In this podcast episode, Kevin and Steve discuss how understanding and leveraging the "rules of money" can significantly benefit real estate investors. They emphasize the importance of knowing the nuances of real estate markets, particularly in regions like Florida. Using analogies from sports, Kevin explains that just like in a game, knowing the rules allows for strategic advantages. They highlight how selecting the right markets and properties can protect against risks, like hurricanes, and generate wealth. Steve shares insights on choosing inland, elevated areas in Florida to avoid flooding and reduce storm damage risks, showcasing their conservative, informed approach to property investment.
They conclude that real estate offers one of the best ways to maximize wealth creation by leveraging these rules, especially in carefully chosen markets.
Chapters
0:00 Arizona
3:19 Profitable Real Estate
7:19 The Rich Invent Money
12:51 Mastering Rules
18:28 Storm-Proof Investing
Kevin
Now, when I look at real estate, I look at real estate and I go, okay, well, this place, according to so many of the rules of money, especially when you're buying the right type of real estate in the right type of market, given some of the conditions we talk about, then all of a sudden you're opening up the rulebook and being able to use all the rules of money available.
00;12;51;29 - 00;13;09;26
Kevin
Is that making sense? It's just something I've started to think about. If we invent money and if we go, okay, if that's what the rich do, then the question is what are the rules and how do we play the rules? And where do we go and use as many of the advantages the rules give us as possible? Like if we were going to go play basketball, Steve.
00;13;09;29 - 00;13;20;22
Kevin
And and I said, you can't dribble, okay? You can't dribble. How difficult would it be for you and I to play? I get to dribble. You don't get to dribble. Who's probably going to win that game?
00;13;20;24 - 00;13;26;01
Steve
Well I would probably still win but it's a lot harder. It'd be a lot harder if I couldn't dribble.
00;13;26;01 - 00;13;39;03
Kevin
Yeah. So anywhere you got the ball, you just have to shoot and I get to dribble all over. Yeah, yeah, you probably would. When. Just because you're skilled. But really like, think about that man. If, if, if it on the football field it was like okay want.
00;13;39;03 - 00;13;41;02
Steve
To change the game now I could change game okay.
00;13;41;02 - 00;13;57;26
Kevin
If one team can only pass and the other team can run and pass, does that change the game? You're using more of the rules available to you. You have a much better shot at potentially winning the game. So that's the way I'm starting.
00;13;57;28 - 00;14;20;23
Steve
Such a key. Like I really, actually really love your analogies because in real estate like and in life and regarding money, like if you don't know the rules of the different games that we get to play in terms of money, creating wealth, planning for retirement, those kinds of things, you're at such a disadvantage now, it doesn't necessarily mean that you have to go out and like, know every single rule, like the like an NBA ref does.
00;14;20;23 - 00;14;32;05
Steve
Yeah, sure. But you got to know at the very least like the basics. Well I can dribble the ball well. Can I use two hands to deliver the ball or can I only use one hand. Right. You know when I, when I'm dribbling you know how many. You know if I pick up the ball. How many.
00;14;32;05 - 00;14;32;29
Kevin
Steps today.
00;14;33;01 - 00;14;56;13
Steve
All the different things. Yeah. Right. When you know the rules, all of a sudden you have massive advantage. Yeah. And as you get to know the rules, that's one of the things that creates confidence. One of the things that helps you overcome fear, like the the debilitating fear that can, can set upon us when like the world is doing its craziness and we're wondering like, what should we go and do?
00;14;56;13 - 00;15;18;02
Steve
And how do we how do we get where we want to go when we understand and know some of those rules like it? Like it really is not not just life changing from a monetary standpoint, but life changing from a standpoint of not having to walk around in fear with blinders on, living life half blinded like that's when fear sets in is when you don't.
00;15;18;02 - 00;15;22;17
Steve
You can't see where you're going, you don't know how you're going to get where you want to go.
00;15;22;17 - 00;15;41;13
Kevin
If we were to play with this idea, and I apologize for everybody listening and watching, you know, sometimes we have these, we just have these conversations and we learn things as we because we're because we're in this all the time. I feel like we're just always kind of evolving and learning. And I, until very recently, have not been thinking of real estate and money in these terms.
00;15;41;19 - 00;16;03;28
Kevin
Where can I go and exploit the majority, as many rules as possible of money in order to create wealth? So if I look at it from a real estate standpoint, like we could say, if you want one of the rules you want to play by is you want to put money somewhere where it produces money for you without you having to necessarily work for it.
00;16;03;28 - 00;16;28;03
Kevin
Right. Like that's one of the rules. So Robert Kiyosaki and Rich dad, poor dad, he says, you know, every dollar you put in real estate should never come out. Like, because a $1 is an employee that works 24 seven and can do so for, you know, generations, which is very instructive, right? It's the whole reason why, like we you know, there's times we leverage and use cash flow from real estate.
00;16;28;08 - 00;16;44;11
Kevin
There's a lot of times when we don't pull any cash flow from real estate, because our dollars are in the real estate and the dollars that it produces go back into the real estate. So it creates more dollars because we're looking at creating actual, real tax free wealth, not just like, oh, I have 50 more dollars to spend this month or whatever it is.
00;16;44;13 - 00;17;09;25
Kevin
And so if we are going to put money somewhere where it can produce without us having to do a lot of work, that is why we have to go put it into properties and into markets that are likely to produce the dollars. And and that is why we select some of the markets we select. So if I were to go take if the if the rule is just I put money into something and more money comes out, okay, fine.
00;17;09;26 - 00;17;34;08
Kevin
That's only one rule. But the other part of the rule is I put money into something. And then in order for that money to come out, that thing that I put it in has to have the ability to produce more money. If I put money into a trash property in Detroit, which, you know, we've talked about in the past, and nobody wants that property and nobody wants to rent that property, and then all that thing's going to do is I'm going to put money in the real estate.
00;17;34;08 - 00;17;55;02
Kevin
It's going to suck money out of my life. It's not going to give me money. But if I put money into a property in Florida and it's somewhere people want to live, it's in a state that's growing. It's in an area that isn't impacted by hurricanes nearly as much as maybe some of the coastal areas are. All of a sudden, I'm increasing the likelihood that that dollar is going to produce additional dollars for me.
00;17;55;04 - 00;18;13;09
Kevin
So I'm playing by the rules, but I'm leveraging the rules. You know, it's just like if I was shooting a free throw in basketball, I can stand at the line and I have to and I can. I could shoot the free throw. So I can either choose to shoot the free throw with good technique, elbow wind, flicking my wrist, or I could baseball throw it at the backboard as hard as I want.
00;18;13;11 - 00;18;28;22
Kevin
Which one's going to produce success? Well, it's certainly not baseball throwing it at the backboard. So I have money in real estate now. How do I leverage the rules available to me to make sure that success happens? And that's a big reason why we're in the market that we're in is that make it set.
00;18;28;26 - 00;18;47;08
Steve
100% Kev. And as far as like we're where we're at, the markets that we're in, like why we're in those markets. And it's not just in those markets, it's very specific in those markets. So let me share with you a few of the rules of investing in Florida. I love that, because over the over the past few days, I've had friends of mine who've texted me.
00;18;47;08 - 00;19;12;12
Steve
They're like, hey, how are your properties doing down there? I'm like, well, my property is actually great. With Hurricane Helene, for the most part, it was like a nonevent for the properties that we and our clients have in Florida. Now, here's the rules of the game, and it requires some analysis and requires some some forethought. And it requires, like some, some significant knowledge and effort.
00;19;12;12 - 00;19;40;07
Steve
Okay. So here here's one of the rules. Number one, we don't buy or build properties in low lying elevations. Now, everywhere in Florida is fairly low. But if you're 100ft above sea level and you're inland by, you know, many, many miles, as many as 100 miles or more like your property probably isn't going to experience any or very much flooding, right?
00;19;40;07 - 00;20;10;13
Steve
Yeah. Because flooding doesn't happen from the rain usually, sometimes there there is some flooding specific to like actual rain, but it's usually like some kind of a storm surge, like low lying areas. And so we very specifically, even the properties that, are builder built for us in Citrus Springs, he purchased those lots after analyzing them and making sure that they weren't in the low lying areas that they were at elevations 60 to 90 to 100 plus feet above elevation.
00;20;10;13 - 00;20;40;23
Steve
Yeah. And guess what? Zero of those properties were affected by any kind of storm surge or flooding, that was caused by, by the hurricane. The other thing is being inland such that, you know, wind is a big factor, right? Yeah. And so by the time a storm gets hit by the time the storm breached any where we have any properties or that our clients have properties, the, you know, this is still pretty significant, but it had gone from like, a category five to a category four to a category three to a category two.
00;20;40;23 - 00;21;02;10
Steve
Yeah. Before it hit any of our properties. So I did get some information here in the last few hours, actually, that there are a few homes that have like shingles that have blown off or, you know, maybe a fence blew over, but but nothing catastrophic. And so from, from a rules standpoint, like you can still be in an area that experiences some of these.
00;21;02;10 - 00;21;37;15
Steve
You know, catastrophic events, but the likelihood of experiencing something catastrophic has gone way, way down. Now, here's another thing that's an interesting factor is that, you know, in areas like Florida and other areas where like reoccurring things happen over and over and over again in an area like in Florida. This is just kind of a thought. It's not necessarily, something that we're planning on, but it's something that is is factored into where we buy properties at some point, people who still want to live in Florida, but they are on the coast.
00;21;37;15 - 00;21;55;11
Steve
At some point they might be, you know what, I want to still live in Florida because I love everything about all the way from, you know, the business friendly environment to the climate to where it's situated in the world and so on. And but but I'm going to find a place it's just a little bit less likely to have catastrophic events.
00;21;55;17 - 00;22;06;00
Steve
Right? I guess what is more and more people do that. Guess what happens to the value of your property specific, you know, right now the coasts, it's like those are the high value properties. Yeah.
00;22;06;00 - 00;22;09;09
Kevin
Well because they have a view or whatever or they're not close.
00;22;09;09 - 00;22;31;14
Steve
To the beach, that kind of a thing. And they'll probably always be like high value. But they're the areas where we buy, which are way more conservative. Yeah. Are going to are likely to become more coveted because they don't experience those types of things. The insurance is less. Yeah. You know, the the fear of what's going to happen every single hurricane season is less all of these different things.
00;22;31;21 - 00;22;57;19
Steve
And so like that's those are part of the rules of the game that that we've been playing for many, many years. More than a decade in the Florida market. And it's that conservative nature. It's that forethought. It's it's it's this process of understanding the rules of weather, understanding the rules of the local areas, understanding like the rules of a purchase worthy property in an area that is subject to different catastrophes, like that's what makes the game doable.
00;22;57;19 - 00;23;13;12
Steve
That's what makes a game something where it's like, you don't have to live in fear and you don't have to wonder, like, is this property still going to be around ten years from now when I'm ready to retire and start creating and taking advantage of the cash flow this property has put in my path?
00;23;13;15 - 00;23;29;22
Kevin
So we didn't exactly know where this conversation would go. But this is what I hope everybody's kind of taking from this conversation is that there are rules that are applicable to money, and there are rules inside of what we do with real estate in order to leverage the rules of money to grow it. Right. That is really what we're talking about.
00;23;29;22 - 00;23;50;08
Kevin
You could call it criteria. You could call it rules, whatever you want to call it. The idea here is that while the game is afoot, while you have the ability to play by the rules of money, to create more of this thing that we are going to refer to as money, you still have to understand the rules, even inside of the game, right?
00;23;50;13 - 00;24;11;03
Kevin
So there's rules of the game and then there's rules inside of the rules, right? There's nuance. Maybe we call it there's nuance inside of the rules of the game of money. And that nuance is some of those quote unquote rules that we're talking about when we select markets, when we select properties. So I hope that, if nothing else, it's kind of a brief episode today, but we wanted to get on and wanted to share this idea.
00;24;11;03 - 00;24;27;28
Kevin
Want to let everybody know, first of all, for our clients, if you've got properties in Florida, you've probably already received reports, kind of what's going on if you're considering buying in Florida or some of these markets and you're wondering why is DFI in the markets that they're in, that is some of the nuance inside of the rules of generating money.
00;24;27;28 - 00;24;42;07
Kevin
And real estate is maybe the best way to leverage the most rules of money creation than just about any other investment. And that's really, I hope, what everybody kind of takes away from the conversation today. Any final words before we wrap up?
00;24;42;10 - 00;24;45;00
Steve
Okay. I think you, wrapped it up real good. Okay.
00;24;45;01 - 00;24;48;10
Kevin
All right, everybody, thank you so much for joining the replacer and the podcast. We'll see you real soon.
00;24;48;17 - 00;24;57;03
Steve
Have a good one. And.