The Mindset of a Real Estate Investor

Release date: October 13, 2021
Duration: 54min
Guest(s): Robert Helms and Russell Grey
Robert Helms and Russell Grey
 
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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.

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