Finding and Creating Value in a Hot Market

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!

More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Podcast: Finding and Creating Value in a Hot Market

Robert Kiyosaki’s real estate partner Ken McElroy sits in as we tackle the timely topic of finding value in a hot market.

Markets are hard to time. And no one likes to sit on the sideline missing out on opportunity. But when cap rates are compressed, finding deals that make sense is a challenge.

Fortunately, Ken McElroy has been in the game for quite a while … and has found ways to thrive through all kinds of markets.

So listen in as we learn how to find and create value in hot markets … with Robert Kiyosaki’s Rich Dad Advisor for Real Estate, Ken McElroy!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Coronavirus could be coming to Main Street …

By now you’ve probably heard about the coronavirus. It’s big news and appears to be getting bigger … and there are MANY angles on the story.

Of course, we’re just The Real Estate Guys™ … not the virus guys … so we’re not qualified to have an opinion on the health risks or odds of a global pandemic.

But whether the coronavirus is truly an existential threat to all humanity … or just another run-of-the-mill frightening event that fades into obscurity …

… it’s certainly creating some economic upheavals all investors (even real estate investors) should be paying attention to.

And as long as we all survive long-term, the coronavirus crisis is raising notable concerns and creating short-term opportunities.

To be clear, we’re not making light of it … or suggesting that economic consequences are the most important aspect of the coronavirus story.

But since we don’t have the expertise or ability to change what’s happening or to advise on how to avoid the health risks … we’ll just focus on the investing considerations.

It’s safe to say the coronavirus could be the proverbial “Black Swan financial pundits constantly obsess about.

No one saw it coming, and then … BOOM! It’s here. And it’s already having a profound effect on stocks, bonds, currencies, and commodities.

Of course, the big question is … what does the coronavirus mean to real estate investors?

In the short term, it creates an opportunity …

As freaked out paper asset investors jump into safe havens, lots are ending up in U.S. Treasuries.

This is bidding bond prices UP, driving bond yields DOWN …meaning interest rates are falling.

This pulls mortgage rates down and provides real estate investors with an opportunity to restructure existing debt and take on new debt

… and lock in those low rates for the long term.

Meanwhile, some safety seekers are piling into gold … and we think there’s two parts to that story … maybe three.

First, gold is the ultimate safe haven because there’s no counter-party risk (assuming you take physical possession) and you avoid specific currency risk.

In other words, you can store wealth in gold, and later convert it into ANY currency … not just the one you bought it with.

American brains often tilt here … because they only think in dollar terms. But the rest of the world doesn’t.

Sure, the U.S. dollar is still considered the “safest” currency … but as we explain in our Future of Money and Wealth video, “The Dollar Under Attack” … there are reasons to be careful of the dollar long term.

And enough investors in the world appear to agree … and they’re bidding up the price of gold in their flight to safety. That says something about the dollar.

But the BIG coronavirus story isn’t falling interest rates, spiking gold prices, or crashing stock markets …

As is often the case, investors and mainstream financial media pundits fixate (and trade) the symptoms … sometimes missing the real problem.

There’s a YUGE difference between a booming economy and a strong financial system.

During this U.S. election cycle, you’re likely to hear about the “booming economy” … and it’s true.

But even more importantly, it’s NECESSARY … and that’s the concern.

A global economic slowdown isn’t just inconvenient … it’s systemically dangerous on an epic scale.

This is what our big-brained friends help us understand and navigate.

The world is piled nose-high in debt … most of it at very low interest rates. And yet, it’s barely being serviced.

There are many tapped out “zombie” businesses who don’t even earn enough profit to pay their interest … which means their debt is a slow-growing cancer.

A spike in interest rates or a decrease in prices or economic velocity accelerates their demise … but that’s just the beginning.

Besides the obvious ripple effect of job losses through communities and supply chains … some of which would affect Main Street real estate investors …

… the potentially bigger problem is the ripple effect through financial system balance sheets which are holding bonds as ASSETS … assets they’ve borrowed against.

This is EXACTLY what happened in 2008 with sub-prime mortgage bonds.

It wasn’t the direct losses from a relatively small number of sub-prime defaults that imploded the system. It was the contagion because those modest losses were magnified by leverage.

But unlike real estate, when the collateral (the sub-prime bonds) declined in value …

… Wall Street loans come with cash calls when the “margin” between loan and collateral value shrinks too much.

Margin calls exploded throughout the system … forcing everyone to sell everything to raise cash. This crashed prices, triggering more margin calls …

… creating a vicious downward cycle until the bottom fell out.

So the Fed (and other central banks) stepped in with MASSIVE amounts of “quantitative easing” to put in a bottom and stop the free fall.

They printed trillions and bought the “toxic assets” no one else wanted. And as we now know, they’ve been unable to withdraw the patch.

After 10 years, the Fed tried to “shrink their balance sheet” and “normalize interest rates” (i.e., stop propping things up) …

… and they failed miserably on both counts. In fact, they recently had to take emergency action to blow it all back up.

So there’s a LOT of air in the financial system right now … all propped up by record levels of debt … which can only be serviced by a “booming economy”.

And that booming economy keeps the frailty of the system off many commentators’ radar … while “alarmists” like Robert Kiyosaki and Peter Schiff don’t get much media time to warn people.

That’s the way it was in 2008 … and that’s the way it is now.

The setup is the same as 2008 … just bigger. WAY bigger. And it’s all rooted in gobs of global debt …

China has taken on enormous debt to fund its phenomenal growth the over last two decades.

The coronavirus could push China into even greater debt … not to grow … but just to prop things up as their economy slows.

Corporations took on records levels of debt to fund stock buybacks over the last decade. Of course, this helped boost stock prices, but is it reliable wealth?

Households are also carrying record levels of debt … probably feeling rich because of high home and stock equity on their balance sheets.

Sure, inflated assets can make people feel rich … boosting consumer confidence … but how stable is it?

Equity is awesome … but it’s fickle. The coronavirus is writing a reality check for stock investors right now.

Meanwhile, the coronavirus is shutting down factories … even entire cities … which MASSIVELY slows economic activity … with global ramifications.

It’s like if you had a gigantic credit card with triple your annual incomes in consumer debt …

… but are barely able to make the payments working 60- or 80-hour weeks … and then your hours are cut.

Now instead of just getting by … you’re being swallowed by the debt.

Except it’s not just you … or a single corporation … or a few thousand sub-prime homeowners … or even a tiny country with a small global economic footprint.

It’s the ENTIRE globe … and it’s emanating from the second largest economy on the planet.

It’s hard for China to be the manufacturing engine of the world with closed factories and entire cities quarantined.

That means they use less energy, buy less commodities, export less products … which means shippers have less to ship, retailers have less to sell, and on and on.

ALL those businesses and employees in the chain … many of which are loaded with debt … take a big pay cut … putting all that debt in danger of default.

To “save” it all, central banks will need to print like crazy … and gold prices tell us smart investors are concerned about that.

Gold is at record highs against EVERY currency in the world … except the U.S. dollar (yet).

Ironically, the financial contagion has the potential to spread FAR faster than the coronavirus itself.

YIKES.

Okay, take a deep breath. It’s not Armageddon.

But as you might guess, a scary place to be is in investments that are front-line to fragile financial markets.

That’s probably why alert investors are exiting into safer havens.

Well-structured real estate investors are likely to fare better than most paper asset investors … because real estate’s fundamental model is far more stable.

Think about it …

Do you see any headlines that say, “Rents are crashing as coronavirus spreads” or “Tenants break leases to escape coronavirus”?

We don’t.

So while paper asset investors are watching their 401k wealth go up and down like a roller coaster …

… real estate investors are quietly endorsing rent checks.

But it’s not just the cash flow of real estate that makes real estate stable …

It’s the priority in people’s lives to make those rent payments … and the ownership of a physical, tangible asset that doesn’t disappear in crisis.

Yes, if the coronavirus destroys humanity, demand for rental property will implode. But that will be the least of your worries.

And if the financial system implodes … as bad as that sounds … it will be bumpy for awhile … but a new system will be put in place.

So as long as you’re structured to weather the storm 

… with competitive rents and great customer service in markets with solid infrastructure and fundamentals …

… and stable underlying financing with enough cash flow cushion to absorb temporary softness 

… you might not get richer on your current holdings, but you can probably ride out the storm.

Of course, if you’re properly prepared, you’ll be in position to go bargain shopping in such a storm … which is exactly what Ken McElroy did in 2009-2012.

The world is volatile. Real estate is relatively stable compared to most other investments. But you still need to see the big picture and think ahead.

That’s why we hang out with people like Robert Kiyosaki, Peter Schiff, Ken McElroy, Brien Lundin, and other super-smart people.

After all, it only takes one good idea or heads up to make or save you a LOT of money when things get crazy. And you never know what that’s going to happen.

Until next time … good investing!

 

More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Lessons from a legendary billionaire real estate investor …

Even if you’re a die-hard cash flow investor … more intent on collecting properties than flipping them … it’s still important to pay attention to market cycles.

After all, though you might not plan to “sell high”, it’s sure nice to “buy low”.

Besides, “buy and hold” doesn’t mean you’re not harvesting equity when conditions are ripe … which is usually closer to a cycle top.

So, what is a “cycle”? Why do cycles happen? And what do they look like?

Maybe obviously, cycles are the ups and downs of prices or economic activity. And they always seem so obvious when charted after the fact.

Of course, cycles are hard to see when you’re buried in the weeds of the here and now. That’s why it’s smart to listen to seasoned investors.

Economic cycles … those sometimes severe and shocking ups and downs … happen for a complex variety of reasons … but are rooted in a fundamental pattern of action and over-reaction.

Think of it like a car fishtailing on an icy road …

It starts with a sudden acceleration or braking. Then a cascade of exaggerated actions and reactions take place … with lags in between … as both driver and vehicle strive to find an equilibrium and get back in sync.

Skilled and experienced drivers keep their emotions in check …

… calmly making proven moderate adjustments to quickly regain control and get the vehicle pointed safely in the right direction.

Of course, that’s just one car and one driver.

In a professional race, it’s a cohort of highly skilled drivers. In your daily commute, it’s a diverse collection of amateurs.

In financial markets, there’s an eclectic mob of professional investors, politicians, bankers, business executives, and upper-middle-class workers …

… all subject to greed, fear, and ego.

It’s amazing there aren’t bigger market wrecks more often.

The tell-tale sign of a cycle top is when everyone has piled in … and the prevailing belief is the good times will never end. But then they do.

Professionals recognize this and get out of the way and wait.

There’s an old investing adage attributed to some fellow named Rothschild …

“The time to buy is when there’s blood in the streets.”

Hmmm. Makes you wonder how much money you’d make if you could find a way to trigger such a bloodletting? But that’s a discussion for another day …

For mere mortals like us, it’s simply a matter of watching events unfold … and getting in position to move in when others are moving out.

Of course, you don’t want to “catch a falling knife” … another investing adage which refers to buying a failing investment.

So just because everyone’s selling doesn’t necessarily mean you should be buying. Sometimes there’s a reason an asset goes “no bid”.

Cheap doesn’t mean bargain. There’s no guarantee that something cheap won’t go to zero.

Of course, with tangible assets like real estate, the “zero” scenario is less likely.

Still … when leverage is involved, equity can most definitely go to zero … even if the property doesn’t.

How do you know the difference between an opportunity and a trap?

For clues, we watch smart, seasoned investors like Sam Zell. Fortunately, Sam’s come out of his shell, so he’s appearing more often in media to share his immense wisdom.

So, when we saw this headline pop up, we took time to listen to what mega-billionaire real estate investor Sam Zell has to say …

Sam Zell Says He’s Buying Distressed Oil Assets During the Slowdown
Bloomberg, 11/14/19

What’s nice is there’s a video and you can hear it straight from Sam himself.

Like most brilliant people, he says a lot in a few words. You can watch for yourself, but in short, Sam sees TEMPORARY distress in oil assets. And that’s a GOOD thing.

Now we’re not saying you should invest in oil, although there are some compelling reasons to consider it right now.

But oil is a sector where Sam Zell sees opportunity. However, the lessons are less about oil and more about how Sam recognizes and reacts to market conditions.

Here are some of our key takeaways from Sam Zell’s comments …

Look ahead and anticipate the next boom or bust … and react NOW, not after the fact. In other words, be proactive and get in front of opportunity as it develops.

Always pay attention to the supply and demand factor.

This is a common theme any time Sam Zell talks about how he evaluates opportunity. When supply and demand get out of sync, prices can rise or fall disproportionately. This “gap” creates attractive buying or selling opportunities.

Zell obviously doesn’t think demand for oil is going anywhere soon, even though there’s a temporary over-supply driving prices down.

It’s these “low” oil prices that are creating issues for oil producers … and creating opportunity for investors like Zell.

That’s because, as we’ve noted before, there’s a lot of debt in the oil sector which was put in place when prices were higher.

And just like a real estate investor levering up a property during peak rents … when rental rates fall, debt can go bad fast … creating an urgent demand for cash.

Cash is king in a crisis.

It seems obvious. But it’s hard to sit on “idle” cash when everything’s booming. Yet legendary investor Warren Buffet is sitting on over $120 billion cash right now. Maybe there’s a reason.

Real assets cash flow.

Zell mentions he doesn’t lend. He buys assets. And if you listen carefully, he talks about how cash strapped oil producers are selling cash flow. That’s what Zell appears to be buying.

There are probably many more lessons. Sam’s a fun guy to study. Unlike Buffet, Sam Zell is fundamentally a real estate guy.

And as we learned from Ken McElroy in the wake of the 2008 downturn, the energy sector … and oil in particular … is a huge and important driver of economic strength in several U.S. markets.

So for that reason alone, oil is a sector real estate investors should watch. Right now, oil is energy, and energy is fundamental to all economic activity.

Meanwhile, remember that in both up cycles and down cycles, there are ALWAYS opportunities in real estate.

That’s because every regional market, neighborhood, and individual property is unique … there’s often a lot of room to negotiate a profitable win-win …

…and there’s much a smart investor can do to proactively add value without needing to depend on unpredictable external factors.

We think it’s safe to say that demand for real estate, like oil, is probably not going away anytime soon … no matter what’s going on in politics or trade.

Just be careful to use financial structures you can live within both up and down cycles.

Now the Fed’s up to $400 billion …

Last week the Fed pumped over $200 billion of freshly printed cash into the repo market.

Since then, the Fed’s upped the ante to $400 billion … and counting.

For those young or asleep during the 2008 financial crisis …

… back then, the Fed provided an infusion of $85 billion per month to keep the wheels on the financial system bus.

Today, they’re pumping in nearly that much PER DAY.

That’s MIND-BOGGLING.

They’re trying to keep interest rates DOWN to their target. Of course, interest rates matter to real estate investors. We typically like them low.

But this isn’t about real estate. It’s more about banks who hold debt (both mortgages and bonds) on their balance sheets.

As we explained last time, when interest rates rise, bond values fall

… and a leveraged financial system with bonds as collateral is EXTREMELY vulnerable to collapse if values drop and margin calls trigger panic selling.

The Fed seems willing to print as many dollars as necessary to stop it.

And that brings us to an important question …

If the Fed can simply conjure $400 billion out of thin air in just a week … is it really money?

This matters to everyone working and investing to make or save money.

For help, we draw on lessons learned from our good friend and multi-time Investor Summit at Sea™ faculty member, G. Edward Griffin.

Ed’s best known as the author of The Creature from Jekyll Island. If you haven’t read it yet, you probably should. It’s a controversial, but important exposé on the Fed.

In his presentation in Future of Money and Wealth, Ed does a masterful job explaining what money is … and isn’t.

In short, money is a store of energy.

Think about it …

When you work … or hire or rent to people who do … the energy expended produces value in the form of a product or service someone is willing to trade for.

When you trade product for product, it’s called barter. But it’s hard to wander around town with your cow in tow looking to trade for a pair of shoes.

So money acts as both a store of value and a medium of exchange.

The value of the energy expended to create the product is now denominated in money which the worker, business owner, or investor can trade for the fruits of other people’s labor.

This exchange of value is economic activity.

Money in motion is called currency. It’s a medium of transporting energy. Just like electricity.

When each person in the circuit receives money, they expect it has retained its (purchasing) power or value.

When it doesn’t, people stop trusting it, and the circuit breaks. Like any power outage, everything stops.

So … economic activity is based on the expenditure and flow of energy.

This is MUCH more so in the modern age … where machines are essential to the production and distribution of both goods and information.

Energy is a BIG deal.

This is something our very smart friend, Chris Martenson of Peak Prosperity, is continually reminding us of.

Here’s where all this comes together for real estate investing …

New dollars conjured out of thin air can dilute the value of all previously existing dollars.

It’s like having 100% real fruit juice flowing through a drink dispenser.

If someone pours in a bunch of water that didn’t go through the energy consuming biological process of becoming real fruit juice in a plant…

… the water is just a calorie free (i.e., no value) fluid which DILUTES the real fruit juice in the dispenser.

Monetary dilution is called inflation.

Legendary economist John Maynard Keynes describes it this way

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

Inflation waters down real wealth.

Fortunately, real estate is arguably the BEST vehicle for Main Street investors to both hedge and profit from inflation.

That’s because leverage (the mortgage) let’s you magnify inflation’s effect so your cash-on-cash ROI and equity growth can outpace inflation.

Plus, with the right real estate leverage, there’s no margin call. Meanwhile, the rental income services the debt.

Even better, the income is relatively stable … rooted in the tenant’s wages and lease terms. Those aren’t day-traded, so they don’t fluctuate like paper asset prices.

Effectively, you harness the energy of the tenant’s labor to create resilient wealth for yourself. And you’re doing it in a fair exchange of value.

Of course, the rental income is only as viable as the tenant’s income.

This brings us back to energy …

Robert Kiyosaki and Ken McElroy taught us the value of investing in energy … and markets where energy is a major industry.

First, energy jobs are linked to where the energy is. You might move a factory to China, but not an oil field. This means local employment for your tenants.

Your tenants might not work directly in the energy business, but rather for those secondary and tertiary industries which support it. But the money comes from the production of energy.

Further, energy consumers are all over the world, making the flow of money into the local job market much more stable than less diverse regional businesses.

It’s the same reason we like agriculture.

While machines consume oil, people consume food. Both are sources of essential energy used to create products and provide services.

So when it comes to real estate, energy, and food … the basis of the investment is something real and essential with a permanent demand.

Though less sexy and speculative, we’re guessing the need for energy and food is more enduring than interactive exercise cycling.

Real estate, energy and agricultural products, are all real … no matter what currency you denominate them in.

And the closer you get to real value, the more resilient your wealth is if paper fails.

Right now, paper is showing signs of weakness. But like a dying star, sometimes there’s a bright burst just before implosion.

Remember, Venezuela’s stock market sky-rocketed just before the Bolivar collapsed.

Those who had real assets prospered. Those who didn’t … didn’t.

Are we saying stocks and the dollar are about to implode? Not at all. But they could. Perhaps slowly at first, and then suddenly.

If they do and you’re not prepared … it’s bad. It you’re prepared and they don’t … not so sad. If they do and you’re prepared … it could be GREAT.

Real assets, such as well-structured and located income property …

… or commodities like oil, gold, and agricultural products (and the real estate which produces them) …

… are all likely to fare better in an economic shock than paper derivatives whose primary function is as trading chip in the Wall Street casinos.

So consider what money is and isn’t … the role of energy in economic activity … and how you can build a resilient portfolio based on a foundation of real assets.

“The time to repair the roof is when the sun is shining.”
John F. Kennedy

Until next time … good investing!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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Avoiding bubble trouble …

Between Bitcoin, Nasdaq, and yes … even some real estate markets … there’s a growing concern about bubbles blowing up on giddy investors who’ve been partying like it’s 1999.

Of course, if you sit out to play it “safe” … you might miss out on all kinds of exciting gains. Buy into the hype … you might be left without a seat when the music stops.

So what’s an investor to do?

Fortunately, these are much easier problems for a real estate investor to resolve than for those investors playing purely with paper assets.

That’s because real estate is unique among investment vehicles.

First, real estate is almost impossible to commoditize.

Every property is a one-of-a-kind collection of condition, location, potential, financing structure, and seller motivation.

And unlike nearly all other investments … you can influence many of the factors which contribute to the financial performance of real estate.

On the other hand, every Bitcoin, ounce of gold, share of Apple stock, or 10-year Treasury are essentially identical anywhere in the world …

… and there’s virtually nothing you can do to influence the supply, demand, or financial performance of any of them.

Of course, this doesn’t necessarily make those “investments” bad.  But they are very different than real estate.

Our point is that when pundits toss real estate into the commoditized investments bubble warning basket, it’s not a completely valid argument.

Real estate provides a level of safety and control not available in commoditized investments … and the key is basic analysis and underwriting.

Now don’t be intimidated.  It’s not that complicated.

However, income property analysis and underwriting is a different process than analyzing a stock, bond, or commodity.

As for crypto?  We’re the first to admit we haven’t the slightest idea how to analyze or underwrite a crypto-currency.

But back to the business of analysis and underwriting …

In simple terms, “analysis” is simply looking at the numbers and drawing some conclusions about what they mean.

“Underwriting” is fact-checking the inputs which create the numbers you’re analyzing to be sure the numbers are rooted in reality.

“Technical” analysis is looking at the supply, demand, and price trends.  It’s about patterns, and using the past to help predict future price action.

“Fundamental” analysis is looking at the operating income, the market, the management, and other competitive factors, to estimate prospects for future success.

Fundamental analysis is what Warren Buffet is famous for.  And because he’s really good at it, he often finds companies whose stocks are cheap relative to their potential.

So a “good deal” is something selling for less than it’s potential … so long as you have the funds, expertise, and control to develop the potential.

When it comes to stocks, Warren Buffet is big enough to have some direct influence on how a company develops its potential.

Unfortunately, Main Street investors can’t play the stock game at Buffet’s level.

The great news is real estate lets you get your Buffett on much better than just some speculating amateur playing pin-the-tail on the hot stock donkey.

So here’s a simple way to approach real estate deal analysis and underwriting so you can recognize a bargain … even in a hot market.

The goal is to buy a property that isn’t already at the top of its value range (a bubble).

For this discussion, we’ll assume you’ve selected a market and neighborhood that’s in good shape and stable, or trending in the right direction.

When it comes to the actual property, you’re analyzing it for acquisition, improvement, and long-term production of income.

Already, the distinction between real estate and a commoditized investment should be apparent.

When you acquire a commoditized investment like Bitcoin, Apple stock, gold, or a bond, you’re bidding into a very competitive environment.

Sure, there may be a little wiggle room in the price, but it’s based on timing … not negotiation.

But with real estate, there’s often the possibility of negotiating price, concessions, carry-back, equity participation, etc.

Often, you’re only competing with a handful of other bidders, so your negotiating skills can make a big difference.

Real estate is personal and individual.  It’s NOT a commodity.

So one way to mitigate the risk of buying at the top of the value range is to simply negotiate a better deal at the start.  Skill matters.

But that’s just the beginning.

Most properties aren’t perfect when you buy them.

Depending on the condition and potential of the property, there’s often a variety of improvements a new owner can make to create additional value.

If you’re smart, creative, and cost-effective, you can make micro-investments into the property and improve its macro performance.

For example, our friend Ken McElroy likes to add washers and dryers to his apartment units.  When he does, he can get a $600 investment per unit to yield an increase in rents of about $300 a year.

You can’t do that with Apple stock.  Even if you buy 100,000 shares.

This is where your “cap ex” (capital expenditure, or “fix-up” budget) ties in directly to your income analysis.

So you have the acquisition costs and the cap ex as your “cost basis” going in.  It’s the amount of capital you need to get a return on.

That “return” is called Net Operating Income.  It’s simply revenue less expenses before debt service.

Once again, this is where real estate sets itself apart from commoditized investments.

With real estate, the line items of your revenue and expenses often contain things which you can improve with good management and creativity.

So as you analyze and underwrite the deal, make a note of each item over which you have some degree of influence or control.

When you do this, you’ll see the potential and probabilities for improving the financial performance, and thereby the value … and you’ll develop a solid foundation for a viable business plan for the property.

This is “duh obvious” to seasoned real estate investors.  But for newbies, it’s a VERY important distinction.

Real estate isn’t a good deal simply because it’s real estate.  And real estate isn’t dangerous simply because values have risen in the aggregate.

Real estate can’t be measured in the aggregate.  Each property is unique.

That’s what makes real estate fun and challenging.

But to our way of thinking, what’s dangerous is buying a commoditized investment you don’t understand, can’t control, with no plan … hoping it will do something awesome all by itself.

It might.  But it might not.

In ANY investment, there are ALWAYS stories about people who get stupid rich by dumb luck.

But for every lucky winner, there are a hundred gamblers who get crushed trying to get lucky … with no plan.

Be smart.  Do your homework.  Make executable plans. And when you see a deal that makes sense … just do it.  And don’t let bubble talk scare you.

There might be bubbles forming all around you, but you don’t have to buy one.

Until next time … good investing!


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.

Property Management – The Key to Profitable Investing

Buying a property is one thing. Operating it is another.

Many investors buy property but fail to think about where their money will really be coming from … the tenants.

If you can’t take care of your property or your tenants, your income stream will be in big trouble. That’s where a property manager comes in.

In this episode, we invite a special guest to discuss the finer points of developing your property management philosophy.

He’ll offer tips on how to find a stellar property manager, what to expect from your property management company, how to manage a team, and MORE.

You’ll hear from:

  • Your philosophical host, Robert Helms
  • His phil-o-what? co-host, Russell Gray
  • Property management professional, Ken McElroy

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Why do real estate investors need a property manager?

We want to make it really clear … property managers are the unsung heroes of the real estate business.

As a real estate investor, your money is coming from your tenants.

Property managers interact directly with tenants. A good property manager will maximize the return on your investment by finding … and retaining … paying tenants.

If you’re a new investor, you may be fulfilling the role of property manager yourself. As your investments increase, however, you’ll soon find it necessary to outsource property management tasks to someone else.

Every real estate investor is running a business. If you want to grow your business, you need to make sure that every vital function is scalable as you move up the ladder and acquire new investments.

Overall, scalability means two things:

  1. Making sure that every aspect of the business you handle personally is either scalable (you can handle more of it as you get more properties) or can be delegated
  2. Making sure the people you rely on are also scalable

Make sure the system you set up has redundant life support systems. In other words, if one part of the system fails, you have a back-up plan to ensure everything is running smoothly and your cash flow won’t be interrupted.

And make sure your property manager has a back-up plan too and won’t be overwhelmed when you add to their workload.

Your property manager is essential to your process.

We’d caution you to consult with property managers BEFORE you even purchase a property … they have their fingers on the current state of the market and know what’s happening now.

And make sure you are not only thinking about how your property manager can help YOU, but also how you can help your property manager.

What does a property manager do, exactly?

Property managers are responsible for two essential tasks:

  1. Finding, vetting, and placing tenants
  2. Providing ongoing support for the tenants and property

Different property managers have different philosophies on how to fulfill these tasks.

You can approach working with your property manager in several different ways:

  1. Establish your own policies and require the manager implement them
  2. Pick the right person and let them do their job, using their own established policies
  3. Work with your property manager to establish a routine that’s somewhere in between.

Whichever route you choose, you want to keep your main goals in mind … to keep your property manager happy, to keep your tenants happy so they stick around, and to keep your property in good shape … and, just as important, to make sure your cash flow is stable.

Sometimes, the best option can be trusting your manager’s experience and letting them decide maintenance and marketing strategy.

Picking a property manager can be tricky, but the VERY LAST criteria you want to use when shopping for a good manager is price.

DON’T pick the cheapest property manager.

If your property manager is poorly paid, they’ll be unmotivated to do a good job, and you’ll end up losing more than you save.

Don’t begrudge your property manager the money they get for doing the easy jobs, like handling long-term tenants.

You want your property manager to be happy … it’s a win-win for both of you.

The bottom line is that real estate is a people business, not a property business.

Your managers and tenants aren’t widgets. Value them, and they’ll value you.

Want to help your property manager without giving them a raise? Consider referring them to other investors in the market for a manager.

Referring a good person or company is a win-win-win for you, your investor friend, AND your property manager.

Pro tips for property management

Ken McElroy started managing properties as a college kid who wanted a free place to stay.

Today, he runs a 250-person property management company that manages properties in Washington, Oregon, and California.

We asked him what he’s learned about property management over the years. Here are some key questions and answers:

What are the basics of finding a good property manager?

First, look for experience. Collecting rent is harder than you think.

Second, look for people who can hold down the rules without being too confrontational.

What should investors expect from good property management?

Two things:

  1. The return you budgeted for
  2. No issues

Ideally, Ken says, there should be no reason for you to call your property manager … in other words, your property manager should be responsible and responsive enough to handle issues as they arise and get you your return.

How do you manage a large team?

Ken’s company employs 250 people who work at the corporate office or on the ground at the properties.

“The key to everything is communication,” Ken told us.

One of his strategies is to have on-site managers hold daily meetings with all staff members, including workers responsible for maintenance, landscaping, and leasing.

Is it better to outsource maintenance and repair services or hire in-house teams?

This comes down to what the residents need.

Retention comes first, says Ken, and to retain tenants, managers want to handle any issues immediately.

A tenant will not want to stick around if you don’t handle a broken heater or jammed plumbing as quickly as possible.

Whether in-house vs. outsourced is better ultimately comes down to what strategy will allow your property manager to solve problems immediately.

What’s your client retention strategy?

Ken implements a policy of making sure one of his employees reaches out to every resident, every month.

He also hired a relationship manager to contact new tenants about the move-in process right away.

And he has his team reach out to tenants well before their lease is up … six months before, in fact … to check in and get tenants thinking about renewing their lease.

He shoots for a 50 to 60 percent retention rate.

What kind of tenant screening do you do?

Ken runs a criminal background check and a sex offender check. Someone with terrible credit and multiple evictions is obviously not the ideal tenant.

What advice do you have for new investors?

Going into property management as a new investor with no prior knowledge can be a recipe for disaster.

If you really, truly, have the time and can show up, you could successfully be both owner and property manager, says Ken.

But if you’re just doing it to save money or don’t have time to have your boots on the ground, disaster is a certainty, not a possibility.

The golden rule of property management

We love talking to Ken because he has a “No BS” policy. He has a ton of experience, and he’s not afraid to share it.

He’s also always looking to learn. For example, he’s been incorporating social media into his marketing strategies over the past few years and is always looking to learn how to use new technology.

If you want to read a whole book of tips and tricks, we highly recommend you check out his book, The ABCs of Property Management.

Looking for more property management advice? Check out Terry’s Tips for Happy Tenants, a report compiled by business owner Terry Kerr that you can find on our website.

Want to know our golden rule for flawless property management? Treat each tenant like they’re gold.


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

The BEST investment you can make …

We’re back from what Robert Kiyosaki described as our BEST Summit at Sea™ so far.  It’s hard to disagree.  And no, this isn’t a pitch for the Summit.

In fact, alumni already grabbed about 40% of the available spots … before we even got off the ship!

While there’s no way to describe the magic of the Summit, there are a few valuable ideas worthy of mention.

Developing social capital

New Summit faculty members Chris Martenson and Adam Taggart (The Crash Course and Peak Prosperity podcast) shared the importance of “social capital.”

After a compelling presentation about the inevitable collision between exponential growth and finite resources (a fascinating topic!), Martenson and Taggart suggested your prospects for prospering will rely heavily on your network of relationships.

That’s true whether a crisis strikes tomorrow or 100 years from now.

And it’s not just knowing a large quantity of people … it’s who those people are and how well you know them.

But even if a crisis NEVER hits, it’s wise to invest in quality relationships.

Surprise faculty member, Ken McElroy often says, “If you want to change your life, change the people you hang around with.”

This year, we had several young people take advantage of our Young Adult Program.  It allows a limited number of young adults ages 18-25 to get into the Summit for only $2,500.

More importantly, it gave these young people close personal access to many highly successful investors and thought leaders.

Our other surprise faculty member, Simon Black of SovereignMan.com joined Kiyosaki and McElroy for a one-hour private session with these young adults.

Simon said it was the most powerful experience in his four years of being a part of the Summit.

Going forward, we’re dedicating up to 30 seats on next year’s Summit to our Young Adult Program.

We believe investing in young people is one of the BEST investment we can make.  And we’re thrilled our super-star faculty agrees!

But whether you’re young or not-so-young, if you’re interested in taking your education, business and investing to the next level, it’s wise to put concerted effort into developing good relationships with great people.

Summit faculty member and legendary sales trainer Tom Hopkins (How to Master the Art of Selling) reminded us the key is being of service to others.

So it’s not what you GET that matters most … it’s what you GIVE.

That’s easy to say, but often hard to do when our own urgent needs are clamoring for attention.

Tom says always remember, “Use money and serve people.  Don’t use people and serve money.”

A billion-dollar boo-boo

Consider the recent flap over United Airlines handling of an overbooked flight.
It’s a case study in forgetting the MAIN thing.

Unless you’ve been off-planet for the last few days, you know a ticketed customer was forcibly removed … literally dragged … from a plane because the airline wanted his seat to reposition their own staff.

The details are all over the news, but the bottom line is the airline decided to “save” money by not raising the bid to buy people off the plane, or making other (presumably more expensive) arrangements to get their staff where they needed them.

In short, they served money and used people.  Oops.

Of course, the horrific decision and resulting disastrous PR resulted in a nearly BILLION dollar loss of market value.

And that’s probably just the beginning of losses which will include customers, employees … plus money spent on public relations, training, and let’s not forget … LEGAL.

It’s shocking a mature business could be so short-sighted.

Relationships are the REAL asset

The beauty and danger of real estate is it’s not traded in impersonal, highly automated exchanges.  It’s a very PERSONAL business.

If you’ve got a good reputation and great relationships, real estate is actually pretty easy.

If your reputation is poor and your relationships are weak, you’re almost always looking at leftovers.

But it’s not just about deal flow … or even raising money.

Relationships provide access to ideas, perspectives, wisdom, encouragement, and inspiration.

Relationships change who you are, how you see yourself, what you reach for, and what you believe you can achieve.

We spoke on the Summit about Roger Bannister, the first human to run a mile in less than four minutes.

Until he did it, it was commonly believed it wasn’t physically possible.

But once he did it, others soon followed … because he broke the mental barrier holding so many people back.

If this can be done in the world of athletics, where a certain level of physical skill is required … imagine what can be done in a less demanding arena like real estate investing.

During the course of the Summit, we heard from investors who started with next to nothing … and grew portfolios of THOUSANDS of rental units in just a few years.

Until you’re around them, it SEEMS impossible.  But when you meet them and hear their stories, it opens your mind to the possibilities.  It EXPANDS your dreams and beliefs.

An epic experience

There were so many GREAT sessions including Peter Schiff on navigating the Trump economy, G. Edward Griffin on how the Fed affects everyone, Fannie Mae’s chief economist Doug Duncan on the state of the U.S. economy and housing … and MANY more.

We had nearly 25 faculty members … our biggest ever!

Perhaps one of the best parts of the Summit were the eight expert panels featuring some of the biggest brains on banking, precious metals, marketing, real estate niches, the next crash, and more.

In the information age, panels are really powerful.

It’s one thing to HEAR a great mind share big ideas.  But you can do that online.

It takes you to a whole new level when you watch several great minds DISCUSS big ideas. And to be a part of the conversation yourself?  Priceless!

With limited space on each year’s Summit, we realize it’s not possible for everyone to be there.  Hopefully someday, YOU can join us!

But in the meantime, we encourage you to seek out the smartest, most accomplished people you can … and find a way to get into high quality, win-win relationships.

They’ll expand your thinking, show you possibilities you didn’t know existed, open doors and make introductions to people and places you might otherwise take months or years to get to.

There’s nothing we know of that can help you accelerate your success faster than smart investments in building social capital.

Until next time … good investing!


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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Live from the 15th Investor Summit at Sea™ – Part One

Ever had a life-changing week that left you reeling? That was us, after our 15th Annual Investor Summit at Sea™. It was one of those weeks we could relive over and over, and we’d like to take you aboard.

Our speakers are providing the BEST insights on real estate, economics, business and even life tips. Hear, also, why there’s always room to be optimistic.

Listen in as we sail with the specialists. In this informative episode of The Real Estate Guys™ show you’ll hear from:

  • Your captain on the economic seas host, Robert Helms
  • His (calm and collected?) skipper co-host, Russell Gray
  • Faculty member, and author of mega-bestselling Rich Dad, Poor Dad, Robert Kiyosaki
  • Faculty member, multi-family Investor and Rich Dad Advisor, Ken McElroy
  • Faculty member, investment broker, and respected economist, Peter Schiff
  • Faculty member, investor and founder of Sovereign Man, Simon Black
  • Economic researcher, and co-founder of Peak Posterity, Chris Martenson, PhD
  • Silicon Valley internet executive, and co-founder of Peak Posterity, Adam Taggart
  • Author of The Creature from Jekyll Island, G. Edward Griffin

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Preparing for the future…

 

Author of Rich Dad Poor Dad, Robert Kiyosaki, continues the conversation … letting us know how he looks into the future.

“It really is possible to look into the future because there are parts of history that do repeat. The number one thing repeating is the ability to print money.”

The government continues printing more and more money.

Some would say it’s one of the biggest scams in history.

Robert explains that the biggest culprit of this salacious scam is the lack of education.

Due to the lack of financial literacy and excessive money printing, Robert suggests we may already be in a depression.

Robert’s reasons for writing the book Rich Dad Poor Dad was to prepare people for these types of crises today.

But no matter the crisis, there is still reason to be optimistic.

Robert’s best advice in these economically uncertain times is to have a plan B.

In fact … Robert started with his plan B.

He didn’t get a job … but instead started his own business, invested in real estate, and invested in financial education.

Robert’s plan B was better than any plan A.

Much of his success had to do with his mission … his devoutness to duty, honor, and respect and in staying in line with his moral and ethical compass.

Lessons to be learned … seek financial education … have a plan B … and have a moral mission.

 

Debt … is a good thing?

 

Debt … a four-letter word despised by many. But there ARE good times to go in debt.

Debt is overwhelming and often causes financial hardship. But real estate investor, Ken McElroy, gives his positive spin on the benefits of debt.

“I believe it’s good to be in debt right now because obviously the way the dollar is being printed. That’s going to drive inflation.

His simple reasoning behind this is if you are in debt now … you can pay it off with cheaper dollars later.

But don’t start racking up your credit cards now. There is a BIG difference between good debt and bad debt.

Bad debt is when you invest in things that depreciate quickly after purchase.

Many people’s credit card purchases fall into the bad debt category … those items simply lose value rapidly.

Good debt as Ken suggests, “is the kind of debt your tenants pay off.”

In other words, it’s investing in things that appreciate over time with a result in cash flow.

 

Essentially, “investing” in good debt is well … GOOD!

 

You borrow from the bank to invest in real estate (good debt) while tenants pay off that debt … and voilà you put money RIGHT back into YOUR bank account.

In Ken’s experience, “Good debt is a good way to get massively rich.”

Get into good debt … get more money in the bank.

Seems like an oxymoron, but the reasoning is sound.

So keep in mind … shying away from debt might actually lose you more money in the end.

 

A Strong Dollar … Relatively Speaking

 

Economist Peter Schiff joins our show once again with his expertise on the American dollar.

Peter and many others here agree that we are headed toward an economic downturn.

Generally speaking, in a strong economy and productive growth, prices don’t increase because you’re producing goods with a high supply.

But with decreased productivity and a shortage in supply … the economy slows down.

In many cases, the Federal Reserve resorts to printing more money causing inflation to accelerate.

We constantly hear in the news “The dollar is strong. The dollar is strong.”

Is this really true?

Peter recognizes the media’s common fallacy … exposing the strong dollar façade.

He explains the dollar is strong … relative to other currency falling at a slower rate.

But “it’s not real strength,” he explains.

Simply because the euro or the yen are weaker than the dollar doesn’t equate to strength.

According to Peter, gold is only up by 8% this year … which isn’t very strong compared to earlier years.

The constant increase in living costs … often more than 2% of inflation … only emphasis the weak dollar.

Peter asserts, “If the dollar really were strong, the cost of living would be falling.”

Perhaps the media should redefine their use of “strong dollar.”

 

An Opportunity for Optimism

 

Investor Simon Black of the popular Sovereign Man joins The Real Estate Guysonce again at our annual sailing summit.

Just like in any investment, there are many risks or potential problems to be weary of.

Simon identifies some of these problems including “unprecedented levels of debt” and the central bank that appears to be “actively engineering it’s own insolvency.”

But even as the bank inflates our money away, Simon joins other experts in remaining optimistic.

There may be a number of problems, but as Simon so brilliantly pointed out “Anytime there are problems, those are just opportunities. “

These problems present us with infinite opportunities to learn, innovate, adapt, and improve our circumstance.

These opportunities are a gateway to knowledge and learning … in hopes we can establish a healthy and sustainable marketplace.

We completely agree with Simon … at the end of the day we are intelligent people and “we are going to be okay.”

 

A Framework for Success

 

The Real Estate Guyswelcomes … for the first time on the show … authors of Prosper, Chris Martenson and Adam Taggart.

Chris’ curiosity led him to create a book and video series entitled The Crash Course.

After a series of events, Chris discovers that our entire entitlements system in the US is completely insolvent and unsustainable.

Intrigued by Chris’ insights, Adam continued the conversation with Chris … forming a complementary (and impressive) partnership.

Using their unique skills, data, and wealth of knowledge, they co-wrote Prosper in hopes for seeking real solutions.

Both teach the principles of The Three E’s. Which are:

  • Economy
  • Energy
  • Environment

The economy, as Chris suggests, is the most important E to pay attention to.

Without a functioning economy, we are vastly limited in possibilities.

The relationship between energy and the economy is also key to understand.

Just pay attention to oil prices.

Lastly, we need to understand the environment … what we take out of it and what we put back in.

Chris asserts, “We can’t keep going as we have. It’s time to have a whole new approach for living on this planet.”

We can’t continue to have a constant increase of growth year after year.

Yet so many companies and countries place their projections on this data.

Next year is always going to be better.

While this is a positive perspective, Chris and Adam’s research shows … it is NOT actually POSSIBLE.

“Infinite growth is not possible in a finite space,” Chris says.

Instead of projecting eternal growth, Chris and Adam advise investing in differing capital.

In their definition, wealth is a whole lot MORE than just the number in your bank account.

You preserve your wealth through various capitals including emotional capital, financial capital, or social capital.

You gain MORE resources by expanding your capital outside of mere money.

Developing these types of capital along with an increased resiliency … will set your path for success.

 

Money on the Mind

 

Our last interview for today is the author of The Creature from Jekyll Island, G. Edward Griffin.

The main question on our minds today is why people always want more money?

Edward’s simple response says it all.

“Money is a measure of the extent of which you can ask for and receive the services of other people.”

In expanding wealth, some believe money is for the greedy or evil.

However, money isn’t inheritably evil.

It can provide enlightening education, take us abroad, and create tremendous opportunity.

But also, unfortunately, money can be used in unsavory ways. “The fact of the matter is that evil people have captured control of the system by which money is created,” Edward states.

He is referencing the Federal Reserve.

Or what he also refers to as “the engine of inflation.”

The Federal Reserve controls the creation and elimination of money.

The controversy with this agency is their excessive fiscal printing with no tangible thing to back it up.

They produce money out of thin air … and then collect borrowed interest on it.

It’s a difficult concept to wrap your mind around … perhaps if the government had a little more moral in their mission like Robert, inflation wouldn’t be as big of a problem.

 

The Insightful Summit Ensues

 

Many of us are floating in a sea of investment opportunity.

There are so many factors. There’s the undercurrent, the winds, the weather, and the waves jostling us around.

But with every problem, there in turn is another opportunity … a chance to unify with our peers and come up with solutions.

This Summit gives us so much to digest … but don’t tune out just yet.

We have a lot more thought-provoking ideas heading your way as we continue our ocean sailing.

Until next time … make some equity happen!


 

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The key to a healthy economy

The “Make America Great Again” freight train keeps on rolling along…

Of course, some people think America was already great.  So they see all this rhetoric as just politically motivated hyperbole.

Others think America was never great and now just got a whole lot worse.

Then there’s those who think America used to be great in some bygone golden age, but has now somehow lost her way and is in need of a savior…or at least an extreme makeover.

There’s probably some truth in all views.  But we think they all miss the most important point …

Whose job is it to make America (or any society) great… again or for the very first time?

As real estate investors, we care about economics, demographics, trends, and all the various macro-winds that blow around our investment vehicles.

Our goal is to avoid headwinds and catch some tailwinds.  Life is just easier with the wind at your back.

So is Donald Trump going to make it better … or will he make it worse?

Yes.

Just like Presidents Obama, Bush 2, Clinton, Bush 1, Reagan, Carter, and every other President going back as far as you’d like to go.

Some people did better.  Some people did worse.

But how can that be?  How can different people produce dramatically different results in the SAME economic and political environment?

We hope the answer is obvious…

It’s individual choice … and individual action.  Emphasis on individual.

Each individual decides how to respond to external forces.  Challenges and opportunities are ALWAYS present. Which do YOU see today?

We’ve been guilty of missing opportunities because we were fixated on some problem over which we had NO control.

So instead of acting on what we did control, we wasted precious time, energy and focus on complaining… fretting over being stuck (in our own minds) by things we didn’t control.

Dumb.

Meanwhile, other people were busy taking effective action … using what they had, doing what they could, and seizing opportunity abandoned by other people paralyzed with fear, uncertainty, and doubt.

Robert Kiyosaki and his investing partner Ken McElroy were AGGRESSIVELY buying real estate in 2009 … when most people were afraid and angry at corrupt banks, misguided government policies, corporate greed, and irresponsible borrowing.

Was it justified to be angry at the people who played a role in imploding the mortgage and real estate markets?

Sure it was.  We were.

And it’s certainly totally reasonable to be outraged when bad actors get bailed out … while the honest, responsible people who played by the rules get nothing.

But if all you are is scared and mad, you miss out. Fear and anger don’t make you money.

And here’s the bigger perspective …

An economically healthy nation consists of a collection of economically healthy states, which consists of a collection of economically healthy individuals.

Which are YOU?  And which do YOU control?

Each of is part of a nation, a state, a community.  But each of us are individuals.  We can only control ourselves.

It’s not selfish to focus the bulk of your attention and energy on your own financial well-being. We’d argue it’s your civic duty.

In the safety briefing on an airplane, you’re told if there’s a drop in cabin pressure, put YOUR oxygen mask on FIRST.

Why?

First, so YOU aren’t a burden on others. And next, so you can help others.

Yelling about how awful it is that the cabin lost pressure … and how stupid the pilot is … or how irresponsible the plane manufacturer is … while all that may be true … none of it helps.

What helps is YOU taking care of yourself FIRST. Doing what needs to be done.

First, don’t be a burden.  Next, create opportunity for others.   When each individual does this, the whole (family, community, city, state, nation, world) is greater.

So no matter how you FEEL about what’s going on in the world, remember… you probably have virtually no control over it.

Does that mean it’s “fair”?  That everyone is dealt the same hand?

Of course not.  Every real estate investor knows every single deal is different.  Every day is filled with diversity of circumstances.  Real estate investing is FAR from a level playing field.

We’re not saying fair play, equal access and the things society strives for aren’t important.  They are.

They’re just out of your direct control.

The surest path to making America (or wherever you are) great, is to take what the externals give you and find ways to make yourself great.

If enough people do that, America and the world WILL be greater … one person at a time.

For centuries, real estate has been a predictable wealth builder for average people … when they have the freedom to own it.

From that standpoint, most of us have hit the lottery. Most of us live where we have the lawful right to own real estate.

And no matter where you live, if you have that right, your country is already great.  At least great enough for you to become great.

Could it be better? Sure. And a great way to start is for YOU to own more properties that are profitable.

We’re not saying you shouldn’t call out injustice or stand up to tyranny.  Of course you should … no matter where you land on the political or philosophical spectrum. Every voice has a role in the symphony of public discourse.

Just remember the airplane. The MOST important thing is for YOU to stay healthy and strong.  That’s your first and most important contribution to the greater good. Real estate investing is a GREAT way to do it.

Until next time … good investing!

More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

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