Rich Dad Radio Show: Robert Helms and Russell Gray
On Rich Dad Radio today, Robert Helms and Russell Gray join Robert and
Kim Kiyosaki to discuss all things Real Estate. Helms and Gray are the
dynamic duo behind The Real Estate Guys Radio Show.
Robert Helms is the host and founder of The Real Estate Guys Radio
Show. His background includes residential property management, teaching
Landlord Boot Camp for new investment property owners, and teaching
college level real estate for four years. He has eighteen years of
experience in a residential real estate brokerage firm with his father
and business partner, Bob Helms. The father-son team were recognized in
the top 1% of the largest real estate chain in the world. Now, Robert
Helms is a professional real estate investor and developer.
Russell Gray is co-host for Helms’ radio show, and offers his insight
as a financial strategist with a background in financial services. He
has taught Real Estate Finance to Realtors®, and is a valuable speaker
and author in the industry.
Russell Gray shares that the influx of traffic to their radio show,
often resulting from listeners of Rich Dad Radio coming to understand
the value of real assets. “…they want to get out of paper assets. They
want to get into real assets. They understand that they want to have
passive income. They want to have debt free tax advantages, and real
estate…”
Prices are up…but the dollar is worth less
Kim Kiyosaki notes that the landscape of real estate has changed
dramatically and asks Helms and Gray what they see happening in the
industry, currently.
“Prices are up”, Helms says. “People are like, ‘wow, look how much my
house is worth.’ Well, as we all know, the house isn’t worth any more.
The dollar is worth less, and as we continue to print trillions of
dollars, it shows up somewhere. And right now, one of the bubbles we
see it showing up in, is real estate (prices everywhere). And yet we do
have legitimate demand.”
Helms continues and says that we don’t see a lot of speculators buying
a house hoping it will go up in value. He says we see owner occupants
buying, people buying for the job or income side of real estate.
Experts, Helms says, predict that prices will either rise or decline in
the future. However, now may be a great time to consider getting out of
some real estate in some of these overheated markets, he says.
Russell Gray adds the point, telling us that real estate is “not an
asset class…it’s not a market.” Every market is unique, every property
is unique. If you can identify trends, such as where people are going
or migrating to, (like we see happening now, especially out of
California), you can identify supply and demand imbalances that exist
on a micro level.
You can’t look at real estate, Gray continues, the same way you look at
commodities such as gold and stocks. Those investments are relatively
priced the same around the world and work in very efficient markets.
Real Estate is NOT a commodity and it’s very local. It can be messy.
People like Warren Buffet, Gray says, don’t like real estate because
they can’t just move it around the way they’d like to. But, “for street
rats that are willing to go out in the street and look at deals, there
are all kinds of stuff out there in any market, even today’s market
where the prices are quite bubbly in some areas.”
“Number one: Real Estate is a function of jobs and when jobs move, when
people move, real estate goes with it.”—Robert Kiyosaki
Because of the current climate with jobs and so many Americans not
working, either by choice or job loss, this trickles over into the real
estate market. Robert Helms shares that moratoriums that are still in
effect keep owners from evicting tenants who can’t pay, make it
difficult for the real estate investor, capitalist, or owner to take
the risk and purchase property when they may end up with tenants who
are protected under these moratoriums and don’t pay. “That doesn’t sit
well with real estate investors,” he says.
Should I invest in real estate?
Going into real estate is a bit like wading into the swamp. It’s not a
401(k). “If you’re going to play the game of real estate, Robert
Kiyosaki says, “you have got to have more education.” Interest rates,
Kiyosaki says, are zero bound, and this is good news for those in real
estate.
Helms agrees. Debt, he says, is a two-edged sword. Like a chainsaw.
It’s a great tool, but it is dangerous. “With debt, if you study it, it
is the key to getting wealthy.”
Russell Gray adds that it is important to understand that paper money
(dollar bills, etc) are an IOU from the Federal Reserve. From the time
our country implemented the Federal Reserve and Federal Income Tax, we
began living in a system of debt. “The entire thing is debt.” When you
understand that basic concept and that printing money is diluting the
value of each individual dollar you own, then you have to find a way to
go short. You have to find a way to buy things today while the dollar
has value.
Real estate, Russell Gray says, provides the asset and the cashflow and
the tax write-offs that allow you to control the debt. When you can
control the debt for a long period of time, over time, the inflation
reduces the cost of the debt. “That is where the wealth is.”
Equity Happens is a book written by Robert Helms and Russell Gray on
this principal. The thesis is that over time, real estate, real assets,
gold, oil, are going to appreciate in price. But it is not real wealth
unless you have secured it with debt because as the debt shrinks, now
you end up getting a discount on that asset you purchased.
Helms says that the economic model for real estate is simple: someone
lives in the house I own, they pay rent, which is derived from their
job. I take that rent check and I pay my mortgage and I pay my taxes
and the rest goes to me. Over time, the loan gets paid down by the
tenant, and that is the great part about debt.
Problems, he says, occur when people get sold a big seminar package and
are wanting to flip houses and don’t understand these educational
foundations of real estate and debt.
Education and Syndication
Syndication is a simple concept, Robert Helms says. The idea is that
most big real estate developments and projects and apartment buildings
are not owned by a single person. You have a general partner or
syndicator who finds the deal and puts together the financing. Then you
have passive investors who fund it. So, certainly you still get bank
debt. Some of the best debt is on these larger assets. Then you bring
in private investors. You have two sides to play.
The passive end side is where you put money together with someone else
who has experience and market knowledge. It’s team investing, and the
natural evolution for many real estate investors. The syndicator is the
person who spend time looking for markets that make sense, and bring
the property and the investor together.
They find a great market where it is landlord-friendly, look for
returns, tax benefits and package it up in a way that is simple for
people. If you are the passive investor, you still need to be educated
about the market and the debt, however.
The Real Estate Guys, Kiyosaki says, has a package from beginner to
syndicator, with the education to coach someone through. You can start
with nothing, Kiyosaki says, and come to their program, learn from
them, meet other beginners. And they offer the package to go from
beginner to syndicate.
“If you want to get rich, you’d better invest in your financial
education, debt and taxes, first.”—Robert Kiyosaki
Russell Gray explains how The Real Estate Guys educate: first, offering
a primary class called Secrets of Successful Syndication, which many
people take more than once because the class is nuanced enough as
attendees evolve in their education. “It’s a community and content,
tribe and training.”
When it comes to being a syndicate, there are some crucial parts of
education to avoid pitfalls when taking someone’s money and being
responsible for investing it.
Robert Helms says that there are two sides to that. The moral side,
where people who are desperately worried about losing someone’s money,
and the legal side, where you cross from investing in your account to
raising money. People who are moral and take care and responsibility
for investing other peoples money are the ones who should be in the
business. You have to treat the money better than your own money.
“People say, ‘well, I’ll treat it like my money.’ No, because you’re
stupid with your money. It’s reverent. You have to be so careful.”
It’s a burden and you need to be able to deliver tax benefits in
return, as an upside, and dividing the risk. The minute you are playing
with taxes, you are playing with the Federal Government.
The key is to be well-advised. Know what you need to do and what you
don’t need to do, Russell Gray says. There are plenty of ways to make
money in the system. You don’t have to go outside of it.”
You can find Robert Helms and Russell Gray on The Real Estate Guys
Radio Show podcast, and at
realestateguysradio.com.
There you will find events, education, and more for beginners to the
vastly experienced.