Kris Khron here, welcome to REI TV. This week were talking about Retirement. Were talking
about Real Estate. Real Estate and Retirement? Now that sounds funny. Not for the wealthy.
Financial freedom, how do you define that? What is that? Uhm, being able to support yourself
on your income. So, let's say you wanted to retire with $50000 a year. How much money
do you think you would need at retirement to be able to do that? Probably around $500,000.
So let’s talk about saving for retirement because there’s a huge problem with the
way I think society tackles retirement. In fact, I think we have a very broken system
because what we’re primarily taught is to put our money in places that actually don’t
pay us, and do you know what you call that kind of investment? Speculative, Speculation.
If you wanted to put money in 401k or real estate, which do you think is riskier? I think
the real estate is riskier. Coz the 401k is pretty uhm, stable. As a general rule of thumb,
I never put my money into something that doesn’t pay me every single month. And yet we’re
really trained “oh put your money in a 401(k), in an annuity,” put it in these things where
you’ll get charged fees, and other people make money, and you’re going to be penalized
if you try to access and touch your money, meanwhile, it’s going to pay you zilch.
Lot of people get to real estate because they want to get this thing called residual income.
Own the house, have this residual, do you think residual income is real or do you think
it's a myth? I also have no idea. So there’s a world of a difference between the accumulation
mind-set and a cash flow mind set. In general, society says you’ve got to accumulate yourself
to freedom. You got to save, save, save. You got to put money in 401(k)’s, IRA’s, pay
off that house. You got to save a chunk of money. And for most people they need a seven
figure chunk of money and most people because they can’t save that, it means that they’ll
never save enough. Fortunately for us there’s another door that you can go through and it’s
a different mindset, it’s a cash flow mindset. And that mindset says that it doesn’t matter
how much money you have in the bank, it says what are your assets spinning off in terms
of residual income every month? Because once they produce enough residual income then you
can retire. Now when you compare the two against each other one of these is very feasible and
the other isn’t. In one of them, we can’t accumulate enough to get to freedom. But in
the other scenario, we can produce enough residual income to cover all of our expenses
and then some. Take the stock market for example, you take your money, you put in the stock
market, maybe it’s in some kind of mutual fund or maybe it’s directly in the stock
market, but when you put your money there, you’re on this roller coaster ride- it goes
up and it goes down and when it goes up, you’re really happy, when it goes down you’re really
sad and we’re going to play this long-term average but all the while what’s it paying
you? Nothing! Now let’s be honest, I’m a real estate guy so you didn’t really expect
me to be a huge fan of the stock market right? There is actually something that I like less
than the stock market, and its annuities. The reason why I don’t like annuities it’s
because it’s like the stock market but the financial planner traps the money in it and
says that you have to wait for 3, 5, 7 years or else you’re going to be penalized. Normally
you can put money in the stock market, there’s no penalty associated with it. And that annuity
when you look at what it kicks off, it’s a fraction of what real estate can give you.
So I know a lot of people they finally get to retirement they’re thinking “well I’ve
had my money in the market my entire life- 401 (k)s, IRA’s, now let’s listen to the
planner and annuitize it,” and it’s going to kick off a really tiny little bit of money.
And here’s the deal, it usually cannot kick off any near what you need which means you
have to start pillaging some of your other accounts, spending everything down until everything
you’ve saved is completely depleted and it’s gone. Not a great solution. Now just
for a moment, compare that to real estate, if I put my money in real estate how is that
actually really different? Well I put my money somewhere and then every month it has the
potential to what? Well, if I did it right it’s going to pay me a cash flow. If my
mortgage is $500 and my rent is $800 and there’s a management fee, oh now I’m making $220
a month. Wow this is actually kind of nice; I get paid every single month. But there are
more benefits than that. The real estate you have control over it and if you buy it the
right way you can liquidate it, you’re not going to be penalized and yet you pick up
maximum taxes. So there’s a lot of benefits to considering real estate as a diversification
or a part of your overall retirement planning strategy.
Real estate is King! Just take a moment and look up at the screen and see the kind of
advantages that real estate gives you compared to the stock market. In the accumulation mindset,
look at that, • You don’t get any cash flow when you
put your money in the market. • You could save for 30 years with no guarantee
that it is actually working for you. • You’ve got no inflation hedge, no control
over the market. • You get penalized if you try to pull out
your money early. You’ve got less tax advantage, but worst of all there is this fear of running
out because you’re never going to have enough. Now check out the other side.
On real estate this residual income mind-set you have a perpetual cash flow, you could
actually do something that in 5 or 10 years could actually lead to financial freedom.
You have a natural inflation hedge. In fact, what happens when inflation hits, you better
hope that you have tons of hard assets like real estate. You have solutions for market
volatility. You don’t have withdrawal penalties. You actually have not increased but maximum
tax advantages. And cash flow increases over time. Friends, for all these reasons, I love
real estate, I invest in real estate that is the one safe secure investment with this
philosophy, strategy and system I’m always going to go after. So commit to learn everything
that you can about it and abandon this accumulation mind set and head into the world of residual
income, because with less time and less effort, you can actually realistically get where you want to be.
Thank you for joining us on REITV today hope
you enjoy the information we shared. We’ve got more coming next week and if you subscribe
I’ll make sure to let you know about it. Thanks!