Ken McElroy
@kenmcelroy • 49,243 subscribers
📈 Real Estate Investor | Multifamily Expert 🏠 10,000+ Units | $1B+ in Transactions | The Founders Group 📚 Author of The ABCs of Real Estate Investing
Videos
Grant Cardone says buying a house with all cash is ridiculous. His move? If you handed him a $700,000 house, he would sell it for 600 that same day, take the 600, and buy 2.4 million dollars in real estate that pays itself off over 30 years. Lot of numbers. But let's get clear on the original offer. The offer was $700,000 to buy a house. Selling it for 600 the same day is a $100,000 loss for no reason. Here is what I would do instead. Buy the house for 700. Then put debt on it, maybe 500 grand through a cash-out refinance, which is tax-free. Now I still own the house. I throw a renter in it. I pulled 500 grand out tax-free. And I use that to lever up and do it again, and again, and again. Same game he is playing. I just keep the house and skip the 100 thousand dollar loss. He has a lot of good points here. The first move was just a little off.
Ken McElroy388,129 görüntüleme • 20 gün önce
Someone just argued that income above $2 million should be taxed at 70%. Peter Schiff's response was simple. Once income hits $2 million, stop working. Furlough the employees. Go play golf. Come back in February. Why work for 30 cents on the dollar? And he is right. Most earners at that level would do exactly that. Once they hit $2 million, they would just shut things down. But here's what most people don't understand. The tax code is not just a tax bill. It is a playbook. A series of credits and deferrals that offset income legally. Real estate gets tax breaks because the government needs housing. That offsets a significant portion of the income it generates. The guy asking has never made close to $2 million. He would never open the book or try to understand the tax laws. That is the whole point. The rich do not pay the rate on the page. They pay what the playbook allows.
Ken McElroy150,817 görüntüleme • 26 gün önce
Most people drive past billboards every day without a second thought. That might be the most expensive thing they never noticed. A piece of land in Phoenix. Almost 2 acres. Billboard on it making $5,000 a year. Most people would have ignored it. One phone call to a billboard management company changed everything. That same sign should be making $2,000 to $4,000 a month. Bought the land for $250,000. Moved the billboard. Put an easement around it. Cash flowed $2,000 to $3,000 every month. Then sold the land for $250,000. The billboard was free. Did it again near Bank One Ballpark in Arizona. Static billboard right across from where the Diamondbacks play. Converted it to digital. Sold it to Clear Channel for a couple million. That was not the end. That was the beginning. Now building an entire media company around digital billboards across the United States. Most people see a sign on the side of the road. The right people see an asset.
Ken McElroy222,647 görüntüleme • 1 ay önce
Most people use debt to get poor. They buy a house, build equity over decades, and stop there. The wealth is locked in a primary residence, doing nothing. The ones who get rich do something different. They take that same principle, the same velocity, and apply it to an asset that produces cash flow. A rental property. A business. Something that generates income while the debt pays itself down. The bank already knows this. Every loan they write is backed by collateral. They are not lending against your income. They are lending against the asset. And if you default, they take the asset and recover the debt. That is the whole game. Find an asset a lender would take back. Acquire it. Let the cash flow service the debt. Own it free and clear on the other side. Good debt makes you richer. Most people just never learned the difference.
Ken McElroy44,838 görüntüleme • 12 gün önce
Dave Ramsey says all debt is stupid. Credit cards, student loans, car payments, borrowing against your house. All of it. He says your income is your number one wealth-building tool, and the second you hand it to someone else, you give up your economic future. He is half right. On credit cards, I agree completely. You are paying 28 to 30% on that. But notice what he never mentions. Cost of capital. That is the whole game, and he skips it. High-priced student debt, fine. But my own loans were at 3%, and they were the only way I got into college. I paid them back over time. That was a good investment, not a stupid one. Where he is dead wrong is real estate. Debt on real estate lets you use other people's money to buy an asset that pays for itself. That is what he misses. His whole philosophy depends on you earning more income. But with wages growing 3% while inflation runs 3%, you never get ahead. You run in place like a rat in a wheel, the exact thing he is warning you about. The only way out is to own hard assets that produce cash flow, and you buy those with debt. Here is the difference between us. He thinks all debt is bad. I think debt is a tool. Good debt and bad debt, high cost and low cost, and that difference is everything. He once said he would not take a billion dollars at zero interest. A billion dollars, costing him nothing. Put it in Treasuries and that is 30 to 40 million a year for doing nothing. He said he would pass. That is lunacy. When I borrow on real estate, someone else covers it. Always. The office building you work in and the Starbucks you walk into all carry debt, and the tenants pay it back. I own a single-family house, my tenant pays off the loan. I do not pay it. I do not need more income. I just need to keep a good tenant in that house. And yes, you get vacancies and turnover and the occasional problem tenant, but that is what management is for. He never had to learn that, because he does not use debt. And here is the part almost nobody gets. It is your money anyway. The cash sitting in your retirement account or your bank is yours. You are just borrowing it back at a lower rate and finding a tenant to cover it. That is why I disagree with him on debt. Used right, it is not the enemy. It is the entire engine.
Ken McElroy38,187 görüntüleme • 19 gün önce
Warren Buffett says using leverage is foolish. Why risk what you have and need to chase what you do not have and do not need? No matter the odds, if the downside is everything, do not do it. He is right. But real estate is a different game. That rule is built for paper. Pull up Sam Zell or the other people I follow, and you get a completely different answer. Here is the real difference. Paper is paper. Real estate is control. I do not love the paper world. I do not like the volatility, and I do not feel like I can control it. Control is the whole thing. I control the debt I take on. The interest rate. The monthly payment. And I never over-leverage. I control the apartments too. The occupancy. The expenses. The rents, to the extent the market lets me. Paper gives me none of that. I do not understand it well enough to control it, and it does not have the predictability real estate does. Now the harder question. If I paid everything off and sat on 600 million debt-free, would my life really change versus 1.5 billion with 900 million in debt? Honestly, no. I do not personally need more. But that is not what this is about anymore. I am running a legacy play now. My kids are involved. This is succession. He is not wrong about leverage. It just depends on what you can actually control.
Ken McElroy12,472 görüntüleme • 14 gün önce
Dave Ramsey was asked a simple hypothetical. Would you take a billion dollars at 0% interest for 10 years? He said no. Not because the math was bad. Because he does not borrow money. Period. No exceptions. And that is the problem. There is a difference between bad debt and good debt. Bad debt costs you money. Good debt makes you money. A loan covered by tenants is not a liability. It is a wealth building machine that someone else is paying off for you. Refusing all debt does not protect you. It just keeps you from building anything. The question is never whether to use debt. The question is whether the debt is covered.
Ken McElroy19,697 görüntüleme • 27 gün önce
Robert Kiyosaki explains why the rich don’t chase money… they own assets that pay them “When you print money, the price of everything goes up… most people get poorer. I don’t work for money, I work for the asset.” On May 20, we are going to sit down for two hours to walk through what the Fed transition means for interest rates, how the rate environment is reshaping real estate and debt, and where serious investors are positioning their capital in response. Click here to join the free live webinar before spots fill up ⬇️
Ken McElroy15,540 görüntüleme • 2 ay önce
Daha fazla içerik yok.