"The $50 Million Seminar"
Multifamily REI Expert
Episode 22: "Bad Beats"
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On this episode of Real Estate Nerds, Rod Khleif tells our host Scott Smith a painful story of building up a real estate empire, only to watch it crumble. But he is back, stronger, and wealthier than ever thanks to a multi-unit real estate investment strategy. Listen to Episode 16: Bad Beats to learn about Rod’s rise, fall, and comeback, and the truths he has learned from his journey. Scott and Rod share insights into multi-family unit investing, as well as the strategic and psychological secrets to resilience that helped Rod build back up after losing everything. Success in anything is a habit that can be learned, and today’s episode will show you exactly how to build the positive mindset that is essential to real estate success.
Rod Khleif’s Story: The Rise and Fall of a Young Real Estate Investor
Scott welcomes Rod Khleif, a multi-family real estate investment success. But Rod wasn’t always a success. Rod tells the story of his humble beginnings, rise in the industry, and his most devastating loss.
A Young Real Estate Broker on the Rise
Rod tells Scott about his experience growing up poor, wearing clothes from Goodwill and drinking powdered milk, and knowing he wanted more. He set out to make his mark and improve his life by getting started in the real estate industry.
[1:18] Rod’s entry into the real estate industry at age 18 was inspired by his mother’s successful investment.
[1:37] During his third year as an investor, Rod multiplied his income tenfold. How?
[1:55] Scott learns about Rod’s earliest investing epiphone: mindset is everything.”It’s your mindset. Your ability to push through fear, take action, to get uncomfortable, and to get up when you get your nose bloodied that causes you to be a success. And to be a consistent success.”Real estate skills account for 10-20% of your success, according to Rod. The other 80% is all psychology.
[2:40] By 2006, Rod owned over 200,000 houses and several apartment complexes in three states. His net worth climbed by $17 million overnight, and he was earning an average of $80-100 per hour.
2008: The Fall, or, The Seminar
Rod tells about how he “imploded” in 2008, but he isn’t crying about it. He came to view it as a massive learning experience. He now affectionately refers to this objective failure as a “Seminar.”
[3:13] In 2008, the market crash combined with Rod’s investing strategy caused him to lose $50 million.
[4:15] Rod explains why his investment strategy was ultimately unsustainable.Rod’s C- property choices combined with the costs of insurance and property taxes in Florida to create significant cash flow problems.Maintenance costs made managing single-family properties expensive and inefficient.
[6:20] The critical lesson, for Rod, was that if you’re going to buy and hold, buying multi-family properties is a much more sustainable long-term plan.
[6:48] This experience motivated Rod to start his Lifetime Cashflow Podcast, which educates other real estate investors based on his experience.
[7:52] Rod describes the parts of his business that were worth
Mindset: Investing is All in Your Head
Rod has since seen a comeback and is more successful than ever. He shared how this was only possible because he developed a healthy attitude towards failure and a mindset that fosters success. He told Scott some of his best psychological tricks for developing a winning mentality.
[8:55]Rod tells Scott about having to reframe his position on failure. Despite owning multiple successful businesses, he has also had many go down in flames. His advice to our listeners is: “You shouldn’t be afraid of failure. Most successful people fail their way to success.”
[9:55] The billionaire owner of Spanx, who began with a mere $5,000, agrees. Her father used to challenge her with the question: “What have you failed at today?” This attitude towards failure also resonates with Scott: “If you haven’t failed at something on a daily basis, you’re really not trying. Stuff doesn’t work out most of the time if I’m trying new things. ”
[10:00] Scott and Rod agree that comfort is your enemy as an investor. Both have signs in their offices to remind them that comfort kills, and life begins on the edge of your comfort zone, respectively. They agree that coping with discomfort is vital to quality of life.
Motivational and Psychological Tips for Real Estate Investors
[10:40] Rod is a Certified High Performance Coach who engineered his own comeback in part by learning directly from world-famous motivational speaker Tony Robbins.
[11:20] Mr. Robbins taught Rod the importance of psychology to success and some of the tools below, empowering Rod to bounce back from his $50 million “Seminar.”
[12:30] Motivational Tool #1: Manifestation. Rod describes manifesting his desires into existence, initially with cars he hoped to own. When he owned a Corvette, he placed a picture of the Maserati he dreamed of having in the visor. He later came to own a Maserati.
-visualization of success.
[13:50] Motivational Tool #2: Written Goal Setting Process. If you don’t know what you want, you won’t know how to get it. Rod shares his one-hour exercise for establishing, and meeting, your major goals in life. Here are the basic steps:Write down everything you could ever possibly want in life. Don’t place limits on yourself. Want a Lambo? Toilet made of solid gold? Go for it.Also write down everything you want to learn.Also write down who you want to help. Be specific. Everything you want to do, be, or have should be written down.Ensure that your goals are measurable. Put a time limit on each goal. Keep in mind that people tend to overestimate what we can do one year but underestimate what is achievable in ten yearsPick one “top” goal, then pick top 3 one-year goals. Write a paragraph about why each goal is absolutely necessary with compelling, strong language. An example might be “I must acquire one more property this year to help support my amazing family.” Last step: Use images placed in a journal to reinforce your goal and bring in visualization element.
Fulfilment vs. Success
[18:41] Rod shares about experiencing a vast emptiness and depression while floating in the pool of one of his valuable homes.
[19:11] The lesson from feeling depression amidst great financial success for Rod was clear: “There’s a big difference between success and fulfillment…Success without fulfillment is not success.”
[20:47] Giving back to others leads to fulfillment and adds substance to life. You can be rich and miserable, but it’s much harder to be miserable when you’re contributing to the the world. Acting beyond yourself creates fulfilment and defends against narcissism.
[21:30] On that note, Rod has a gift for the listeners of the Real Estate Free Nerds podcast. Get your copy of his eBook, How to Create Lifetime Cashflow Through Multi-Family Properties here. See below for more details.
Resilience and Coming Back From Real Estate Failure
Rod and Scott discuss some final tips and tricks for building resiliency and nurturing true success.
[22:30] Make aspirational friends. You are the sum of the company you keep. Particularly the five people you are with the most. Be around people who motivate and empower you.
[24:31] Rod’s daily habits led directly to his recovery in the real estate business. “Because I knew what I want and why I wanted it, I was able to rebuild and now am in an even better place.”
[25:12] Scott and Rod discuss the importance of having a morning routine. Rod’s employs vision and gratitude boards, morning routine focusing on gratitude. “Everything starts from gratitude.”
[28:39] Rod and Scott end by agreeing on one simple point: you get what you focus on. “If you have a lot of bills, focus on cash instead of the bills,” says Rod. Direct your energy in a positive way, and you may be surprised what you can achieve.
The Takeaway: Think Your Way into Real Estate Success
The ultimate takeaway from this episode is simple: Be careful what you think about. Your thoughts can control your behaviors and every piece of your life, including your portfolio. If you declare in the morning that the day will be great, and it more likely will. Train your mind, and the rest will follow.
Connect with Rod or Claim Your Free Gift
Text ROD to 41411 for a free copy of his 200 page book. Your gift includes a companion course with videos. Rod describes this package as a textbook in multi-family real estate investing.
You can also join him on Facebook by visiting www.multifamilycommunity.com. Visit www.RodKhleif.com for Rod’s podcasts, books, and free educational resources, including daily 5-minute clips about the psychology of success.
Thank you for joining us on today’s episode of the Real Estate Nerds Podcast.
For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.
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When making business decisions that affect your long-term goals, like what types of investments to make with your retirement dollars and which vehicles to use, it really is best to be aware of all of your options. We frequently talk about the Solo 401(k) and Self-Directed IRA as tools for funding your retirement. But what about life insurance? And what about the stock market? What if we told you there is a tool that allows to to reap some benefits of both? It’s called Indexed Universal Life Insurance–and some investors have found it a useful addition to their retirement plans.
What Is Indexed Universal Life Insurance?
Indexed Universal Life Insurance (IUL) plans are a variety of permanent life insurance plan that features a cash-building element. One primary benefit of these plans is that the policy holder gets some of the gains of being associated with the stock market without all of the risk Wall Street is famous for. This is in no small part because of how these policies are designed. IULs earn in part because they are directly linked to a market index, such as the Dow or the S&P 500. Any gains remain within the policy, albeit a cap rate will limit how much you can make. However, you are protected during a particularly bad year for your index with an IUL. The worst case scenario with these plans is that you make nothing, but you never actually lose money no matter how poorly your index performs. The protection of your principal is actually derived in part from the same cap rate that limits your gains.
How much money do policyholders stand to make? Historically, returns run between 5-9%. The S&P Index has actually returned at 9-11%, but the upside limit on UILs stems from the account’s cap rate. For this reason, many advisors argue that the UIL can make a wise addition to a retirement or estate plan once more traditional and self-directed accounts are maxed out.
Tax Benefits of Indexed Universal Life Insurance (IUL) Plans
There are three key tax benefits of IULs. First, you may pay into the policy with pre-tax or after-tax funds. Withdrawals from the policy may be made tax-free if you are under 59 1/2. Such withdrawals are regarded as loans, with your death benefit serving as collateral. Any funds paid out to the beneficiary are also tax-free, including normal benefits upon your passing. This is true regardless of their value.
Ask the Experts at Royal Legal Solutions About Your Retirement Planning Options
Regardless of where you are in the retirement planning process, Royal Legal Solutions an assist you. We have extensive experience educating investors about self-directed investment options. Many of our investor-clients love our Solo 401k information, product, and compliance services. Our Self-Directed IRA services can also be helpful for retirement planning, as the SDIRA is yet another vehicle that allows you to diversify and take total control of your investments. To determine which of the available retirement planning strategies are best for you, consult with one of our experts at Royal Legal Solutions. You may also contact us with any questions you may have about your options.