Markets can seem like a mystery. They’re hard to time … and no one wants to sit on the sidelines and miss out on an opportunity.
Luckily, our guest today has been in the game for quite a while. He has found ways to thrive in ALL kinds of markets … and he is sharing his take with investors like YOU.
Ken McElroy is real estate partner and advisor to Rich Dad Robert Kiyosaki. He knows how to find value in a hot market … so let’s get started!
In this episode of The Real Estate Guys™ show, hear from:
- Your hot host, Robert Helms
- His hot-diggity-dog co-host, Russell Gray
- Real estate guru and Rich Dad advisor, Ken McElroy
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Meet Ken McElroy
Our good friend Ken McElroy is an icon in real estate. He started out in property management and decided it would be better for him to own apartments.
Today, he owns more than 7,000 units.
Ken has a lot of practical, pragmatic wisdom … and he LOVES helping people grow and be successful.
That love is reflected in his work as Rich Dad Advisor for real estate to Robert Kiyosaki and in his library of books. You’ve probably read Ken’s classic The ABCs of Real Estate Investing.
Well, we’re at an interesting time right now. We’ve been in a really long cycle … and everyone wants to know what is going to happen next … and what to do about it.
Navigating market changes
“One of the mistakes people make is that they try to time everything,” Ken says.
There’s nothing wrong with thinking about things and trying to consider what the future will bring, but don’t overanalyze yourself into a corner.
If you’ve bought correctly, and you’ve made some good money … you shouldn’t be concerned.
Ken said his team had some properties that they really didn’t want anymore. As you grow your portfolio, you’ll have things doing really well, things doing just fine, and things that are taking up your time.
As you feel like you are coming to the end of a cycle, it’s a good time to dump any projects that aren’t paying off for you.
But what about if you’re trying to force equity?
One of the classic ways to force equity is ground up construction. Ken says he is still seeing those opportunities today, but investors should be prepared for market changes.
As the market changes, you may have to rework your strategy. You take what the market gives you.
Ken also says not to discount the power of small wins. Small wins add up. Look for opportunities to cut costs without cutting quality.
This is especially true if you are involved in new construction or you are working with a large amount of units.
If you can save $10 on 100 units, that’s $1000. Look for the small wins … and if you can, buy in bulk.
In a hot market, the key is finding opportunities to add value. If you increase value, you increase your profit.
Keys to success in partnership, investment, and family
Ken and his real estate partner, Ross, have been working together for nearly 20 years. That partnership has been key to his success.
What makes them so effective as partners?
“We stay out of each other’s way, but we keep each other accountable,” Ken says.
Ken and Ross have a clear division of responsibility that plays to their strengths. Ross handles tax and legal. Ken handles operations and equity.
Together, they work on acquisitions.
Ken says that in your partnerships, it is important to keep each other updated and in the loop. “We periodically sit down and make sure we each know about the moving parts,” Ken says.
Those moving parts include investors and tenants. Does taking care of tenants automatically translate into taking care of your investors?
“We think that that is really where it all starts,” Ken says. “Our tenants and our employees are as important if not more important than our investors.”
Why? Because if tenants are being treated well, you can reward your employees. And if they are happy … they keep doing a great job.
All good things flow up. The investors benefit from happy employees and happy tenants.
Ken points out that that same lesson applies to family as well as business.
“If you haven’t played the cashflow game with your kids, you’re crazy,” Ken says. “My kids were not particularly great at math, but we invested in their education and treated them well.”
Ken says that by the time his kids got into finance and higher math in school, they understood income and expense, asset and liability, what a stock purchase was, and how capital gains work.
Part of treating your kids well is helping them understand the hard work that goes into purchasing and investment.
“My sons went to private school, and a lot of the kids were driving fancy cars. I made them save their money and buy their first car. It’s hard, but it’s easier to teach them to make money than to give them money forever,” Ken says.
For more tips and wisdom from Ken, listen in to the full episode!
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