Chris Krohn is one of the top real estate investors on YouTube. He has invested in over $2B worth of single family residential real estate in his career and has a lot of experience in tech and venture capital. He is based out of Utah, which is a conservative state, and in this episode we talk about what it means to be a Mormon in today's society and how to navigate the current political climate in America. He also talks about how he and his family have been able to get their 4 kids into private school and how they plan for their future in the real estate industry. We also talk about the future of education in America and how we should be educating our kids in order to keep them up to speed with the times and what they need to do to keep up with the fast-paced, tech-driven world we live in today. If you're interested in investing in real estate, this is the episode for you! Hit us up at FreshFit and let us know what you thought of this episode! Timestamps: 1:00:00 - What's your favorite piece of real estate investment advice? 4:30 - How to get your kids into real estate 6:00 What do you think of the current state of American education system? 7:00- What are your thoughts on public school 8:15 - How do you plan for your kids to go to college 9:40 - What should you do with your kids in public school? 11:15- What does your family do to prepare for the future? 14: What are you looking for? 15:30- What is your biggest fear? 16:30 17: What is the biggest piece of advice you would give your kids? 18:40- What kind of education system you would like to see your kids get? 19:00 -- How would you want your kids grow up in the next five years? 21:30 -- What would you like to grow in the world? 22:40 -- What are some of your parents should be doing in the most disruptive and most disruptive industry? 26: How do I get my kids to be educated? 27:15 -- What do I m looking for in a good public school experience? 29:15 28:30 What are my biggest takeaway from this episode? 30:00 What s your biggest challenge?
00:14:18.000But for those that might not be familiar with who you are, can you introduce yourself to the people?
00:14:21.000Yeah, so I've done two billion dollars worth of single-family residential real estate and played the game where I said, if I can figure out how to scale a game that most people don't know how to play, I can make a name for myself.
00:14:32.000Basically, riches are in the niches, so go to a niche that no one wants to play in.
00:14:36.000Most people, they do single-family and they graduate to multi-family.
00:14:39.000And so I just basically said, hey, let's see who can produce the highest ROI in single-family.
00:14:51.000Beyond that, the last several years I've been in private equity, sift through thousands of companies every year, find 10 companies that I want to bet on.
00:14:59.000And so when I'm not investing in real estate, I'm investing in tech and other companies that are insanely disruptive and changing industries.
00:15:06.000And so I'm enjoying playing that game as well.
00:15:07.000When it's not that, dude, it's just me and my wife and my four kids.
00:15:11.000I've got an 18-year-old, my youngest is 13, and we've been world schooling for the last five years.
00:15:17.000Meaning took them out of public school and basically hired our own teachers, brought them in and said, you know what, we're going to educate you.
00:15:24.000We're going to customize your education.
00:15:25.000We don't really believe in college anyway.
00:15:27.000Let's get you educated based on this crazy world that has changed so much.
00:16:30.000So, real estate, you mentioned that you, single family homes is your niche and you also do help with startups 10 per year, you said that you pretty much stake on, where you fund them, get their business off the ground.
00:16:41.000Well, and it's not just syndicating and funding them, you know, we've developed a passion for how to grow companies successfully, so when we find a company that we want to back, often they'll literally house in one of our offices, we'll bring them into our culture, we'll provide leadership training, we'll headhunt their CEOs for them,
00:16:56.000so we take a Really a hands-on approach to helping grow those companies.
00:18:23.000And so, I've got six different vectors that I look at when I'm looking at all strategies.
00:18:28.000And the reason why I roll with single family is because for me, I can produce the highest ROI with the least time, the least effort, and the least risk.
00:18:34.000It works in up and down markets and it provides a service.
00:18:37.000And so, you know, I had Cardone on my podcast and he's like, dude, why aren't you doing multifamily?
00:18:42.000I said, it's because I like more money.
00:18:44.000It's called higher ROI. We just completed a 10-year study year over year on our last 2,130 properties and evaluated where, you know, what is our ROI? What are we making year over year?
00:19:16.000I'm saying that it's like, oh, I got tired because I was figuring out how to scale single family, and I got 25 homes, and I was the landlord, and I was doing all the work, and it was so hard.
00:19:25.000I sold it all, and I rolled it all up, 1031 Exchange into multifamily, and then it manages itself with an on-site manager, and you're like, wow, that's so much easier.
00:19:32.000I'm like, yeah, and what did it cost you?
00:19:34.000How much of your future did it cost you on the money you're not making because you're lazy?
00:19:38.000So, you know, to the credit of people out there that do multifamily, it's not just lazy and easier.
00:19:45.000They just can't figure out how to scale single family.
00:19:47.000And I always just told myself 20 years ago, if I can figure out how to scale this game, which I don't know anyone that scaled as big as I have, but if you can figure out how to scale it, then you're going to make way more money than multifamily.
00:19:57.000And so I basically said, okay, let's take on Mission Impossible.
00:20:00.000Quantity and volume is like the name of the game if you're going to go in the single family home realm.
00:20:07.000There's been talk for years, by the way, and I really want to get your take on this, because I think it's actually genius that you do single-family homes, because it's an asset class that's never going to go away, and it's the most required.
00:20:18.000People always say, the real estate market's going to crash, blah, blah, blah.
00:20:21.000I think last time we spoke, there was something like five million homes shortage.
00:21:39.000Real estate gets a bad rap right now because the interest rates are high.
00:21:44.000It's expensive to get commercial real estate, office space isn't a thing.
00:21:47.000What I've come to realize is people ask me all the time, well, why are you in real estate?
00:21:52.000The interest rates are high, people aren't renting as much, there's too much inventory, blah, blah, blah.
00:21:58.000And they always say the real estate market is going to crash.
00:22:00.000But I think they tend to look at the commercial side versus the residential side.
00:22:03.000Because what you do is very specific with single-family homes.
00:22:07.000And that particular market, there's a huge shortage.
00:22:10.000Versus on the commercial side, there's too much.
00:22:12.000And a lot of these loans are coming up now.
00:22:15.000Can you explain to the people why the single-family home market is completely different from the commercial world and why people need to stop conflating the two and trying to say it's going to be a crash?
00:22:24.000It's weird that people actually do that.
00:22:26.000At least if you look at multifamily and single-family, it's people that need houses, right?
00:22:32.000Like, that's for businesses, and it is possible to have a softening or a crash of the commercial market, which, frankly, the pandemic created a lot of that problem that we're in right now, because a lot of people have figured out, why am I renting this really huge building when people are completely capable of working from home?
00:22:48.000That's created a nightmare in that arena.
00:22:50.000Single family, however, is really just written by supply and demand.
00:22:53.000And when you look at the high interest rates, here's the weird thing, because I have a ton of people, they're like, oh, Chris, I want to invest.
00:22:58.000And I want to get in the game, but not right now.
00:23:10.000I'm like, did you know in my world that my overall ROI is affected by less than 1% based on that jump in rate?
00:23:17.000In other words, all it does is affect cash flow and cash flow is only one of the four ROIs and it's the smallest of the four ROIs.
00:23:24.000It's like, you guys are actually like, like you're trying to jump over dollars to pick up pennies and it doesn't make sense because they don't, they think, oh, real estate is always about cash flow and I always tell people in the beginning, if you can get a high ROI and you're broke, because most people get into real estate not because they want to buy a home and have a $400 a month cash flow.
00:23:41.000They want that home to turn into five and they want that five to turn into 15 and eventually it's like, hey, I got It's like when I was 26 years old.
00:23:54.000Real estate works for me so I don't need a job.
00:23:56.000Cash flow is important after your money has grown.
00:23:58.000But before it's grown, you don't focus on cash flow.
00:24:00.000You really got to focus in the beginning on being in a place, being in a market where you're going to get maximum growth so that then you have millions to convert into cash flow.
00:24:09.000And I think it's very important when you mentioned earlier that you did your 10-year study and you had a 60% ROI. Can you break down for the audience real fast?
00:24:16.000Because people tend to hone in on that cash flow thing that we just discussed.
00:24:18.000Can you discuss the components as to how you're able to achieve that return on investment?
00:24:22.000Let's start with what most people are comfortable with, a 401k.
00:24:26.000Because everyone's told that's your retirement, right?
00:24:28.000They just completed in 2024 a study on the last 20 years for the average 401k.
00:25:07.000And at 6% in 20 years, all of a sudden is triple.
00:25:11.000So I was like, cool, my 50 grand turned into 150 grand.
00:25:14.000In real estate, if all you were earning was it was earning 25%, which is four times the ROI, it makes 27 times more money.
00:25:22.000It makes $4.3 million in that same span of time.
00:25:26.000So, understanding ROI is actually a really big part of the game.
00:25:30.000Now, to break down that 60%, there's four different major ROIs.
00:25:33.000The first one is the very obvious, appreciation ROI. And the reason why I only invest in the top five markets nationwide and give people access all over the world to just those five markets, with, by the way, Orlando, Florida, I mean, we're in Miami, but in Orlando, not far away, this is where I buy a lot of my inventory.
00:25:57.000It has excess money for, you know, in its budget for doing that 8 billion dollar railway and everything else, right?
00:26:03.000So Florida is definitely one of the top five markets that I'm in because of the appreciation.
00:26:08.000So of that 60%, a lot of that comes from appreciation.
00:26:11.000And the reason why the appreciation is so high is because you get to leverage banks' money.
00:26:16.000The banks will put up $4 for every dollar you put up.
00:26:19.000And so instead of putting in a 401k, put it in a property and then you get leverage.
00:26:23.000So that the appreciation now is five times more money to you on that first ROI because the bank's putting up the money.
00:26:30.000And real quick, just for the audience out there, for anyone that doesn't understand what Chris is talking about, Fresh, you bought a home in what, 2020 or 2021?
00:28:23.000So principal reduction just basically means, okay, so when they give me the rent payment, a portion of that goes to service the loan, and a portion of that isn't to interest, it's to principal.
00:29:24.000On a house in that price range, having tenants basically servicing the loan, you're going to make around 4% on your money on average just there.
00:29:34.000So what you'd make in a 401K, literally your tenant, by servicing your loan, you're making 4% on that.
00:29:40.000And if you add in tax reductions as well.
00:29:54.000Because all of that, as the principal comes down, eventually I'm going to sell that house and it's like, oh, like the house came down, that's a return of capital I'm getting.
00:30:18.000I get to depreciate it over 27 and a half years.
00:30:21.000So let's take your $330,000 house that you bought four years ago.
00:30:26.000I'm going to divide that by 27 Divide that by 27.5, you get to write off 12 grand every year.
00:30:36.000Now, let's say your cash flow is $6,000 a year.
00:30:39.000You're pocketing six grand, but because you have a $12,000 write-off, that's six grand, you don't pay taxes on that, that is literally tax-free money.
00:30:46.000And then you're like, wait a second, but every year I've got six grand left over, what do I do?
00:31:06.000My income is going up, but I don't pay taxes on it.
00:31:09.000But then on paper, it looks like my income is actually going down, and I don't pay taxes on that.
00:31:13.000So every home you buy, you create this spread where for the first seven years I bought real estate, I didn't even have to pay taxes because of this one little hack that people don't understand.
00:32:32.000But if you get to a point where it's like, I'm making more and more money, now I gotta get aggressive, then for me, I'm like, oh shoot, I gotta figure out how to now write off millions of dollars years in taxes.
00:32:44.000It's like, oh, you guys have a business that's called Fresh and Fit.
00:32:46.000I'm like, if I were you guys, next year, go buy a commercial building.
00:32:50.000Before the end of this year, buy a commercial building, you can rent out 50% of it, you only have a 10% SBA down payment, and if you do the math, after cost segregation, You would literally, for every dollar you'd give the government, you actually get to pocket two dollars while buying an asset that has rental income to you.
00:33:07.000Those are aggressive strategies that help people.
00:33:10.000Once you, it's like, well, if you can buy 10 homes, you can buy 100.
00:33:12.000And essentially, you're gonna come into a lot more income, and when you do, then you need more aggressive taxes.
00:33:17.000And I tell people this, like, I tell them that story, not to flow, I'm gonna do this much money.
00:33:20.000It's to say, like, Literally, if you're in the middle class and you don't have assets, they destroy you in taxes.
00:33:26.000Versus if you have assets and you're in real estate, you can make 10x the money and pay the same amount of taxes as someone that makes 10 times less than you.
00:34:08.000Because you're very critical of Dave Ramsey and the whole saving money thing and the 401ks and the traditional financial advice that they give you.
00:34:17.000What do you think is the problem with it?
00:34:19.000Why do you think it's a failed system now?
00:34:28.000And in that book, what I do is I talk about the five different ROIs that can help anyone achieve a lot of wealth in a very short period of time.
00:34:35.000I'm reading some of the comments because we're live and there's someone here saying, oh, this is why the rich stay rich.
00:34:47.000I had to create that wealth, and we're really exposing here how we did that.
00:34:51.000And so when you take a look at the system of 401Ks and IRAs, the problem is that everything society asks you to do with your money is single-digit.
00:35:57.000Dave's good for people that are irresponsible and uneducated with money, where it's like, hey, if you don't know how to budget and you're blowing your money, blowing your wad, then yeah, you gotta actually get all your stuff paid off.
00:36:07.000But you've got a lot of good people that actually buy into that philosophy of no debt will set you free.
00:36:13.000I'm like, dude, when you wasted 22 years of your life or 16 years of your life on Dave's Baby Steps program, and you're like, I'm 52 and I'm finally, I'm out of debt.
00:36:23.000I'm like, you were out of debt 30 years ago.
00:36:25.000You wasted all your time because for money to multiply and to invest it and go somewhere, you need time.
00:36:30.000And so you focused on getting out of debt.
00:36:33.000What you should have been doing was actually growing your money.
00:36:36.000And if you can learn, most people have debts at like 5, 6, 7%, not 18 and 22, like reasonable rates.
00:36:42.000When I can make money earning 25% or 50% or 60%, why would I ever focus on eliminating a 5% mortgage?
00:36:50.000When I can grow my money at 50%, it doesn't make sense.
00:36:53.000So, make the money, make money and then go pay off your debts.
00:36:56.000Like people are retiring their money in the river, you know, they're doing it out of order.
00:37:00.000They're prematurely satisfying their debts.
00:37:02.000They're like, if I pay off my debt first, then I can invest.
00:37:12.000Would you rather be debt free, or would you rather have 10,000 residual dollars coming in every month for the rest of your life growing at 10%?
00:37:39.000Well, I love leverage and I put 20% down on pretty regularly.
00:37:45.000The bank puts up the other 80% of the money and my rule is I don't want a house to be ever more than 50% paid off.
00:37:51.000When I talk to someone, once their house is 50% paid off, I start freaking out because all I see is Hey, if that worked for you, pull out, harvest that equity, and go buy three more.
00:38:02.000You know, think about that person that is 65, a lot of young people are watching this, but imagine you're 65 years old, and you got $300,000 of equity in your house, and you have $300,000 for retirement, and you know that you only have a few years to live with what you save for retirement, and strangely, you're like, I got $300,000 in equity.
00:38:16.000And in that moment, you're thinking, You know, if I had just bought six or seven more of these, I'd be worth two million dollars.
00:38:23.000And then I'd have a residual income from a bunch of paid off houses and then I could live my life.
00:38:27.000But instead, I'm going to have to go back to work or rely on government or rely on charity and I'm going to drop below the poverty level on my income because I can't stretch my money.
00:38:37.000But modern medicine is going to keep me alive for 40 years, yay.
00:38:54.000But I always cringe at myself whenever I'm like, oh my God, I've got to buy this thing fucking cash.
00:38:57.000Because I do think it's a foolish thing because you can take that, let's say $300,000, $400,000, and buy multiple homes.
00:39:03.000And they get the depreciation benefits.
00:39:06.000And for the audience, when we talked about depreciation over 27 and a half years, It's off of the purchase price.
00:39:10.000So if you buy four of those houses versus only buying one, you're able to get way better tax benefits.
00:39:15.000But I guess in what situation would you say does it make sense to buy cash besides maybe some of the ones I... Well, first of all, there's always a way around.
00:39:24.000And they'll basically say, hey, if you're going to buy home cash, do it cash.
00:39:27.000And then two months later, refinance it, pull 60% of the money out on a DSCR loan.
00:39:32.000And they're going to qualify you not based on your credit or your job income, but actually on the merit of the rents from the house.
00:39:39.000So I have hundreds of houses that I do DSCR loans for.
00:39:42.000If you have anything paid off right now, put those loans in place and then all of a sudden you've got that money out and it wasn't a qualifying game.
00:39:56.000DSCR. DSCR. So if you have a home paid off, go to these people, hey, I want to pull out, is it a cash out refi essentially is what it comes to?
00:40:05.000I got people all over the world that follow me on my social and they say, Chris, will you be my mentor?
00:40:09.000Partner with me and they're basically saying, if I put up the 401k and IRA or equity in my home, will you put your team to work buying and doing all the work so I don't have to learn how to do this?
00:40:52.000I do the DSCR loans, pull 60% of the money out, go buy cash again, do the 60% loan and do it a third time.
00:41:00.000And now I have a whole bunch of houses where maybe the houses are more like 40%, 45% loan to value.
00:41:06.000So they're over half paid off, but now they're still performing at a, you know, they're not performing at a 60% ROI. They're still performing at a really high ROI, something that kicks the trash out of your 401k.
00:42:01.000So guys, once you start doing this and getting into real estate, you could get 10 loans that are like Fannie Mae loans that give you the good interest rates and everything else like that.
00:42:08.000After that 10, because I've had to deal with this, you have to start becoming a bit more creative with your mortgage broker and finding loans and stuff like that.
00:42:14.000So this is one that doesn't count towards that 10.
00:42:47.000You have one on a rental, but they gave you a high rate.
00:42:52.000Do you want to tell the audience about it a little bit?
00:42:54.000Luckily for me, I have a relationship with my lender, and he made a different type of loan for me, but it's this hybrid between HELOC and Cash Out, basically.
00:43:58.000I want to get into real estate and do this the right way.
00:44:00.000Should I use you or how should I start this program, you'd say, to get this started?
00:44:04.000Well, I think you always have two options.
00:44:06.000The first one is you have to ask yourself, am I interested in real estate as a shortcut because I want the money?
00:44:11.000Or am I actually passionate about learning how to do it?
00:44:14.000And I'm going to tell you, I've ruined a lot of people over the years that I trained to do real estate that never wanted it.
00:44:20.000And so you have to ask yourself, am I going to become the master?
00:44:23.000Malcolm Gladwell says 10,000 hours to master something.
00:44:26.000So if you're like, if this is like your thing, like when I look back on my working life, I'm going to look back and say there was a handful of things I mastered and real estate was one of them.
00:45:12.000So someone says, hey, if I partner with Chris and he does all of the work, that's way better than my learning curve of trying to figure the game out.
00:45:19.000So it depends if you want to be the master or it depends if you just want the benefits.
00:45:22.000So Myron mentioned my property I first got and I had a mentor to help me with that property because I didn't know what I was doing.
00:45:27.000I just knew it was money and real estate.
00:45:30.000Hey guys, get your questions in, because obviously we got an expert in single-family homes, residential real estate, so if you guys got questions, make sure to get in, like, yeah, literally a master at this stuff.
00:45:40.000So let me ask this, because we talked about the benefits of real estate, we talked about residential versus commercial, you know, the scam of IRA, buying cash versus using leverage.
00:45:48.000So I guess for the audience that's watching, let's say they're like, all right, I want to get into the game.
00:45:56.000I want to buy maybe my first or second deal by myself.
00:45:58.000Then I go ahead and get with an investor, someone that's knowledgeable like Chris, because I kind of want to understand how to do it myself before I start getting involved with other people, which I tell people all the time, hey man, buy at least one house by yourself, figure out the process, go to the closing table, figure it out, understand how to deal with real estate agents, etc.
00:46:13.000If someone wants to do this, what do you think is the first thing they should do if they want to get their first house?
00:46:18.000If they're just trying to do a house for themselves and start with a little bit of like house hacking, like this is how I got started.
00:46:26.000This is a three or a three and a half percent down payment.
00:46:28.000And so even though we talked about how much homes have gone up by, if I was a young single person, I would be racing to save up 10 to $15,000 in the bank.
00:46:35.000When you come out of college, it's like, man, do not adjust to your lifestyle to that income.
00:46:41.000Like live on the cheap or else you don't have much of a hope in life financially because I want to be clear.
00:46:47.000Like, our Millennials and our Gen Zers, they have it way worse when you compare it to Gen X or Boomers.
00:46:59.000If you take a look, this is kind of crazy stat, Gen Zers, I got kids that are Gen Z, you compare them to Baby Boomers when they were in their 20s, And literally, Gen Z has 85% less buying power than a boomer did in their 20s.
00:47:12.000Which basically means they have to work way harder for the same dollar, which means they got to work smarter.
00:47:18.000So here's what a lot of them are doing.
00:49:36.000It's really basic and simple, but what I've realized is with all my deals, I'll just use the Redfin calculator to see what my monthly payment's going to be and then how much the house generates.
00:49:44.000And if there's a cash flow that I'm happy with, a lot of the times, by the time I close the deal and be done with it, it's pretty accurate with how much money I make.
00:49:52.000So that's really important to crunch the numbers.
00:49:54.000Now, Chris, in your opinion, what do you think they should be looking for as far as a cash-on-cash return, which we discussed before, guys, which is...
00:50:01.000Well, we can tell them what a cash or cash return is first and then what they should be looking for.
00:50:04.000Let's just say for a moment that you were going to put up $12,000, like fresh.
00:50:08.000And that's your 3% down payment on a house.
00:50:11.000And then let's just say that after renting it out, there's $200 a month left over.
00:50:15.000And as long as you kept your, you know, let's just say vacancies and everything was taken into account, that's $2,400 a year.
00:50:21.000So if I put up $12,000 and I make $2,400 a year, I can figure out exactly what my return is.
00:50:26.000Everyone should know how to calculate an ROI. You take your gain, which is $2,400 in this scenario.
00:50:31.000I'm going to divide it by my investment of $12,000.
00:50:35.000And then I'm going to times it by 100.
00:50:37.000And that tells me that I have a 20% cash on cash with my 3% down payment.
00:50:42.000Do I think you should look for a cash on cash on a home that you're going to live in?
00:51:01.000So, you know, there was really good house hacking because a person's rent or their mortgage is the biggest expense you're ever going to have your entire life.
00:51:07.000If you can be smart and wipe that out in the beginning, then it's like you've removed the largest financial burden.
00:51:12.000What should you be doing with that extra money?
00:51:24.000So now you can buy, you know, so cash on cash, I think becomes more important when you start buying non-owner occupied real estate, meaning I'm buying homes, investment properties, like, okay, now I'm not living there.
00:51:40.000How much money do I want to make on that house?
00:51:41.000So for me, right now we're in a scenario where rates are high and rates are scheduled to come down and if they can get a handle on inflation, let's just say in the next 12 to 24 months that rates come down two or three points like they're hoping.
00:51:53.000If that happens, cash flows are going to be booming because rents have not been catching up as fast as prices have gone up in the last two years.
00:52:00.000So we're in a really weird season of crunch, which is not what we'll see for the next 20 years.
00:52:05.000It's like the next two years are going to be funky because rates are high, which means cash flows pinched, but rents haven't caught up yet.
00:52:19.000That's not exciting, but in two years when everything evens out, it returns to a 4.5% cash on cash, which is actually, that's actually pretty decent.
00:52:27.000Yeah, and I think it's very important for the audience to understand, like, if you guys buy your first house and you're living in it, right, you might make little to no cash, but like you said before, you live in it and you're living for free.
00:52:37.000If you're living for free, that's a W. If you're making a little bit of profit, that's an even bigger W. I'll never forget, when I did a strategy that you just mentioned before, my rent was, I believe we're at my old spot, $1,200.
00:52:49.000So I got a property, and I had three units.
00:53:39.000Well, almost everything I do now these days is turnkey.
00:53:42.000And if it needs $20,000 or $50,000 repairs, I put that on the investor, not me, saying, hey, you take that risk and then bring it to my buy box.
00:53:50.000And then if it still fits, then I'll buy it.
00:55:04.000I could tell you who's calculating my ROI. So I just revealed all my numbers and he's like, oh my gosh, do you know what kind of ROI you're producing?
00:55:39.000And we did 50 homes together, millions of dollars in real estate, and that's when I learned the power of, because there's a lot of people listening like, well, what if I don't have the money?
00:56:17.000That's why it's important to go outside, meet people, make connections, go to events, because my realtor helped me with this first property, right?
00:56:25.000I didn't even know who he was until I met him there.
00:56:27.000But then again, being resourceful, finding ways to make money is very important.
00:56:31.000Yeah, and Tony Robbins, years ago I was in his Lions Club.
00:56:34.000He'd pay hundreds of thousands of dollars to go through that whole system.
00:56:37.000And I was sitting there at his house, and I'll never forget when he said this.
00:56:40.000He said, you're one person away from lifetimes of income.
00:56:44.000And I think about all the money I've made in my lifetime, and I'm like, Yep.
00:56:48.000A handful of mentors unlocked all of the doors of possibility for me.
00:56:52.000So everyone's got to be out there thinking, okay, you either subscribe to go to college, which I think is a broken system.
00:56:59.000You either think I'm just going to read books.
00:57:01.000That's never going to get you where you want to go.
00:57:03.000I've never found a system that is more efficient and better than...
00:57:07.000Oh, just go find someone that's already done it and if you can find an arrangement with them to learn from them, there will never be a faster way to the top of the mountain.
00:57:14.000That's like doing Everest where people die and it's like, do you really want to climb the mountain with a Sherpa in their first year that has no track record or the dude that's been up 200 times and has never lost someone?
00:57:24.000Go find the smartest, brightest, most successful person that's relevant And then figure out how to grab onto their coattails.
00:57:30.000Grab a tiger by the tail and then let them carry you up the mountain.
00:57:50.000When I went nationwide for the first time, this was like 2009, this is right after Fannie and Freddie had just, they were getting foreclosures like crazy.
00:57:59.000And I got access to a tape of 187 homes that they were going to sell me at a 92% discount.
00:58:06.000These homes were in Ohio, so we're talking about Cleveland, and then also in Michigan, in Detroit.
00:58:13.000And I was like, oh my gosh, if I get a home at a 92%, imagine for a moment buying like a $150,000 entry-level home for like nine grand.
00:58:24.000So I went in, I bought all these homes, I raised capital to do it, and then I fixed them up, I took them to market, and then disaster struck.
00:59:02.000Go where they have a surplus of beautiful homes.
00:59:04.000And that's when I developed a system for basically finding these markets that have really high performance.
00:59:12.000Because what I'm about to suggest, when I reveal what these markets are, it's not about a good deal on a house, it's actually about a good market.
00:59:19.000In other words, the secret to my ROI, over half of that 60% comes from macroeconomics.
00:59:24.000It's a study of population, migration, the economy in those local markets, the companies that are moving in, jobs, like for example, Blue Oval City.
01:00:05.000I'm gonna be there for the boom, and when everything is still taking off, I'm gonna pull out, but I'm still gonna have some of my greatest wins.
01:00:12.000Those are the markets that I actually look for.
01:00:59.000We go to Oklahoma City and then in Oklahoma City, then you have to say, well, where's the path of progress?
01:01:05.000What side of the railroad tracks do I want to be on?
01:01:07.000And then I only buy in certain zip codes.
01:01:09.000And then I focus in on an age range of home.
01:01:12.000And so I get super, super micro within that zip code down to the neighborhoods.
01:01:17.000And now I actually say, now I'm willing to entertain properties in my buy box.
01:01:21.000And the majority of homes that we find there, I don't even want.
01:01:23.000So it is literally sifting everything.
01:01:26.000For the audience, because that's like a really good strategy, because for the audience, guys, when it comes to residential real estate, it's heavily dependent upon comps.
01:01:32.000So if the area has homes that are a certain price point, etc., like that's sold in the past year or so, whatever was sold is typically what's going to be...
01:01:41.000The general thing, because with residential, it's like comps mean almost everything.
01:01:44.000So even if you trick out the house and make it super nice, they're still going to put it at the same...
01:01:59.000How much do people need to earn in that area for where you want to go?
01:02:03.000Okay, there's a couple of things that are really important there.
01:02:05.000First of all, I'm almost always a three bedroom, two bath.
01:02:07.000I might be a four bedroom, three bath, but my average square feet is $1,500.
01:02:11.000And that's actually really important because if you actually cross-examine all real estate and ask what real estate performs the most, let's say on the high end I have million dollar homes, half a million dollar homes, entry level homes, and then pre-entry level.
01:02:26.000And then what's smaller than pre-entry level like a 3-2, then you start getting into really weird two bedroom, one baths, condos, and townhomes.
01:02:35.000Is always entry-level single family starting at a 3-2.
01:02:39.000If you go to a 5-3, your cash on cash is actually going to go down.
01:02:42.000You go to a half a million dollar house, your cash on cash is going to go way down.
01:02:45.000You go to a million dollar house, you're going to be majorly negative.
01:02:48.000So there's a zone of genius where you earn the highest cash on cash.
01:02:52.000So we're always looking for the cheapest Nicest home, in the path of progress, starting at a 3-2, and that's where I'm actually gonna get my highest overall ROIs.
01:03:03.000Don't do condos, don't do townhomes, I don't do two bedroom, one baths, I'm always starting with that 3-2.
01:03:07.000They have the highest performance, they have the highest growth and the highest gains.
01:03:15.000Because it's, yeah, it's like perfectly in the middle almost.
01:03:17.000Okay, so you mentioned, so I got here, Memphis, Orlando, Jonesboro, Oklahoma City, Jonesboro, and then you mentioned, was there, Am I missing one here?
01:05:56.000Within five years of buying my first couple thousand homes in Phoenix and Vegas, you know, we had made our investors over a hundred million dollars.
01:06:41.000And earlier in the chat someone said, well, that's why the rich stay rich and there's all this negative sentiment about, you know, the people with the haves and the have-nots.
01:06:47.000I'm like, bro, you can be poor and you can have money if you find a mentor and you get smart and you learn how to play the game.
01:06:53.000So Miami, the affordability, it's already out of the price range that I want to be in.
01:06:57.000That's why I'm in other parts of the state.
01:07:13.000And when you're thinking macro and buying thousands of homes like me, you actually have to start looking at, you know, some of the natural disasters and features like that.
01:07:21.000Speaking of hurricane, there's one on the way actually this weekend.
01:07:28.000And I've told people all the time, actually, I'd like to get your take on it.
01:07:31.000I tell people all the time, condos, don't fucking buy them.
01:07:33.000You know, there's very few circumstances where buying a condo makes sense financially because of the HOAs, especially here in Miami, where you're paying $1,000 to $2,000 on HOA alone, which that price can only go up.
01:09:38.000You have $110,000 that the bank is going to give you on that house.
01:09:42.000Now, let me just tell you what that means in my world.
01:09:44.000Don't get caught up on the details like, I was in military, so I have VA, so I can do 0% down.
01:09:50.000Again, that's getting lost in strategy.
01:09:52.000Focus on ROI. You have $100,000 that you can access.
01:09:56.000If I put $100,000 earning 34%, not 60%, 34% year over year, For a period of 20 years, that is going to turn into 34.6 million dollars.
01:10:12.000That's what happens when you compound your money.
01:10:15.000So, you all got to be thinking, how do I access my assets and how do I earn a superior ROI? If all you ever do is go from a lame single-digit ROI like a 401k or an IRA that's earning 5-6% and put it into real estate just even earning 20 or 30%, just wait 20 years.
01:10:32.000Your money will multiply and at retirement, you have millions.
01:11:54.000Yeah, because we had investment join here, and he does all this shit in Ohio.
01:11:57.000But yes, he's getting houses for cheap.
01:11:58.000But yeah, finding tenants might be tough.
01:12:00.000If I say $15,000 or $20,000 towards a home, average home in New Jersey is about $350,000.
01:12:04.000How would I even get a bank to even approve me for that amount?
01:12:07.000My sister's husband brought my W-2 to his people and said I only qualify for $65,000, which I don't think is right because I can get that easy in a few years.
01:12:17.00030k truck in two years easy how do I even get the loan to begin with then and if I put three percent down when I pay crap town ton in homeowners insurance do it bro what the hell is this question?
01:12:27.000I think I got it okay yeah so let me talk to Vilexia Vilexia first of all if your husband brought your w-2 to a bank and cut you out so they're the middle person you got to pause and get enough financial education to go sit down and talk to the bank yourself for them to say that you only qualify for $65,000 as Trailer Park House,
01:12:44.000that means that you're not even working part-time and you're earning minimum wage.
01:13:06.000You find someone else that has good credit and income, they'll combine your income with their income, and boom, it's just another way to get a house.
01:13:13.000But I would find out for yourself actually what's going on.
01:13:54.000Banks are built on basically running your financial situation.
01:13:57.000If you have an average financial situation for a person, for example, coming out of college, and if you've built your credit up to something really, really basic, go talk to a bank, get qualified, find out what you need to do.
01:14:07.000When I got started in real estate, I couldn't qualify.
01:14:09.000My mentor said, hey, you're gonna need to state your job for 14 more months so that you get your two-year track record.
01:14:14.000I need to put five grand in the bank for your tiny down payment on a tiny little house.
01:14:19.000And then I need you to go get two more credit cards and use them responsibly and keep them paid off.
01:14:23.000And I did those three things and 14 months later, I barely qualified by the skin of my teeth to get my first house.
01:15:09.000Number one, the market is not going to crash.
01:15:11.000Number two, I don't keep any rentals that are worth more than $300,000 because when the market does eventually crash, I think we're a decade out on that, I think you're going to get spanked.
01:15:19.000So for me, if I were you, I want to sell that house even if I have a $1,500 a month cash flow, I'm going to take my $200,000 of gains and I'm going to use that to buy two or three homes at a lower price point in one of the top markets where I'm going to get a higher performance on my money.
01:15:33.000So a question for you, actually, I was gonna ask this.
01:15:35.000When it comes to renters, you said you want them to make 60k per year, bare minimum.
01:15:41.000Because I've noticed, like, with credit score, I'm not putting anyone else in that's under, like, 720 or something, because I've seen people that make 100, and they still fucking don't pay rent.
01:15:49.000Yeah, we're 680, 690 minimum, and then anything on up is good.
01:15:53.000But yeah, if they have credit glitches, like, that's definitely a red flag that the moment they have problems, they're going to, like, poke around and figure out, who can I get by not paying?
01:16:01.000Now, I'm also a professional organization, so I also know how to kick people out immediately and there's no bleeding hearts on our side of the fence because it's a business.
01:16:16.000I do not recommend, unless you're going to be that Malcolm Gladwell 10,000 hour expert, you should hire a property manager and take a cut in the cash flow and have a professional manage that for you because your bleeding heart is going to get you in a lot of problems.
01:16:28.000Like, running a real estate long-term rental business is actually a very tough business emotionally unless you're really bred for it.
01:16:34.000So, I would rather take a cut in cash flow and I'm going to have someone else come in and manage it for me.
01:16:43.000When I go into a top market and I bring all my partners with me and every day we're buying homes there, I find a property manager where I can take advantage of them.
01:16:52.000This is going to sound a little bit bad but I'm just going to kind of tell you one of the little hacks here.
01:16:55.000That when you're a nobody and you go to an out-of-state and you go buy a house and you find a property manager there, you don't mean anything to them.
01:17:05.000100 bucks a month don't get you any loyalty.
01:17:08.000So what I do is I find, I stay away from the large companies that manage thousands of homes.
01:17:14.000I find one that manages like 500 homes and I know in the next year or two I'm gonna bring them 500 more.
01:17:19.000I'm gonna double their operation in two years.
01:17:21.000They're not, they're gonna view me as a single client and so instead of charging me 10%, I sometimes can get them all the way down to 6%, but because I'm half their portfolio, They basically treat me like I'm the boss.
01:17:33.000And so now what I do is I have bought loyalty in mass.
01:17:36.000So it's bulk that actually gets loyalty.
01:17:39.000That's one of the things that my partners love is they're not an individual buying a home with me.
01:17:43.000They're really part of a collective even though they have individual ownership.
01:17:46.000And so you should always look for ways of bulk.
01:17:49.000Because bulk is how you drive up ROI. Like you look at what I'm doing there on my rent fees going down from the property manager.
01:17:57.000That translates into a higher cash on cash ROI. So you mentioned earlier that you're getting in, you're buying, you're holding for a bit, and then you're selling three to five years out.
01:18:14.000Because I'm waiting for the market to go up to a certain level, and then the market's going to keep going, but I want out because it's outside of my buy box.
01:18:21.000So when I left Phoenix, like watch this.
01:18:23.000I go into Phoenix and 2009, 10, 11, I'm buying homes for $120,000, $130,000, sometimes $90,000, that we're selling for $250,000 to $300,000.
01:18:32.000Once that market came back to 80% of its original value, I left the market.
01:18:53.000So, in the markets, I'm going to stay there for the first 5 years.
01:18:55.000I'm going to watch affordability get crunched as we're making all of this money.
01:18:59.000And then when that market normalizes and has gone from a really juicy opportunity to an average opportunity, I'm bailing on that market and I'm finding the next market where affordability is low, all my macroeconomics line up, and I'm going to go start discharging all my money in that market again.
01:19:52.000Now question, because a lot of people are big on buying and holding etc.
01:19:56.000Do you just feel as though taking that money and going into another market is going to present far more opportunity than buying and holding and just keeping it consistent?
01:20:27.000You wait five more years and it's like, uh-oh, I can keep these homes or sell these homes, but either way I can take my three homes and I can turn them into seven homes.
01:20:35.000If one was good and three was better, then seven is going to be the best.
01:21:17.000More homes earning that ROI is literally more money.
01:21:21.000So part of the reason why I sell in five years is because either way, I need to get out and transfer it into a larger portfolio.
01:21:28.000Hence, This is how I can compete against Grant Cardone's, the multifamily game where they're like, dude, I just buy one big complex with all the doors and it's all done.
01:22:00.000Obviously you're watching the markets, you're obviously tapped in, which is good because you're going to be more informed than 99% of real estate investors because you're constantly looking at markets, you're constantly buying and selling, and you know what's going on.
01:22:11.000I think working with Chris, you're pretty much getting the team.
01:22:47.000Because with single-family homes, since the cash flow isn't as much as you would say, you need to buy more of it, but it has better returns in general.
01:22:54.000We're like two-man armies, three-man armies by ourselves.
01:23:29.000Okay, so retirement for police, $320,000 stuck in a $457,000, which is like a 401k.
01:23:35.000So, you know, what you want to do is you want to talk to your custodian in HR and ask them if you can do what's called an in-service distribution.
01:23:42.000This will reveal how much of that money you can take out.
01:23:44.000Now, they're going to discourage you from doing that because when you do that, they're going to say, oop, we're going to slap you with taxes and penalties.
01:23:49.000Penalties 10%, that's $32,000 off the top.
01:23:52.000Then it's going to look like you've got $290,000 coming as personal income that year.
01:23:57.000That's going to pop you into a really high tax bracket.
01:23:59.000You can avoid all that by actually dropping it in a self-directed 401k, which is your way of saying, I want it out of the 401k market and I want it in my hands in a special device that I can deploy into real estate.
01:24:12.000So, if you can do that, you can avoid taxes, avoid penalties, and you may have a full $320,000 right now that you can start investing in real estate.
01:24:20.000On top of that, you've got $147,000 in another plan and $5,000 in just your traditional 401k.
01:24:26.000So you're in a position, Kim Pop, where first of all, thank you for your service.
01:24:29.000Thank you for doing a very hard, dirty job.
01:24:32.000And you've got the ability to easily, I believe, with a little bit of time, become a multimillionaire in the game of real estate.
01:25:12.000Yeah, I want you to go to my YouTube channel, and I want you to look up the video, 401K Scam, and I'm going to share with you the five ways that the 401K is a scam.
01:25:20.000Because JTK... You're getting a lower taxable income?
01:25:25.000Anytime you take money out of your 401k, you will be taxed.
01:25:28.000Here's the lie that you've been taught that you don't understand.
01:25:31.000What you're saying is, when I retire at 65, I then can take it out and I don't have my 10% penalty, but whatever you take out, you're going to pay taxes on.
01:25:40.000You're going to take it out a little bit each and every year to live off of, and because you're only taking out a little, you're going to pay a little bit in taxes.
01:26:39.000It's how the wealthy stay wealthy and they don't pay taxes.
01:26:41.000They make the joke that Warren Buffett paid less taxes than his secretary, which I believe, because Warren Buffett talks a lot about stocks and all this other shit.
01:27:02.000I just think that's taken out of context.
01:27:05.000My wife and I, we've got a lot of great friends and we're really secure in our relationship and our marriage together.
01:27:12.000I think there's a lot of trad wives out there that are like, oh, I'm just stay at home and then I basically put food on the table for my husband and that's it.
01:28:13.000I believe in crypto, but there's less than 1% of my net worth that's actually sitting in it.
01:28:18.000I think that it is mostly a great game for hodling and for basically the long game.
01:28:22.000The rest of the money that you've saved up in stocks, I actually keep my money in life insurance.
01:28:27.000Now, there are rare types of life insurance policies that pay out a very consistent 5%, 6%, 7% year over year, and so they don't dip and move with the market.
01:28:36.000They're just actually paying you a really great return.
01:28:39.000I save my money, I stash it basically in life insurance and let it build up until it's time to take it out and put it into real estate.
01:28:46.000But listen, you're 22, obviously you've got a job.
01:28:48.000If you already saved about $35,000, you should already own your first house.
01:28:51.000And if you own your first house, you should pull it out and put it into your second house and have your roommates pay the mortgage.
01:29:41.000Blue Silent, just right now, if you take that money and you pay that house off, I'm just letting you know I'm going to roll in my grave, I'm gonna die, and I'm gonna say that is the worst choice you could possibly make.
01:30:27.000When you have a passive income that is greater Then your ideal expenses that basically covers the lifestyle of your dream life, then start paying crap off.
01:30:41.000But if you're like, I want to pay stuff off, but I don't have a passive income, your money is not supposed to pay stuff off.
01:30:48.000You're supposed to use that money, and what do you do with it?
01:30:51.000You buy investments that produce a passive income, and when that passive income is equal or greater than the expenses of your ideal life, now start paying stuff off.
01:30:58.000You do it in the reverse order, you will wind up poor.
01:31:05.000Like, earn more money, invest money into assets that pay you back, take money that comes from the asset paying you back, and then use that to pay your bills.
01:31:13.000That's like working one job, trying to pay off debt.
01:31:15.000You get two or three jobs, and pay it off faster.
01:31:17.000Well, and let me give you a real life scenario.
01:31:19.000When I had a net worth of $1.6 million when I was 26 years old, those 25 properties, I was millions of dollars in debt.
01:31:26.000I want to be clear, I owed millions of dollars.
01:31:28.000But after servicing the debts with all the rents that I brought in, I had $12,000 left over every month.
01:31:34.000So, most people graduate college on a $50,000 a year average salary.
01:31:38.000I graduated college with a passive $120,000 a year.
01:31:42.000Now, you'd have to say, yeah, but Chris, I was millions of dollars in debt.
01:31:45.000I said, yeah, but I had $12,000 and I didn't need a job.
01:32:13.000So it's just like, what do you do with your money?
01:32:15.000I acquired debts like what are you doing?
01:32:18.000I'm going the guys right now put it put a hundred million dollars in front of me And I will sign it today because I know where to put it like I know how to make a hundred million dollars of debt Make me so much money.
01:32:28.000I want that so you got to actually fall in love with good debt And then you've got to do everything you can to stay out of bad debt Got it.
01:32:36.000Like, if you're using a bank and they're giving you 80% of the loan and you're putting down 20%, well, you put down just a fraction, you put down a fraction of it, that house is generating you money, and the person's paying down the principal for you like we were discussing before.
01:32:48.000It's a fucking W. W. Because you're not paying the debt, guys.
01:34:25.000Chris, what would you recommend I do to pay off my debt slash build my credit and save money to invest in some type of property as a beginner?
01:34:31.0003K in capital, 5K in credit card debt and collections with a shit credit score sitting at about 530, 560, joining the army in two weeks, four-year contract, 20K bonus, maybe 16K after taxes, 23 years old, and fairly educated credit.
01:34:42.000Just allowed myself to drop off mentally and gave up for about two years.
01:34:45.000Myrna Fresh, I appreciate your opinion as well.
01:34:58.000I'd say that credit card debt is the biggest problem, right?
01:35:00.000Yeah, so I take that $20,000 and because of the situation that you're in, I would pay off the $5,000 of credit card debt.
01:35:07.000That's not a lot of debt, but what you've got to be doing is building your score back.
01:35:11.000So you're going to probably put out $1,000 and you're going to hire a credit repair company and say, hey, help me rebuild my company.
01:35:16.000Because when I come off of active duty, I would like to step back into good credit and I basically want to have a do-over.
01:35:21.000So, you get $20,000, you take $5,000, you pay off your debt, you pay $1,000, you find a credit repair company that's going to help you build it back.
01:35:28.000What do you do with the other $15,000?
01:35:30.000Well, now you've got VA for 0% down, technically you already have 3% down payment on a house, and go buy a house!
01:35:37.000When you come out, you'll be able to put no money down and you'll make a bunch of money and you'll be able to save because you'll be active and you won't be able to even spend that money.
01:35:44.000But loader beans, I just got to tell you, there's a ton of people in your situation that they actually ignore their bad credit because they're feeling shame and guilt and embarrassment.
01:35:51.000And 10 years later pass and they still have the same dang credit score because you didn't take active measures.
01:35:59.000Yeah, it hurts at the very beginning seeing it and like, damn, this is what I'm into right now, this much debt, but once you pay it off, you're gonna feel a weight lift off your shoulders, bro, and you can focus on investing like what Chris said.
01:36:10.000Yeah, get rid of the credit card debt first, man, because the problem with the credit card debt, right, is that the interest rate is too high for you to, like, stave off.
01:36:18.000Because the problem with credit cards is it fluctuates between...
01:36:21.000I've seen as low as 13% all the way to 30% on credit cards, and it fluctuates.
01:37:43.000Everyone can go to chriscrone.com, but the thing is, if anyone wants to get a free game plan, one of the things that I What I love to do is I give everyone a multi-millionaire's perspective on what would I do if I were you.
01:37:53.000We did a little bit of that today, but we actually go really, really deep.
01:37:55.000I got a team of 25 trained people on my staff that basically know how to deliver a perfect textbook Chris Crone game plan.
01:38:02.000So it doesn't matter whether you're worth a lot of money or you're worth nothing, you can get a multi-millionaire's perspective.
01:38:58.000And so coming out to the event, there's a link if you go to www.chriscrone.com forward slash fresh gift.
01:39:05.000And you get the tickets there, and then on top of that, I'll give you a free game plan.
01:39:09.000So request a free game plan, connect with me and the team, come see me live for three days, and let's help you get straight in the game real estate.
01:39:15.000Well, maybe we'll pull up, guys, while he's down here in Florida.
01:39:18.000The link is in the description right now, so if you guys go ahead and click in the link in the description right now, you're going to get immediate access to that.