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  • (energetic rock music)

  • - But this is investing 101, I mean,

  • there's fundamental and technical, you know?

  • Cashflow 101 is fundamental,

  • Cashflow 202 is technical investing, okay?

  • So, there's two basic investments.

  • One is cashflow.

  • And as Kenny already said,

  • this is the hardest.

  • It is the hardest to find

  • because cashflow then affects return on investment.

  • So if I put in $10 and I get one dollar back,

  • that's a 10% ROI, okay?

  • I mean, it's just simple.

  • I mean, I was taught this as a kid playing Monopoly.

  • You know, you got one house, you get $18,

  • you get two houses, you got $36,

  • I mean it's not,

  • you don't have to go to college.

  • It is not that hard.

  • Monopoly is a cashflow game, right?

  • And that's it.

  • - Yeah, and the problem is,

  • is that the people that you're seeing in the paper today,

  • their philosophy is not based on this, period.

  • - No. - It isn't.

  • - But they don't, I mean, this is as simple as it gets.

  • Technical, fundamental, cashflow versus capital gains.

  • I mean, you know,

  • if you play Monopoly, you'll understand this game.

  • This is all there is,

  • so when you look at cashflow 101,

  • this is called fundamental,

  • and this is called technical.

  • And the reason it's technical 'cause it's all emotion.

  • It's up or down, up or down, up or down,

  • as Kenny says, what's your net worth?

  • What's your equity?

  • It depends upon the emotions of that time.

  • So, I mean, these morons haven't got their lesson yet,

  • they're going in to buy a foreclosure

  • that was here to go on the same thing, I got one more time.

  • - Well yeah, and here's the ironic thing

  • is that all these people that're losing everything,

  • they're gonna blame it on the real estate market.

  • - [Robert] Yep.

  • - They're not gonna take ownership of the issue.

  • They are gonna blame it on the market.

  • And at this time, I'm making so much more money

  • than I was two years ago.

  • - Lemme ask you this,

  • you just built your house, right?

  • - [Kenny] Yeah.

  • - 'Kay, and Kenny has owned multi,

  • multi, multimillion dollar properties,

  • but only after he was a rich man did he build a house.

  • And what poor people do is they buy the big house

  • on emotion, technical,

  • and then they never buy on cashflow.

  • That is a, you know,

  • oh, I have the house of my dreams!

  • What a frickin' loser, are you!

  • How stupid can you be?

  • Kim and I live in a tiny little house on 16th Street here.

  • We paid $117,000 for it,

  • monthly payments were $300 a month,

  • including homeowners' association,

  • who were rippin' us off.

  • (audience laughing)

  • Oh no, they were the, homeowners are the biggest crooks

  • I've ever met in my life.

  • (laughing)

  • Homeowner means crooks.

  • That's what it means, they're the biggest crooks

  • I've ever met in my whole life.

  • Nice, honest people, you know?

  • Like, frick it! (laughing)

  • As they come, they are ripping you,

  • stealing from you, and all this stuff.

  • But we sat there and we bought cashflow

  • and our little house just sat there

  • and it sat there and it sat there,

  • one of those dinky little house.

  • One day, we popped up and we had a lot of money.

  • Then we bought a big house.

  • The same as Kenny.

  • If you can understand what we're saying to you,

  • it's just fundamental of rich people.

  • And poor people want the big house,

  • the BMW, the nice cars and all this stuff,

  • but they don't have the cashflow to support this.

  • Do I make sense to you guys here?

  • That's the difference.

  • - One other thing I wanted to add is

  • I happened to be in Calgary two weeks ago.

  • And Calgary just as a city appreciated 50% last year,

  • so when the-- - Wait,

  • why is Calgary appreciating right now?

  • - Anybody?

  • - Oil. - Oil.

  • - Why do we just buy in Oklahoma?

  • - Yeah, oil. - Oil.

  • I mean, wherever there's jobs, you buy real estate.

  • Why am I not buying in Michigan?

  • General Motors. (audience laughing)

  • No oil!

  • - Yeah, in Japan. - Yeah, Japan.

  • - But, what's interesting is,

  • is that whenever I do a talk,

  • I always like to start out and ask, you know,

  • how many flippers are in a room

  • and there's probably 200. (laughing)

  • And I said, okay, I go-- (birdcall)

  • You know, I said, how many people are flippers?

  • And 200 people raised their hand and I said,

  • how many people wish they wouldn't have flipped a year ago?

  • 200 people raised their hand.

  • So, the point is,

  • it doesn't matter if the market's going up

  • or the market's going down.

  • It's a bad strategy because they,

  • those people, those 200 people,

  • would have had another 50% in value based on appreciation

  • If they would've not flipped.

  • So, it doesn't matter if the market's going up

  • or the market's going down.

  • You might be able to time a quick buck here and there,

  • no question, but the truth is,

  • people that flipped in Phoenix in '03 lost 70, 80% in value.

  • If they still would've owned the home,

  • they would've owned it for a lot less

  • and it would be cashflow now,

  • 'cause now what's happening is rents are screamin'.

  • Rents are going up dramatically.

  • - And populations, you know,

  • Phoenix is still the number one or number two growth,

  • Arizona's number one or two growth state in the nation.

  • As the Baby Boomers retire

  • and the hurricanes hit Florida, more come here, you know?

  • And it's just fundamentals.

  • This is called demographics,

  • and that's why I show you this here.

  • A nation of 300 million in 10, 15 years will be 350 million.

  • They gotta live somewhere.

  • And the dollar's gonna keep dropping,

  • the price of oil will keep going up,

  • gold will keep going up,

  • silver will keep going up,

  • and replacement costs will keep goin' up.

  • So these flippers got f'd.

  • It is really stupid, these guys here,

  • you know, so for Kim and I,

  • our strategy wasn't to own one big house.

  • Our strategy was to own 20 houses,

  • then we live in a little house.

  • And then we went to 500, then we bought a big house.

  • That is the difference between rich people and poor people.

  • Poor people wanna look rich,

  • and rich people wanna be rich, right?

  • - Yeah, I mean, it's the same thing.

  • Any money that I had, I put into real estate investment.

  • And because that's what I do,

  • so I obviously could have put that into my home or,

  • you know, or cars and all those kinds of things.

  • I could have brought all those things.

  • In the cashflow game, those are called doodads.

  • But I didn't.

  • You know, I continued to pour all money,

  • and we always joke around

  • 'cause we're literally always broke

  • because if we have money-- (audience laughing)

  • - [Robert] What, wait, I want you to know--

  • - It's the truth. - How true,

  • Kim and I right now are cash strapped.

  • We have no cash.

  • I mean, we are so tapped out,

  • the reason is is because we're investing like wild people.

  • Do you know what I mean?

  • I don't have savings, I don't have jack.

  • We have a lot of assets, a lot of cashflow,

  • but that money just keeps going back out.

  • It doesn't stay with us.

  • Your first investment, was it cashflow or capital gains?

  • Here, you're fine.

  • - Okay, my first investment was cashflow.

  • - Why?

  • - Because I wanted that money coming in,

  • my biggest concern is I was gonna put money out

  • and not have anything coming back in.

  • - And how much was your first cashflow?

  • - $25 a month.

  • (audience awws)

  • But it was a start!

  • But it was a start, and I learned so much

  • on that one property, but it did cashflow.

  • - And how much cashflow do you have a month now?

  • - Oh, about $120,000 a month.

  • (audience applauding)

  • - That's not Donald Trump's money, you know,

  • that's not Warren Buffett's money and all this,

  • but $120,000 a month is more than most people make a year.

  • And she doesn't have to work for it,

  • and that's not all the rest of her investments.

  • That's not from her oil, gas,

  • and businesses and stuff like this.

  • - Well, but that's what we talk about,

  • I mean, that's freedom, is you know,

  • and when you don't have to work anymore

  • because you got that money comin' in every month.

  • We talk about when we first retired was '94,

  • we only had $10,000 a month coming in every month.

  • That was it.

  • But we only had $3,000 a month goin' out.

  • So we were free, so it's not that dollar amount,

  • it's can you cover your expenses and be free,

  • because after that, then we were able

  • to get on with what it is we really wanted to do.

  • - Right.

  • - When most people are still busy

  • working for that paycheck and, you know,

  • just surviving everyday as we were,

  • that they don't have time to really think about

  • what is it I really wanna do?

  • (inspirational piano music)

(energetic rock music)

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