Doubling your money every 5 years.
This is the paradigm shift. And we can’t promise that we can do that but I can
tell you that if you have a track record of doing that, it’s powerful. And so, I
think one of the reasons why we’re getting momentum all over the world
right now in building portfolios and helping people succeed is because this
isn’t our first rodeo. We’ve done this a number of times. 4,000 homes nearing a
billion dollars. It’s all captured how many of you know this is. You use this
regularly. This document Krohn Consortium, we give it away for free
online. It’s in a link below for those of you watching this for the first time.
This talks about our system. So, I just want to spend a little bit of time
really annunciate exactly how we get to those ROIs. Check this out. I’ve got this on the big
screen. We’re going to talk about 4,000 plus homes.
We’re buying homes nearly every day. 15 year track record. This is 500
million dollar aggregate value. We are coming up on actually a billion dollars.
And this isn’t 65 distinct locations. Because by the way, do we buy real estate
everywhere? No, do you buy just anywhere? Do we buy in people’s backyards? The
market is made up of 324 markets. And the likelihood of you having a good market
your backyard… I’ll tell you this, if you go to the very
best markets, you will naturally organically double your ROI just by
being in the right place. Which introduces the first problem. How does
Joe, Martha, Bobby like that live in Oklahoma
like access the very best real estate that’s out of state? Without a team,
that’s freaking terrifying. So, we built a team. 200 experts. So, if
this is representing our track record or just from 2013 to 2016. And you’ll see here
that that these 3 years alone, they represent 250 million
dollars spread over these markets right here.
Our average purchase price, $143,000. So, by the
way, let’s talk about real estate real quick. Who knows that there’s a lot of
risk in real estate that you can lose money in real estate? Here’s how most
people do it? They have strategies that are market dependent. So by the way, when
the market goes up, who’s happy? Everyone that owns real estate is happy. When
the market is going down, who’s not happy? Most people owning real estate.
When the market takes a really big hit as it does every 12, 15, 18 years, the
K-wave cycle, Kondratieff cycle, 3000 years cycle. We’ve been tracking this for a
long time. And the reason why cycles adjust is because it comes to population
supply and demand. I’m going to show you graphic to show you. But I’ll tell you
this. When the market goes down, in a really bad way, like in 2008, we had the
Great Recession. 2008, a million dollar home becomes what? It was a half a
million. And a half a million-dollar home becomes a 300,000. Three
hundred can become 220. 220 can become 180. 180 can become 170. 170
they can become 160. But at some point, you get into a threshold where your
greatest insulation is an entry level single family homes. Now, I know everyone here
has read my book The Straight Path To Real Estate Wealth. That’s for free
online. Anyone can have it. It documents why for… Unless you have 2 million
dollars or more money. The easiest way to make your first two million dollars, I
believe, single-family homes bought below the median. These price
ranges in the best markets with ROI is greater than 20% like
we’ve been talked about. Does it make sense?
And by the way, is this get-rich-quick? It’s not get-rich-quick. It’s something
that takes time to do. When you start looking at the markets and you start
aggregating all the numbers, you begin to see patterns and basically make
decisions from all the accumulated data. They call these actuaries. Where we
literally go into zip codes. We can measure which markets are the very best
which we’re going to talk about. But next, it’s all about operating inside a really
tiny box where everything is same and homogeneous. Does it make sense? Chris, one
of your homes that you sold, you were there in 2008. Afterwards, went into
Phoenix. You bought some homes in that market, right? -Yeah. My first property was
a home… -By the way, that was a home… Do you remember at the peak of the market
before it dropped what it had been worth? 240,000. Miller
picked up for what price? So, by the way, when the market is in the dump, isn’t the best
or worst time to be in real estate? It’s the best. But everyone else will tell you
what? Because everyone’s values of just what. And so, when your value drops,
everyone says, “Things are bad. Confidence is low.” But actually, it’s the best time
to be in the game of real estate. By the way, when the market is going red-hot and
you know what you’re doing, can it be the best of times?
Guys, if you know what you’re doing, it’s always a good time to invest in real
estate. What happened that home that you bought
for 80? -2 and a half years later is worth 160. -So, you doubled your money
in 2 and a half years. So, you can always crush it in real state.
So, on the last 2,000 homes, what’s our average total annual ROI? 25%. Has that
number gone up? Currently that number is probably sitting closer to 26, 27 percent.
Average cash-on-cash to shy of 8%. Average purchase price 143. So,
we’ve turned this into a boring science where we haven’t learned anything new in
real estate for years. We’ve got the system now what we do is we run the play
over and over again. Our process for buying homes, we use 17 different
methodologies for finding properties. We will go to auctions. We’ll go straight to
the MLS, flyers. Short of sales. There’s a number of different ways. But basically,
the first thing we do is top down, we analyze and identify the very best
market. Because I don’t want to do real estate at my backyard. I would never buy
real estate in this backyard right now as a way to multiply investment
properties. We establish our teams. Right now, we have about 200 professionals
connected to each other through the whole process to do everything from
finding the right product and identifying the properties. We have a
massive research team performing the extensive property analysis. Underwriting
it. And then acquiring groups of properties. This is essentially what a
REIT would be doing. A real estate investment trust except we do it for
individual partners. This is shows you some of the markets that we’ve been in
and that we’re going in. Right now guys, Florida’s our what? It’s our number one
growth market. We’re doing consistently over 25% annual ROIs in that market.
Indianapolis, Memphis. In the right areas, those are where we’re probably averaging
around 25-26 percent average ROI. But we have a higher cash-on-cash. And there’s a
lower T, total out-of-pocket in those markets. There are some of those homes
where you can get into a home with 20% down on everything at 25 grand. Florida
can be 40 45 or 50 thousand dollars. So, there’s a range. But overall, the bottom
line is that our ROI, is at over 20%? -Yes. So, when we talk about actually doubling
money, the biggest secret to doubling money is having a stable asset that you
can get your hands on that is producing what kind of ROI? 20% plus. By the way,
when we’re doing 25 or 30 percent, this is where we start having some cool phenomenons
where people are doubling their money faster. When the market isn’t in the
pooper, that’s when ROIs can be the highest. When the market is
coming up here, we’re super conservative in the markets. The price points. So,
people know this. This is the secret of every 5 years.
Like, let’s just say for a moment that someone could access a 401K. An IRA other
people’s hidden assets. And let’s say that they found a way to buy 3 homes.
In their first year. And then did nothing. But how did growing at 20%. 5 years
later, if we sold those 3 homes, then we might be able to trade them out for
how many? 6 homes. And theoretically 10 years later, if we sold those 6, we
might be able to trade them for what? Okay, this is the level of multiplication
that allows people in time to become financially free. And if they want to be
faster, then all they have to do is just along the way, continue accumulating
assets not just saying, “Well, there was a time 10 years ago, where I renegotiate
my assets I bought for you and that’s all I ever did.” This will build you
amazing wealth. But what happens if you’re paying yourself first? Partnering
and bringing other resources together. So, people want to know how did I become
financially free at 26? I did not have the means of buying 25 homes. I had the
means to buy 3 homes. The other 22 homes were bought with what? It started
with a partner that then became… And you guys know how that went down, right? Like
after I had bought my first partner, that’s when I realized that what I could
really do was get more partners brought on. And as I brought more partners into
the system, you know what happened? I get to partner where I was buying a house every month. In
the beginning, we’re just trying to figure out how do we help someone get
their hands on 1, 2 or 3 homes? But I figured out how to get a home
every month. And then, it kept growing and accumulating. Can you imagine what
happens with time? Your exponential curve like becomes insane. But ironically at
the early game, all you need to do is focus on what? 1 house that is doing
this kind of ROI so you can double your money it. Does this make sense? I talked about
this a little bit. On the next page, I’m going to give you a little bit more. But
when we have run out of houses, then everyone wants more houses. Because
population, babies, migration demands it. People are upgrading their lifestyle.
We get more houses. But somewhere along the way, we’re so above the rebuild
value that people are now building houses spec builts. Which means are
speculating that “If I build this hous, someone should get it”, right? But if you
get to the point where everyone is spec building houses and then all the sudden
people can’t buy a house, what’s the problem? The home is only worth what?
–Someone is willing to pay. So by the way, you have an excess of inventory, guess
what happens to construction? It stops. And it will take how many years before
population will catch up and then use up that inventory? It takes years. It can be
2 years. It can be 3 or 4 years. It can be 5 years. But after 5, 6, 7 years, we have a problem. If we go 5 or 7 years without building,
what happens? All the sudden, there’s all this demand pent up. And the banks have
to restructure and say, “Alright. We need houses again.” And lending becomes easier
and they loosen their grip. And so, we go for peak to trough, to peak to trough. All
the while real estate is always increasing. So, if you take a look at this,
there’s a recovery period and the expansion period and then a hyper supply
will be up too much. And then all the sudden, we go into a recession period.
And it’s a circle. And by the way, this circle, will it ever stop? It’ll stop when
we stop making babies. By the way, does that happen in parts of the world? Europe,
Japan. They’re places they’re actually facing a problem where they have too
much real estate and population will never catch up. Fortunately, we’re talking
about America. Now, people all over the world are still investing. And that crisis
phenomena is called economic winter. There are parts of the United States
that are forecasted to hit economic winter 40 or 50 years from now. But
it’s not right now. The average investor going into real estate, can they produce
20% ROIs? No. In fact, many of my partner’s actually come to us with
portfolios and they are not hitting these kind of ROI. The numbers are
actually really dismal here. What we do that is allows us to get this high of a
number is we have a top-down approach to economics and we have a bottom-up.
Top-down eventually says, we evaluate over all the different markets the
United States. We look at the population growth, affordability and
growth ways, supply and demand. Business growth, wholesale formation and migration.
Those factors intersect to tell us the hottest market to be in. So, we don’t look
at a house. We shop for a market. No one does that. That’s why they’re not winning
as big as they can in real estate. You don’t shop for a house. You shop for a
market. Once you’ve identified the best markets… And by the way, I’ll always
identify the best markets for either cash flow or growth. Once you have that,
then we look in at the homes and say, “Renovation costs, lease of
timing, rental rates, rent growth, operating margins, turnover rates,
occupancy rates.” Those are the most important factors that tell us this. So,
half of this ROI is are you in the right market? The other half is are you buying
real estate the best way possible? Does it make sense?
Who’s connecting with me on this? Right? So, by the way, this entire team of 200
experts who can access it, do we want to partner with everyone in any way? No. Have
we had some partners in the past that we’ve learned from? Like, have you ever
dealt with difficult people on the phone? -Yeah. -So, I want to ask us. Who can partner
with me? Who can partner with this team? Only the right people. By the way, who are
the right people? People who are open-minded, teachable, coachable. People
who actually look at the track record and saying, “I’m making a decision based
on a historical track record.” People that realize that the accumulation mindset is
going to freaking be their financial death. It is the weirdest thing. Listen to
Dave Ramsey. Listen to the financial prudes out there. And they’re telling
everyone “Save, save, save. Pay everything off, pay everything off. Accumulate,
accumulate, accumulate.” And they’re like, “That’s a great plan when someone doesn’t
have a plan.” It really is. But if your plan is “At retirement,
I would like to even just live off of my current standard living”, that plan sucks.
Like it’s it’s a plan for failure. And by the way, poor people go to heaven every
day. If you can get to heaven to be unhappy, you don’t need money for
happiness. But money does equal opportunity. So, if you later in life want
to have equivalent opportunities, it’s the lifestyle that you’ve created or
opportunities that exceed what you had during your working years, you have to
actually make a break with that. Now, by the way, have we had bad
partners in the past? What makes a bad partner? Demanding. Because by the
way, a partner comes into this arrangement and says, “Kris, you do 100%
of the work nearly. And we’re going to be 50/50 partners, right?” They’re putting up
the money and we’re putting up the all. We’re putting up everything. The teams,
the research, the boots on the ground, that going into making it happen. And
people are like, “Am I getting 50/50 in this 20%?” Guys, this is not the goal. The goal is
here. The goal is to get your money to a triple-digit ROI. Which means you’ve got
to allow it to build. And being a 50/50 on that, that’s a racehorse.
Like, that’s incredible. But there are some people we don’t want to partner
with. Who have made that part of the past that we’ve learned from? People who panic.
If you partner with me, they have to come our what? Every quarter, we put on a 4-day that they have to come out and be here live in a person. Because the event
is probably one quarter, one third financial training like technical
training. But what’s the other two thirds? It’s psychology. Because by the way,
winning in the game of real estate is all up here. And if you allow an unrented
property or a long turnover or wanting to sell but it’s not timing in the
market right. If you try to go against some of like reality, dude that can
totally mess you over. And it messes most people over. By the way, the first 5
years, you’re going to make less money in real estate likely than you’ve ever made
before compared to the next 5 of the 5 after how it actually builds and
accumulates with time. So, good partners and bad partners. This team is available for
people actually partner with. But we have a limited number of homes. We have
limited supply. And we want to work with the right people that get this,
appreciate this will come to the training and do those are the people
that are going to freaking crush it with. And those some people are going to win with.
Like we’ve got on our team, we got Paul Olson. I think he’s bought like 8 houses now, 9 houses now. And
he’s been partners for just barely a year. Like he’s crushing it. Paul’s a stud.
He’s got a great mindset. He works well with the team. He communicates really
well and we’re having incredible experience. And we got so many
partners that we could cite that we’re having that experience with. But yeah,
those are some of the things that we’re looking for. You’ve got to figure out how
many of you understand now that we can double the money every 5 years like
it’s so important able to communicate this. This is a document that we send our
partners or those considering being partners. This is a property in Florida.
Now, I want you to take a look here. To acquire this property right now, the
total investment is $44,000. That is… I’m buying it at 159, the
down payment. The closing costs, rehab, acquisition is 44,000 to
get in that house. But it’s cash on cash is what? 7.17% lower
than the average because there are growth market with higher appreciation.
But just also paying down the principal. Literally, we’re actually making money in
time that we’re going to collect on paying down the interest. That puts us our ROI
at 11.63%. What’s the total ROI cash on cash plus
appreciation? 32%. By the way, is this a winner? Is this exciting? Do
I love buying properties in Florida? -Yes. -100%.
In this training with you right now, I am NOT going to go into the rest of the
numbers here. But there are complicated formulas for everything that we do to
answer every question. We have conservative assumptions. But there’s a
couple of weird screwy things I want to point out. We’re looking at the it
says that the annual appreciation is 8% the next 2 years.
Actually year-over-year for the last 3 years, that market is showing
11%. Why are we showing 8% on the pro forma? So, it’s
managing expectations. Here’s another one: By the way, we’re assuming that
appreciation by year 6 goes down to 3%. That’s stupid for the
hottest fastest growing market in the country when you learn the economics of
why. But it is to be conservative. The other thing is you’re going to see a property
management fee. What’s typical property management going to cost? 10%. What
is that number? In that market, in that specific area with that property
management team, it’s 6%. How do you get that? Guys, the way that we win is
volume. If you buy an out-of-state property and you’re a nobody
and you’re paying a property manager 10% and there’s $1,000 in rent,
that relationship pays them how much a month? How much loyalty can you buy for a
hundred bucks a month? Guys, they’re playing a numbers game. They’re Walmart.
Whether you’re happy or unhappy, here’s the sad truth. They don’t give a rip.
Because you’re a 100 bucks. And it sounds crass. But they’re managing
hundreds of homes and they’re winning is a collective. And if they have some
people are unhappy, they’ll swap you out for new clients.
But you go to a property manager, you say, “Hey, we’re going to give you 500
homes in the next year or 2.” You’re one of the property managers we’re going to go
with. And this 6% is a concession they make where they want your business,
they’re fighting for your business and then you’ve called them. If you’re having
a bad experience on our property, is it just one property? The entire portfolio
is at risk. That’s leverage. You win with leverage,
you win with both 100% of the time.
Alright. So, this is Memphis, Indianapolis. This house looks super
different. It’s not newer like the one in Florida. This is a ninety-two thousand
dollar purchase price. Not 159. So, to get this property, the total
investment is 27,000. Not 44,000. It’s a big
difference. When people have limited hidden assets at 401K system, is this
important? But this market is different. In this market, look at our cash on cash.
The other one was just over 7%. What’s this one? 9.3%. That means that every month, there’s more cash in hand on this
property. Does that make sense? However, why is the total ROI with appreciation
at 26%? Because this market when you take a look at our
annual appreciation rates, this is not a growth market. This is not a fast-paced
growing market. We’re going here for collecting a slightly lower overall ROI
but more than that you get to keep cash in hand along the way. Does it make sense?
Now, people are always asking me, “Kris, should I do Florida or should I do one of the cash flow markets?” And do you know what my answer is? This is
important for our field filaments and working with our clients. When they want to know, “Well, why wouldn’t I do this or why wouldn’t I
want to do a Florida?” If someone says, “I have in all of my assets to work with
from hidden assets” that we’re going to talk about next. If they say, “I have $120,000”, we know that we are going to say, “Okay, if I
were to get you a property in Florida and let’s say it’s 45 grand.
But I also want to have 10,000 dollars of the bank to manage it. That’s
called a what? Swan account. Stands for Sleep Well At Night. Is this important?
-Yeah. -This is to keep them from being insane worrywarts that we want to dump
on the curb and say “We out. Hey, we don’t want to work with you.” This helps people
feel good when they’re new to the game of real estate investing. And then
they’re like, “Oh, well. I could do another one of these. But you know, if I did one
of those other markets, I can do with $30,000.” And we’re going to
have another $5,000 to their Sleep Well At Night. And they’re going to
start saying, “Should do more of these or should I do more of those?” Do you know
all I care about is being over what? Don’t get confused. This looks like real
estate. This is a product. And it’s all about producing an ROI over what? And if
this was 26%, the other ones 32% are we over 20? My
personal rule is that actually not to be over 25. If I’m over 25, I feel like we
are freaking winning the Kentucky Derby every day of the week. So, I don’t get
caught up on this. Well, how I was researching the market?
I noticed that FedEx instituted a new policy and though they’re going to be
hiring this. You’re like, right here. The question is how accurate are we in
hindsight to what we’re projecting on ROIs. We’re dang good of these,
guys. This is really what I care about. So, at the end of the day, the market
actually doesn’t matter very much. Making sure that as much of your money as
possible goes to work earning these ROIs, that’s what Trump said. That’s what’s
really key here, what’s really work. So, we all understand that this is what gets
some of the point where they say, “I want to partner with this team. I want to
access that 200 experts. I want to go into the very best markets. I want
to make this happen.” This make sense? Where we’re going to head next is we’re
actually going to go and dive into those 2 markets. In this document that people
get, what you’re looking at here are addresses of homes that we have
purchased for ourselves, for our partners, for our clients. And turn
Page. And turn the page. And the numbers of changing. And turn page. And turn the
page. And guys, this goes on forever and ever and ever. This, this will actually
show you a couple thousand of the homes that we have done. So, people go into
Google. They research in. And at the end of the day, here’s what people need to
know: We know our stuff. This is like our system. This is actually how we run it.
And by the way, we did it in 2008. The next market drops, we’re going to do it
again. And bottom line is real estate, we’re making a sector it’s probably one
of the best sectors of investment that people can access and they just don’t
know how. They don’t know how to do in bulk, they don’t know that teams are out
there. I don’t know of another team out there like ours that actually does what
we do. Which is why this is all about bringing investment grade opportunity to
the individual. To our partners.