Hi there, Kris Krohn with REI TV. Welcome.Today we’re going to be talking about one
of my favourite topics which is “How do you retire early?”
Alright you’re joining me in Venice. Just kidding it’s a tapestry that;s just a wall, this is in my house. I
want to talk about society’s game plan that they’ve laid out for us. Because in general,
we have a society that says get good grades, if you get good grades you can go to college,
graduate college, take that piece of paper that says you’re smart and go get a job,
work for somebody else for 30/40 years, throw money in a 401(k), IRA and here’s my question
for you, “What are the net results of that game plan for the average American?” I you
wanted to retire early, how would you do it? Just make sure that I have enough money. Uhm,
I think the sooner your sharpening things like your retirement fund would be better.
Because I know both my parents right now are struggling with being able to retire, my dad
is 61 and they don’t have as much retirement right now. Well I’ll tell you right now
that our government post statistics from the Social Security board that say that the majority
of us at age 65 at retirement, have very little. In fact, the average American saves about
$55,000 versus what they actually need to support a retirement where their same standard
of living that they’ve been used to can at least still be there versus getting reduced
in half or down to 1/3 or even less. If we really want to get to the bottom of
how to retire early, we have to understand how wealth is created, where it’s created.
And there’s a study that was recently done by Oxfam international, I want to share with
you just a few of the statistics. • They say that 85% of the people on earth
have as much money as the bottom half of the world’s population.
• The richest 1% has amassed about 46% of the world’s wealth which is about $110 trillion.
• The top 1% has 65 times the total wealth of the bottom half of the world’s population.
• The percentage of income gap by the richest 1% in the US has grown nearly 150% over the
last 30 years. • The top 1% of wage earning households
in the US, brings in about $1.2 million per year, that’s 41 times as much as the average
income for all wage earners who bring in, in our country about $40,000 per year.
So why do I share all that with you? It’s because the world’s wealthiest, they have
something in common and I promise you it’s not go to college, get good grades, work for
somebody else, make them money, retire poor and die.
So speaking about early retirement, I retired when I was 26 years old through real estate
and that was just a year out of graduating college. How it happened was kind of weird
for me because I went to college because I wanted to be a doctor, and at some point in
my sophomore year I got sick and tired of my advisors tell me that I was too dumb to
become a doctor or I should stop trying to retake the class, so I kind of gave up on
that dream. But with the help of my first 3 mentors in real estate, man I was reading
books, gobbling up everything that I could, I’d spend my weekends and evenings driving
around with them. And with their help they wrote me up a game plan and 14 months later
I bought my first house. Now that first house was no ordinary house. It was about $40,000
below the market. It was bought with a basement apartment that once I moved in and rented
out would cover my entire mortgage. And 12 months later the bank said “Wow Chris has
lived there long enough, it is seasoned,” so I was able to take some of that $40,000
equity and I was able to move it into a second property. My second property became my third,
my fourth and it just kind of kept on growing, and you can watch some of the other videos
that we post where I talk about partnering and some of the other strategies. But basically
I had about 25 properties by the time I turned 26. My portfolio was doubling each and every
year and now I own a lot of paid off real estate. I have leveraged real estate and what
they all share in common for the most part is a lot of equity and a lot of cash flow,
and it’s that residual income that makes retirement possible for me versus some 401(k),
IRA, trade in dollars for hours, having some kind of good or poor paying job. Real
estate has created that freedom for me. Here’s the cool thing about real estate,
it can compound. Now I’m not talking about your traditional 30 year strategy; buy a house,
put in a renter, and be on a 30 year mortgage or maybe an accelerated mortgage and then
15, 20, 30 years the house is finally paid off. I don’t like that strategy one, because
I don’t like 30 year game plans, because if things slow down all of sudden I miss my
chance at retirement when I’m actually hitting that retirement age, or maybe you haven’t
started young enough. So 30 years not my favourite, there’s some other reasons. But what I like
to do in real estate is I like to compound it. I don’t buy and hold, I buy and trade,this
is like monopoly, I’m constantly trading. If I buy a house right then within a few short
years, I should be able to trade it for more real estate, and trade that real estate for
more real estate, and then on and on and on. So using this strategy, and this system, and
this thinking, here’s what I love about real estate. If I do it correctly I can take
that one home and I can turn that into 2, because I buy it with equity, I buy it with
cash flow and there’s always a plan. I’m never buying haphazard real estate and I’m
never buying a home with this stupid 30 year plan saying “Hey I’m just going to keep
on paying this down and let someone else pay the mortgage off,” meanwhile I get 5, 6,
7 years here and I start getting the depreciation declines on my returns and the diminishing
returns equal I got to dump 10,000 or $20,000 back in that house anyway (don’t like the
30 year plan a little side bonus there for you). But if I can buy that one house correctly,
with that equity like I did on my first house, I’m now going to take that equity and let
it season and take 6-12 months, I’m going to turn that into my second house.
Now if it worked one time this is the power of one, then why not 2? Why not 5? Why not
10? Well my intention with those two homes is to what? Turn them into four homes because
cash flow on four homes is way more tasty than cash flow on one. And if I can take 4
homes and turn them into 10 and 10 into 20, and ultimately what do I do at retirement?
I’m going to sell off all these leverage properties, 1031 exchange to avoid taxes and
I’m going to roll them all into a pile of paid off homes, paying for me a retirement
that I can control. And why I say at an early age, it’s because I believe that most people
depending on where you’re starting can actually retire inside of a 5 or a 10 year period of
time given the right plan. So in comparison yes, real estate can give you more equity,
more cash flow, more tax advantage, more, more, more. But here’s how we are ultimately
more different than the stock market. In the stock market like we said you’ve got to
be worth well over a million dollars if you want to have a very basic retirement without
touching the principle and just living off the interest. In real estate who cares what
you’re net worth is? Who cares what you’re worth? That’s not what you’re focusing
on, what you’re focusing on is the ‘what’. That’s right, it’s the cash flow. It’s
the residual income. It’s like yeah maybe I am worth a half million, maybe I’m more
3 million, but frankly do I have enough money residually that just rolls in from my real
estate that covers all my expenses? And here’s what I find. I find that what you can do in
30 or 40, 50, 60 years in the stock market is achievable inside of 10 years with real estate
Real estate done right can not only produce
all these amazing advantages but it can be a huge accelerator which is in my opinion
what most people in this country need. With that, thank you so much for watching our video
today. I encourage you to subscribe so you can keep getting these free educational videos.
And then at the bottom check out the post where you can learn about how you can actually
access a free audio copy of this straight path to real estate wealth, my book, for free.