inventory it produces income once it’s an expense it’s not an asset an asset produces income over multiple years a rental property would be an asset an oil well would be an asset a business that produces income every single month every single year is an asset okay those are assets a dividend paying stock would be an asset okay most stocks aren’t dividend paying but that would be an asset okay dividend paying stock you know a capital gain stock that’s not an asset it doesn’t produce any income apple tesla they don’t they don’t they’re not producing income those are in in my mind that’s not an asset it doesn’t produce cash flow so i would never borrow to do that bitcoin doesn’t produce income now it’s it may be a good way to hold money right as opposed to savings that’s called a store of value does it hold as value right gold silver bitcoin ethereum whatever okay that’s some place to stick your money okay but if you want it to be productive and you want tax benefits from it okay then it has to be in it has to be in this loop over here but if you stay if you stake your bitcoin or ethereum then then it becomes an asset then it could become an asset right because now you’re earning interest on that bit on on that bitcoin they’re taking it fourth price that’s correct that’s correct now that’s still that’s a very volatile asset so that’s still very risky um proposition all right so do you trust the asset let me put let me let me put this in perspective to greg’s loving this let me put this in perspective bitcoin is right around 50 right now 50 000 if you knew for sure bitcoin was going up to two million dollars i mean without a question you knew for sure is going to mean two million dollars how much would y’all buy how much debt would you get to buy bitcoin if you knew it was going up to 2 million as much as you could right okay kenny knows that his real estate is going to produce income so what does he want to buy he wants to buy as much as he can as fast as he can with as much debt as he can wow great point it’s trusting the asset that’s good you can’t do this without the education you can’t you’re never going to have an asset that you can trust without the education so don’t be thinking about you know the worst question i’ve ever heard robert gatt i remember this really clearly he gets it all the time but i remember one specific circumstance and i can’t remember where we were somewhere in eastern europe and this woman comes is is kind of the hostess and she comes up to robert this is in the in the vip lounge at the airport and she’s sitting with him she goes so i have ten thousand dollars what should i do with it do you remember that you get it all the time i know what should i do with that is the dumbest question ever okay well the answer to me in my mind is spend it on education because you’re going to lose it anyway okay it’s and and some of the education we get one of the things that i’ve been learning from robert is the kind of questions to ask right because there are stupid questions how do i invest ten thousand dollars that’s a stupid question i’m sorry i disagree with people who say there’s no stupid questions that’s a stupid question let me give you a stupid question in my business is this deductible is this book deductible how the hell do i know if it’s deductible i don’t know whether it’s deductible for you but you could ask a better question how do i make this book deductible now that’s a good question that’s a good question so to me a lot of the studying robert’s talking about studying he talks about all this finance stuff but a lot of it’s personal development type studying how do we get better greg just said i’ve never heard you say that before well because i’ve been studying i just and i figured this out like six months ago greg that’s why they cover you in copper so that i mean but that’s the point is that you’re constantly studying you’re constantly learning you’re constantly improving if you’re not doing that then like you said trina you’re going to get passed by anyway so you might as well give up now and the difference if you look at the primary difference between this side and this side these guys rely on a team these guys rely on themselves that’s the the number one difference between this side and this side in my mind is it’s the team these guys can have a mission they can they they can they can be driven but they don’t they don’t have a team because they’re not willing to give up control to their team or create the systems where they maintain control of the team and still have the team right i mean can you imagine having 500 accountants it’s scary scares the dailies out of me every single day let me tell you but it’s a matter of creating the systems and having the leadership and having the mission and doing the training doing the work then you can have the team but until you have the team you never can get big you’re you will always that stands for small and you will always be small and the other thing that happens with tom knows a lot of is all of my partners came from bad partnerships i met tom because i had a bad account yep she was an s and a crook the other thing is my my friends are you know jw right now is going through it if you hire a ceo you hope they share the same mission right right absolutely i i thought just because a person was an accountant an attorney i don’t mention their names that they were smarter than me now there are thieves it’s shocking my biggest problems have been attorneys right yeah it’s really easy to rely too much on experts yeah okay having a team doesn’t mean you’ve got a bunch of experts it means you’ve got a team and it never stops i mean you you make mistakes you learn make mistakes you learn and that’s how we learn everything here is about cash flow right either it flows out and do what most people do flows back to the business which should create more income flows into an asset which creates more income you know you borrow you get debt asset more income but it’s all about cash flow so every single thing by the way every investment is valued based on cash flow that’s a little secret it doesn’t matter if it’s business we call it a multiple um it doesn’t matter if it’s stock market we call it a p e ratio doesn’t matter if it’s real estate we we call it a cap rate but every single asset is valued based on cash flow [Music] [Applause] [Music] youHow Big Money Invests In Real Estate
Solving Common Challenges
Investing in real estate is a proven strategy for wealth generation. Yet, it is not without its challenges, especially for those new to the field or without the vast resources of big-money investors. Ever wondered how the big players overcome these obstacles and consistently succeed? Let’s dive into two common problems in real estate investing and explore effective solutions to tackle them.
Access to Capital and Financing
One of the biggest hurdles for real estate investors is accessing sufficient capital. Real estate investments often require significant upfront costs, which can be daunting. Have you found yourself struggling to secure funding for your investment projects? Without the deep pockets that institutional investors have, many potential investors hit a wall.
Challenges in Securing Financing
- High Down Payments: Traditional loans often require large down payments, which can be a barrier.
- Strict Lending Criteria: Banks and lenders have stringent criteria that can be difficult to meet.
- Risk Assessment: Lenders may view real estate investments as high-risk, leading to unfavorable loan terms.
Market Knowledge and Timing
Understanding the market and timing your investments are critical for success in real estate. How do big investors seem to always get it right? They possess extensive knowledge and resources to analyze market trends and make informed decisions. But what if you don’t have access to that level of expertise?
Challenges in Market Knowledge
- Lack of Data: Accessing comprehensive and reliable market data can be challenging.
- Understanding Trends: Interpreting market trends requires experience and expertise.
- Risk of Overpaying: Without proper market insight, there’s a risk of overpaying for properties or missing out on lucrative opportunities.
Solutions to Overcome These Challenges
Now that we’ve identified the problems, let’s explore how you can overcome them with strategies that even big-money investors use.
Leverage Partnerships and Syndications
Forming partnerships or joining real estate syndications can provide the capital and resources needed for larger investments.
- Step 1: Network with other investors and professionals in real estate forums and meetups.
- Step 2: Look for syndication deals where multiple investors pool their resources.
- Tip: Ensure all legal agreements are clear and protect your interests.
Utilize Creative Financing Options
Explore alternative financing options beyond traditional bank loans to raise the necessary capital.
- Step 1: Consider options like hard money loans, seller financing, or private money lenders.
- Step 2: Evaluate the terms and conditions carefully to ensure they align with your investment goals.
- Tip: Build strong relationships with these alternative financiers to secure better deals in the future.
Invest in Real Estate Education
Equip yourself with the knowledge needed to analyze markets and make informed investment decisions.
- Step 1: Enroll in real estate courses and attend industry seminars.
- Step 2: Subscribe to market analysis services and real estate journals.
- Tip: Stay updated with the latest trends and news in the real estate market.
Use Technology and Data Analytics
Leverage technology to gain insights and make data-driven decisions.
- Step 1: Use real estate analytics tools to evaluate market conditions and property values.
- Step 2: Employ software for financial modeling and risk assessment.
- Tip: Regularly review and analyze the data to stay ahead of market trends.
Diversify Your Investment Portfolio
Spread your investments across different types of properties and locations to mitigate risk.
- Step 1: Invest in a mix of residential, commercial, and rental properties.
- Step 2: Consider properties in various geographical locations to reduce market-specific risks.
- Tip: Rebalance your portfolio periodically based on market performance and trends.
Start Fixing These Problems Today
By leveraging partnerships, exploring creative financing, investing in education, using technology, and diversifying your portfolio, you can overcome the common hurdles in real estate investing. These strategies will help you secure capital, understand the market better, and make informed decisions.
At BigMoneyInvesting.com, we are here to guide you through these processes. Our resources and community support can help you take the first steps toward successful real estate investing.
Who Am I?
Hello, I’m Chris, the founder of BigMoneyInvesting.com. I’ve been where you are now—eager to invest in real estate but unsure how to navigate the challenges. I started this platform to help people like you who are passionate about investing, wealth creation, and understanding financial issues. At BigMoneyInvesting.com, we provide tips, strategies, and community support to help you solve these problems and achieve your investment goals. Join us, and let’s build wealth together!
Thank you for being a part of our amazing community.
We can’t wait to see you shine finanically!
#BigMoneyInvesting #big #money #investing #lifestyle #investors
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Comments (42)
El sistema económico esta muerto, la deuda es impagable, la única forma de resetear es una fuerza mayor, por ejemplo una guerra y eso vamos a tener. Saludos desde Suiza.
Lost me at “I own this building with 0 equity”, the bank owns you man
At 34:39 it explains how you take your income from the S quadrant, buy debt, and roll it over into real estate….
Could you please explain what you mean by “roll it over into real estate?” Do you just put that money down as down payment on a loan? Is that what you mean by “buy debt and roll it into real estate?”
The future….you will own nothing and be happy…NO GOLD…..NO AUTO….NO LAND…..NO REAL ESTATE…HOMES ETC.
THE GOVERNMENT WILL SEIZE YOUR ASSETS
I lost over $80k when everything started to tank. Not because I was in an exchange that went belly up. I was just stupid to hold and because that's what everyone said. I'm still responsible. It just taught me to be a better investor now that I understand more of what could go wrong. It took me over two years of being in the market, I'm really grateful I found one source to recover my money, at least $10k profits weekly. Thanks Charlotte Miller.
The fractional reserve banking theory was disproved by Werner a decade ago. Read his paper. Banks don't lend other people's money, they create it out of thin air then lend it out
All fun and games until COVID hits and the government wont let you collect rent!
why would invester lend you money intrest free?
P
Great lessons here !
Thank you Sirs❤
The govt. allowing depreciation on assets gaining huge value every year is a completely unethical tax subsidy to the rich. 🎉
This teaching l'm understand seriously
Your teaching more l have best Question for you
I happy for you l like this more 🌳🌳🌳🌳🌳🌳🌹🌹🌹🌹🌹🌹✔️🌹👍👍👍🔥🔥🔥🔥🌏🌏🇬🇭🤛
My best rich dady's l get everything
I believe you're seriously teaching
I happy for you 🌹🌹🌹🌹👍👍👍👍👍🌳🌳
Thank you so
I like your best teaching 🌏🌟🌹🌹💯🙏✔️
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Yes good teaching nice one
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I work for my father no pay tax no good
Brilliant
Here's a news flash.. People can't afford rent..I've even heard of people living in a rental and not paying rent for months. Welcome to the real world!
Money knowledge is a valuable knowledge all need to have
How can one become an investor with your group?
So amazing video. How can I invest with you or be part of your team. I’m been following Robert for year and been investing in single houses. But I’ll like to jump up with your team. I learn a lot on this video. You all are a great team together. 👍👏👏👏🙏🙏🙏🙏
Imagine if this was taught in late middle school and high school…. In a generation, debt slavery would be over
What happens the moment the masses decide to stop borrowing.
For example, prices are too absurd for a home.
Implosion?
It doesn't really matter!
if i bought a property for 4million using debt(15%interest rate) and rent it , for 28k per month then it'll take 142months to earn 4million but in that time i will also have to pay the the interest rate as well which will be more than twice the amount then how am i supposed to may it ? like it'll just be like earning money from the property and paying for interest and debt , how will this circulation end ?
How are you borrowing $15 million and the note is only 400,000 annually?
What „class“ is this – where those people directly sit there and can learn within a room and directly ask questions??? I would want to participate!
I think its all about taking responsibilities and balancing it out. The problem being faced now because of corruption and respresentation is people want to get paid for taking no responsibility and when that happens, the people who are taking responsibilities are burned more. This is unfair. More burden to the already burdened will break the whole system.
Helo sir
I took loans and i have 10k dollars where do i invest this or where do i use this momey to pay back loans?
Please add the cost of possible increased rates when it's time to do the cash out refinance
This accountant is 🔥🔥🔥🔥
Every asset is Valued based on cash flow
I’ve known a lot of people that used debt to purchase property and at some point they lost it all. No lie
I don't understand his numbers. A 15 million mortgage @ 4% 30 year is about 70k a month 840k a year not counting property tax and insurance so 900k -700k rental revenue is 200k loss. How do these numbers work. I don't get it
Interesting , the stock market is currently experiencing a decline while bond yields are on the rise. However, there seems to be skepticism amongst investors regarding the Federal Reserve's plan to continue increasing interest rates until inflation is stabilized. As for myself, I find myself at a crossroads, uncertain whether to liquidate my $250,000 stock portfolio> I'm seeking advice on the best strategy to capitalize on this current bear market.
Thank you very much
Nigeria 🇳🇬