Wouldn’t it be nice to make an extra $2,000, $3,000, or even $6,000 a month?
Is real estate something you should invest in?
When shouldn’t you invest in it?
My interview is with Ron Phillips, owner of Wealth Accelerator System, where he has helped hundreds of people make good money in real estate, AND DO IT WELL!
Listen in!
Ron Phillips Bio:
Ron Phillips is an active Real Estate Investor, Author & Educator. He started investing in Real Estate 15 years ago. Quickly switched from “the job he gave himself” to “real investing in real estate, the way guys like Warren Buffet do. They don’t pick up hammers. They simply invest for returns.” Ron has personally helped over 6,000 people invest successfully in cash-flow real estate properties which generate double-digit returns in any real estate market.
Ron is one of the few who “Walks the walk” when it comes to teaching cash-flow real estate investing. He actually gives away his investing method – The Wealth Accelerator System – for free. You can see his latest webinar “How to Double Your Retirement in 45 Days” here.
Chris Miles Bio:
Chris Miles, the “Cash Flow Expert,” is a leading authority showing entrepreneurs and their spouses how to quickly free up and create cash flow and lasting wealth TODAY spending time doing what they love most! He has been featured in US News, CNN Money, Bankrate.com, interviewed internationally on TV & radio, and has a high reputation with his company, Money Ripples (https://www.moneyripples.com/) getting his clients fast, life-altering financial results.
—
Listen to the podcast here
Interview w/Ron Phillips – Is Real Estate the Right Way to Get Rich?
I’m excited to have our special guest on this episode, especially to have you guys on as well. If you haven’t done so, be sure to subscribe to us on iTunes. Also, check out our website if you haven’t done it yet. If you want more tools and free resources, go to MoneyRipples.com and check out blogs. There are events and all kinds of things that you can take a look at. There’s also our free eBook, Beyond Rice & Beans: 7 Secrets to Free Up Cash Today! I love to be able to serve you and deliver any value I can to you, both on and off the air.
My guest in this episode is someone that I’ve known and whom I highly respected. Ron Phillips is the CEO of the Wealth Accelerator System. He’s a real estate investor, an author and an educator. Over the past years, this guy has done amazing things for his clients. All of you know that when I have guests on here, I do not like to have posers. I like to have people that are the real deal that is going out there and doing it. For me, integrity is a big deal and you get the very best.
Ron is one of those guys. From what I’ve seen from him and what he’s done for some of my clients, I’ve seen him give them some great things. It’s not just them. Thousands of people have benefited from his system and team that supports you in doing real estate investing. The thing is that he walks the talk himself too. He is a very knowledgeable and amazing guy to have on the show. Ron, thanks for being on.
Thanks for the invitation and the kind words. It’s nice to be here and be able to reach more people.
It’s my pleasure to have you. Tell us more about you. What’s your journey and story? What led you to this point?
I imagine my story isn’t a whole lot different than a lot of people reading. You talk about money and the correct principles with money and all of these things. I was a guy who was making quite a bit of money. I was a Director of Sales for a large company in Kansas City. I had a pretty good salary but I lived on my salary and didn’t save much. All of a sudden, the company I was working for, the owner told me that he couldn’t pay me anymore and he was going to scale down his business. There I was left with no money and job. I was searching. I had a young family.
I’ve been reading a book called The Millionaire Mind and some of Robert Kiyosaki’s books. I decided to go attend a seminar. I attended a seminar and spend a bunch of money on it like probably a lot of people here have. The difference is I had nothing to lose and I had a set of talents that I had acquired over the years to negotiate. I went out and negotiated my first deal and it changed my life. I didn’t know at the time that I would be helping people invest in real estate. I flipped properties for 4.5 to 5 years. I then started helping people acquire assets, which is far better than buying and selling them, frankly. That’s the short version of my story.
Getting rich quick usually means getting broke quick. Click To TweetYou turned from a flipper to a cashflow investor.
I like to say I became an investor. In all those seminars, they say that if you’re out there rehabbing and flipping properties, you’re an investor but you aren’t. Investing is where your money works for you, not you work for the money. Once I figured that out, I changed my philosophy and decided since I had built this machine, it would be easy to plug people into it. That’s what I do. I help people do the same thing I do.
I’ve noticed 1 or 2 things with people that are flipping. One, they’re flipping because they have no clue what they’re doing and it sounds good. Especially if they hear somebody at a seminar, they’ll say, “I made $50,000 in 3 months off this 1 property.” People are thinking, “That’s awesome.” Although they don’t realize a lot of times that they took 10 properties to finally get that $50,000.
Also, not to mention the 60 to 80 hours it took to find that deal, the buyers and line everybody up. I worked more hours be having than I did at the previous job that I got laid off. That was not what I was after. I was after more time with my family, not less time. You can make a lot of money. I don’t want to bash flippers. I did it for four and a half years. I made a great living doing it and God knows I needed a job, Chris. I went out and created one. A lot more people in America should do that but it was not what I ultimately wanted.
I had somebody who messaged me out of the blue. In the conversation, she mentioned, “I’m in a lot of debt. I’m realizing that even getting a degree may not be enough to pay for the student loans. I need to get creative. I’m thinking about doing things with real estate investing.” What would you say to someone like that?
It’s funny you mentioned that. I got back from Washington, DC. We did a couple of events out there and I had that very same question. After the event, people always come up and ask me questions. There was one very similar to that. There’s an order of things. People want to hear that there’s some magic pill or sauce that I can sprinkle that makes all of their financial problems go away. That’s not true.
The reality is you need money to invest. If you don’t have money and you invest, the reality is that you’re gambling. The house almost always wins. I tell people that as painful as it may be, you need to save some money first. The way I would tell somebody like that to be creative is to go get an extra job and make a little bit more money. Do some of the things that you teach so that they can free up some cashflow so that they can save it and have the capital to be able to invest in assets. Getting rich quick usually means getting broke quickly.
It’s interesting you say that because many people, if they do encourage real estate investing, will say, “You don’t need that. You can go get credit partners and get someone to give you the money down.” You’re saying that’s pretty much gambling, especially if you don’t know what you’re doing.
If you want to go get credit partners and you do deals with people, that’s all well and good but the problem that stems from that is partnerships usually don’t work out very well. I can almost promise that the person who has the money is going to win that. If you’re the guy or gal going in, doing all the work and finding deals for this partnership, ultimately, at some point, your partnership is going to fail. I promise the person with money is going to come out on top of that deal. There are a bunch of creative ways you do things. I didn’t have any money. I did my first deal with zero money. You can do those things.
The thing that I tell people is this lady out in DC had a job she worked 40 hours a week. What I did with no money down, you can’t do in five hours a week. All of the seminar guys will tell you, you can but you can’t. I spent 60 to 80 hours a week and all I did was find deals and buyers. My brother who I convinced to go into business with me ran our crews. It turns into a big business. Especially in a good market like we have, it’s hard to find deals. There are a lot of people out there who are your competition. Unless you have a lot of time to contrast your $0, you’re probably not going to do so well.
What would be your answer to that?
Get creative with some of the things that you do. Free up cashflow, work hard and be smart with your money. Don’t spend your money on foolish things. Save it. I had some people a few years ago and I have a video on my YouTube page and my website, the Petersons. They came in and had a ton of debt. They say it in their video. I told them they shouldn’t buy any real estate and that’s the truth. When you have $60,000 of credit card debt and you barely make enough money to make ends meet every month, you don’t have any business buying real estate because there are costs associated with owning those assets. What I told them was, “Go get an extra job. Take all the money and save it. Within a few months, you’re going to have enough money to be able to invest.” They did.
After two years, they owned a duplex and several pieces of land. They had paid off all their credit cards. It’s possible to do those things. You don’t have to do this tribal thing where you go out in the sticks and build your fort. You don’t have any fun, eat any food and whittle away to nothing. You don’t have to do that to be able to do it. You have to be creative, work hard and be smart with your money.
There is no ramen real estate investing.
The idea is to buy and own and control assets long-term, watch them grow, watch them spin off cash flow, and watch them replace your income. Click To TweetIt’s not necessary. I enjoy and love life. Everybody else should too. I don’t like to paint things a way that they’re not.
One thing you mentioned too is not getting rich quickly. That’s one thing you’re warning people against. You’ve got a book called Getting Rich The Right Way. Tell us what that book is talking about.
It talks about the opposite of what is taught in America. In America, everybody wants everything right now. They think that you can make $1 million in 3 months and they’re willing to go pay anybody to learn how to do it. The reality is that the people who are teaching the seminars and telling people they can make $1 million in a very short amount of time didn’t make their money that way. Most of them are making millions of dollars by preaching instead of by doing.
The idea of the book is to say, “True wealth and generational wealth, the way those people got wealthy was by owning assets for long-term.” I take real estate. It could as easily be businesses or any other asset class but I believe in real estate and I know it. In the book, I tell people, “The idea isn’t to buy and sell assets. The idea is to buy, own and control assets long-term. Watch them grow, spin off cashflow and replace your income.”
Imagine having a couple of apartment complexes paid off and generating wealth for generations. That’s a long-term thing. People aren’t going to go rush out there and buy $10 million worth of real estate tomorrow but you certainly can do that. It takes some time and somebody to help you understand what you should buy first or second and how things progress. That’s what the book does. It does it in a very simple way so that anybody can understand it.
I should have bought my own on Amazon.com. It’s still available for sale there, correct?
It is or on my website at Ron-Phillips.com.
Who would you say is the right person? When is it the right time for someone to do real estate investing?
It depends on the person and what their assets are. One of the things that we do here that’s different than a lot of other people is that we offer people free financial assessment so we can see where they are and also so we can see where they’re going. Contrary to popular belief out there, real estate is not one size fits all. That’s something for someone who’s 65. A plan for them is going to be different than someone who’s 30 or 40. You need to have somewhere between $5,000 and several million dollars worth of usable and investible assets.
When you say $5,000 and several million, does it mean $5,000?
Yes. You don’t have to start with a ton but if you’re starting with a small amount, you need to understand that it’s going to take you a little longer than a guy who’s starting with $500,000. It took that person an amount of time to generate $500,000 to be able to invest now. If you’re starting with $5,000, $10,000 or $20,000, it’s going to take a little longer than it is for the person with $500,000 but that’s okay. You got to start somewhere.
To clarify too and you would agree with us, it didn’t even necessarily have to be cash. It can even be money in an IRA or 401(k), correct?
One of the most powerful things that we do is help people understand the power of their 401(k)s and IRAs. These are assets that for most people, as I’m sure you’ve already told them, are dead or worse, they’re already buried and decaying. Most people pay a broker every single year, whether or not their money goes up. Most of the time, their money goes down and they still pay the broker. What we see is that most people are losing money in their accounts so we can turn that into a positive cashflow with an appreciating asset. 50% to 60% of the people we help, we help them with assets that do not touch their pocketbook every month.
The power behind that is this. One, you have a decaying possible investment, even if it does grow. A lot of people are feeling this nice sense of security because they’ve seen quite a few up years in a row in their money. What I’ve noticed is that even though there are up years, the problem is until you cash the money out and it’s in your hands, that money is not real. You never make money until you sell. In this sense, you have something that does not generate a dime of cashflow. A 401(k) or an IRA is not designed to generate cashflow. It only takes money out of your pocket. If anything, it’s an expense, not an investment.
Real estate is not one size fits all. Click To TweetOn top of that, you’re saying, “What if we could put this in something like real estate?” This starts generating monthly cashflow that can be used again to then generate more money and cash that could go into more properties that keep gathering more cashflow. Instead of this accumulation method, you have this acceleration method that’s allowing you to create wealth more quickly. Even though you’re saying it takes time, your takes time is a lot different than the financial advisor that hopes and prays it’s 30 or 40 years, which is not even true anyways.
Your money stays flat or it goes down. I wholeheartedly agree with you but for everybody who’s reading this who thinks that the security that they felt over the last few years as their money comes back and breaks even, take a look at the gold chart and what it did. Look at the real estate chart and what it did. Look at what’s going on with the stock market and you tell me that it’s secure. I tell you that what goes up will come down. It’s only a matter of time. It’s not if but when. All of the gains that these people have made will be wiped out in a very short amount of time.
Point two is that this acceleration of wealth is simple. It’s the Rule of 72. People don’t understand the difference between a 3% or 4% return and a 15% to 20% return. Also, how that impacts their money inside their accounts. There’s a guy out there going around. He’s all over the radio and TV. He is saying that his clients make a reasonable rate of return and they’re safe. I’m sorry but 4% or 5% is not reasonable to me. That’s a savings rate. That is not an investment rate. It barely keeps pace with inflation and doesn’t take into consideration the brokerage fees you have to pay.
What we do is we create an asset that has a rate of return which is called appreciation. It also has a cashflow rate of return and that money goes back in. What our clients do is take this money. It piles up inside of their IRAs and retirement accounts and then we reinvest it. One of the things that people don’t realize is that their retirement accounts can go and they can take loans as an individual can. They can leverage real estate and own real estate inside of their retirement accounts if they’re averse to taking their money out. There are so many strategies to use that money wisely and generate returns that can double your money in 3, 4, 5, even 6 or 7 years which is so far and away accelerated compared to what they’re doing.
There are a lot of great points in that too. I hope the readers gained because there’s a lot of depth behind what you said. We could probably create several shows on some of these topics here.
In my live presentation, I try to cram most of that information into 2 hours but the reality is it could be 2, 3 or 4 days’ worth of information. The benefit that we give our clients is we have one-on-one interactions. A lot of the things that we teach don’t apply to everybody but when we meet with an individual, we can educate them on everything that applies to them like where their assets are, how their assets are placed and what you can do with those assets housed wherever they may be. It’s not a one size fits all. We do a customized plan for whoever it is that we’re talking to.
You mentioned the rate of return to 4% or 5%. I can hear a few people saying, “That’s not what I get,” but I’ll have you consider that. I’ve seen some people even when they’re not in favor of the stock market will say, “The stock market does a 10.8% average return.” People don’t even realize that’s not even a real return. That average is not actual returns because once you have a negative year, it takes a way more positive number to get you back up.
For example, if you lose 50%, you need 100% to break even. Often, the average return doesn’t make any difference. There’s not even a real number. The actual yield or what you get is a key here. I’ve noticed that a lot of times. The market is closer to about a 7.5% average return. If you were to even get that minus the broker fees you talked about, 4% or 5% is a pretty decent return. That’s pretty good for me.
That’s good and I see most of my clients don’t make anywhere close to that. The real key question is, “Have you made that consistently for ten years?” When I asked that question, my hands go down. People don’t make 5% or more for 10 years consistently. The Rule of 72 isn’t about averages. It’s about consistency. If you can get 5% a year consistently, that’s a wholly different thing than whether you get 10% for 2 years and then you lose money for the rest of the years.
I can make anything look good on average but that’s not the rate you get inside of your account. I’ll have people come in and they’ll be like, “It shows that I’m getting this but my money doesn’t show that I’m getting that.” That’s because you’re paying brokerage fees, taxes and all of these fees on top of the fact that the average is not what you see inside of your portfolio.
I had a friend who said, “On average, I’m doing well.” It’s like saying, “On average, I’m going to stand between two shower heads. One is scalding hot and the other one’s ice cold. On average, it’s warm.”
It’s like my golf game. When people ask me if I’m a good golfer, I say, “I’m about 1 or 2 over par but I’m 1 or 2 over par on every hole.” That’s not a good golf game. It’s the same thing. If your account is like my golf game, you’ve got a problem.
I’ve seen a lot of your properties. I’m on your weekly email list. I’d recommend that if you’re interested in real estate, you should go on Ron’s email list. Seeing the properties you have, those aren’t the best properties. 15% and 20% are pretty conservative. That’s more cash on cash than the net cashflow you get from the property. That’s not including things you talk about like appreciation, paying down the loan and increasing the equity and tax benefits that people get. There are a lot of other factors there too.
Let’s take one of those. What people fail to realize is when you have a tenant inside of your property and they’re paying the payment on the property, they’re in essence paying your mortgage down. That is a hard return every single year and people discount that. People discount the appreciation of the property and all of these returns. I say, “That’s fine. You discount whatever you want to.” When you can get cash on double-digit cash returns, you can afford to discount all the other stuff, even though there’s legitimately someone on your property paying down your mortgage, which is real money going into your pocket every single month.
Real estate is very localized. Click To TweetThere are real benefits from the tax benefits that come from owning real estate. That’s real money in your pocket. You can discount all that if you want to but you can’t discount that double-digit cash on cash returns every single year, whether you’re skiing, at the gym, at your job or with your family. It doesn’t matter. These little businesses and machines stand out there and crank out money. They do it every month, whether you’re golfing or working. It’s irrelevant.
It’s a powerful point. Let’s say for example somebody is making $60,000 a year. The person that’s working $60,000 a year working for a company won’t have the same tax method as someone doing real estate. It may require $50,000 a year, give or take, to have the same lifestyle. Maybe not even that much. It’s not as hard as some people think. One of the key things that you teach as well is it does take work and time but it’s not the same as what it takes to save up millions of dollars to live a middle-class lifestyle saving that money away. You cannot save your way to wealth. That’s got to create and generate cashflow as we teach on the show all the time.
The other thing that disgusts me is when I have people come in that are 70 years old. I’m going to try to be nice here. They had some ignorant financial planner who put them in an account and tell them they were going to get 8% on their money. They show them what 8% of their money is every year and then all of a sudden, they’re making 1% of their money. They can’t live. They got to go back to work. Either that or they get to cannibalize all of the capital that’s sitting in their account, which should be earning them money. It infuriates me what some financial planners do.
The other thing that infuriates me is some of these seminar peddlers out there go out and sell $20,000, $30,000, $40,000 or $50,000 worth of crap to people. They fill them full of all of this positive mojo and then the people get out there in the real world. They realize they can’t do it. They’ve spent $50,000 that they supposedly invested. They own zero real estates but have an accounting firm to help them with the money they’re not making.
They have LLCs for the properties they don’t own and all of this education with which they can do nothing. For $50,000, they should have $1,000 a month cashflow coming in, assets increasing in value and every other benefit that we’ve talked about. I get riled up at my seminars because people after the fact come up and go, “I wish I’d met you 10 years ago before I spent $60,000 on these boot camps.”
That’s what attracted me to you too because I’ve seen a lot of different companies. I’ve even known people that were coaches in those education companies where they had to pay $50,000 or $60,000. For the most part, half of those people who are teaching you didn’t even do real estate themselves. They’re only getting paid $10, $12 or $15 an hour coaching on the phone to teach you out of a manual but not giving you real-life experience, which you’ve got a lot of that.
I know most of those companies and the people who own them. It’s irritating and frustrating to me that college kids are trying to educate individuals on how to invest when they haven’t even bought their homes. They have no idea what they’re talking about or how to help people on the ground. They don’t even know the area where these people live. Real estate is very localized. How in the world someone from states and states away can tell you how to do real estate in your local market? That is beyond me. I don’t understand how in the world they can feel good about taking money for something that they simply can’t provide.
What would you recommend people do to get in contact with you to learn more about what you do?
People have an aversion to the phone. I don’t know why. Maybe you can attest that nobody in my company bites. We’re here to help. We don’t have to pressure people into doing things. I would encourage you to call. Our phone number is (801) 305-3119. Call and set an appointment. Everything we do here is free, which is also hard to believe. We make our money as real estate brokers when we sell properties.
We only make money when we are successful. All of our coaching and education are free. Everything we do is free to our clients. They don’t ever pay us money. The reason I say that is because people get a little bit scared to call in because they think they’re going to get hard sold something and that’s not the way it is. We’re here to help. I would encourage people to call. You can also email me.
I read all the emails and I’d love to get you in touch with some of our specialists. My email is Ron@InvestmentPropertyCoach.com. You can go to my website at Ron-Phillips.com and WealthAcceleratorSystem.com. Any of those ways you can get in contact with us. The best way is to call our office and schedule an appointment.
Ron, it’s been such a pleasure to have you on the show. Thank you so much. This is great and valuable information. Everyone, I appreciate your time on. Be sure to tune in next because we got some great content coming up with some great stuff. Make it a prosperous week and go out there. Focus on freedom, not on slavery. We’ll talk to you later. Goodbye.
Important Links
- iTunes – Money Ripples Podcast
- Wealth Accelerator System
- Getting Rich The Right Way
- Amazon.com
- Ron-Phillips.com
- Ron@InvestmentPropertyCoach.com