Table of Contents - How to Create Lifetime CashFlow Through Multifamily Properties with Rod Khleif
Dave Debeau [00:00:08] Hey, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. And today it is my pleasure to be interviewing Mr. Rod Kleef. Rod, how are you doing today?
Rod Khlief [00:00:19] Good, but I'm really appreciate you being here, Dave. It's going to be a lot of fun while
Dave Debeau [00:00:23] you're calling in from sunny Florida. I'm here in Canada. Life is good. And we're going to be talking real estate, so it's even better.
Rod Khlief [00:00:29] So that's my favorite topic. Yeah.
Dave Debeau [00:00:32] So if you haven't had the pleasure of hearing Rod speak before, meet him yet. He's a very, very experienced real estate entrepreneur, immigrated to the States as a young child, started from scratch. I won't take the thunder away because you're going to tell us a little bit about your story. But bottom line, what we need to know is Rod started investing in real estate at age 18, and he's owned over two thousand properties all the way from single family homes, now focusing more on multifamily properties. So, Rod, really looking forward to getting some of your experience and your wisdom from this whole process. So thanks for being on the call.
Rod Khlief [00:01:06] Yeah, no, it's absolutely my pleasure. We're gonna have a lot of fun. So why don't we start with the basics? That's pretty impressive. For three years since I'm 21 years old. Right.
Dave Debeau [00:01:14] You're looking good, man.
Rod Khlief [00:01:18] That's good. It's painful. It's painful for me to think about that many houses I'm going to, you know, enjoy, enjoy talking about that because
Dave Debeau [00:01:27] so we'll probably we'll probably go all over the place. But let's start at the beginning. So, I mean, you you came to the States as a young child and you guys definitely didn't have the silver spoon you started. No, no. We had a little bit about your story, please.
Rod Khlief [00:01:41] Yeah, yeah. So I immigrated when I was six from from the Netherlands, from Holland, brought the wooden shoes and everything over. In fact, my mom made me wear them to school. Yeah, the bullies, the bullies loved that show and tell. Anyway, now we didn't have much money. In fact, I work clothes from the Goodwill and the Salvation Army through junior high school. We had expired food. I drank powdered milk. And, you know, and that's I know a lot of people had it harder than we did, but that's how we grew up. And but I knew I wanted more. And my mom had an incredible work ethic and she bought the house across the street from us when I was fourteen for about thirty thousand dollars us and when I was seventeen, she told me had gone up twenty thousand dollars while she slept. And I'm like, what? I'm getting into real estate. I'm going to be a real estate mogul. And I got my real estate brokers license when I turned 18 and I was going to get rich in real estate and I sold real estate for a couple of years, made like eight grand my first year, maybe ten grand my second year. But my third year I made over one hundred thousand dollars. And and so people ask me, what happened between your two and your three? Well, what happened was I discovered the power of mindset and psychology and and really that 80 to 90 percent of your success in anything is your mindset or your psychology. And, you know, luckily, I got to spend twenty years. This is later. Decades later, I got to spend twenty years following Tony Robbins around the planet. And, you know, that just reinforced all of that important component, the importance of of mindset and psychology to success in anything, including life. So but yes, fast forward to today. I've owned over two thousand houses, multiple apartment complexes, and in 2006 my net worth went up seventeen million dollars while I slept a little more than my mom's 20 grand. And but there's a punch line. The punch line is I had a lot of houses in Florida and about eight hundred when twenty eight hit and I crashed and burned and it was a fifty million dollar seminar. I don't call them failures, I call them seminars because I definitely learned from it. But I lost everything because of the logistics of the single family portfolio. And of course thinking I was smart, I crossed Collateralize my single family packages with my multifamily. So I lost my multifamily too. But, you know, it's it was a painful seminar, but I learned a lot. And what was fascinating through that whole crisis was my single families weren't cash flowing and that was more logistical than anything else. And I can get into the detail of that, if you like. But my multi families were and that's kind of why I started my podcast. The Lifetime Cash Flow podcast was just to give people that message that if you're going to buy and hold long term, at least do multifamily, don't do single family. It's just they're safer, they're easier, they're more scalable. Everything about them is is better, in my opinion. So, again, that's my opinion, but based on my track record in my history.
Dave Debeau [00:04:26] So what was like you went through the wringer with single family homes. I mean, you had a far bigger portfolio than most people ever dream of when it comes to single family homes. And and you also had so at that time, did you just basically kind of have a smattering of multiple? Yeah, I
Rod Khlief [00:04:42] know I had a handful of apartment complexes and, you know, a couple of decent sized ones, but and they cash flow just fine through the contraction. See, the problem with my single family portfolio was I was about two hours, one direction, two hours, the other direction everywhere in between that. And so the logistics to that, I'll explain in a minute. But also, you know, Florida has no state income tax, so the property taxes are much higher. Here additionally, I was a lot of my properties were in wind or flood zones, very high insurance, so all that impacts cash flow. And then you couple that with the fact that, you know, for example, in one of my apartment complexes, I would send a maintenance guy and we would have parts that were stockpiled like, you know, appliance parts, plumbing parts, HVAC components, things of that nature filters the right size, all the stuff we needed because everything was the same in every house. Everything's different, every appliance is different. Every the vaisse, the plumbing, the electrical, everything is different. The doors, the doorknobs, the faucets. So, you know, I could send somebody to an apartment complex. They could fix a maintenance issue in 30 minutes if I had to send them to a house. Let's say it's an hour away. So it's an hour each way to drive there. They got to go see what's wrong. Then they've got to find a hardware store, Home Depot or Lowe's, that might take an hour round trip. Then they come back, they're working on it. They get into it. And like, invariably, if you've ever fixed anything, you realize you need something else. You go back. And what takes 30 minutes to an apartment complex takes all day to house. You multiply that times. Eight hundred. You couple that with the fact that I was primarily in C class houses. So a lot of construction tenants in the construction business, tenants in retail, all which got crushed in 2008 and it was just the perfect storm. But again, I don't bemoan it. I mean, you know, I talk about on my podcast, you know, how I got back from that to the success that I enjoy today. So not just how did I get to 50 million dollars in the first place, but then losing it and coming back to where I'm at today. And and it's all a mindset. It's all psychology. Well, not at all.
Dave Debeau [00:06:35] I mean, I tend to find the more painful the lesson, the better it sticks, right?
Rod Khlief [00:06:43] No question. No question. There's an emotional component that absolutely adds has a component to it and and causes you, you know, and again, it's only a failure if you fail to grow and you don't and you don't get the lesson and that's when it's a failure. And so, you know, I am happy that it happened. Probably not. But yeah, I guess I am. I wouldn't have met my wife if it happened, if it hadn't happened. And life is so fantastic right now. So, no, I'm I'm happy it happened.
Dave Debeau [00:07:11] Well, that's that's that's awesome. So for those folks that are watching this, that are real estate newbies or neophytes, they haven't had a lot of experience with real estate investing. Can you just kind of compare and contrast your opinion of the advantages of multifamily properties versus.
Rod Khlief [00:07:27] Sure, sure. Sure, sure, sure. And you know, again, I've owned two thousand of my 500 in Denver at one time. I had a couple hundred in Memphis, you know, thirteen fourteen hundred in Florida. So, you know, it's an area all long term hold. This isn't flipping, wholesaling, whatever these are buy and hold. OK, I rented them out. I owned a management company. I bought them all from individual owners. It wasn't like I bought packages of them. So I was very good with systems. The bottom line is the reason I would never do it again that way is if you have a house that's empty, you're hundred percent vacant. If you have one unit in a duplex or one unit in a four plex, it's vacant. You're only fifty percent to twenty five percent vacant. Or if it's bigger than that, then you do the math and you can sustain vacancy in multifamily that you can't, that you don't have that luxury in single family. So that's number one. Number two, it's a whole lot easier to buy a 20 unit than it is to buy 20 houses. A lot easier. OK, so you get scale faster. Number three, it's much easier to manage, as I just referenced in my logistical issues that I had with my houses. You know, it's just much easier. And the big one, the big one is in the commercial multifamily space. It's a team sport. So so, you know, when you buy us a residential multifamily, residential, single family, they look at you personally much harder than than they would if you buy five units or higher anything one to four units is residential, two to four units as residential multifamily duplex triplex fourplex. In some places it's called two family, three family, four family. Those are residential multifamily and those are treated like houses and are. But still, listen, if you're if you're young and you haven't bought a property yet, for God's sakes, by a plex, by a duplex triplex or fourplex, because not only do you get the advantages that residential financing, 30 year fixed financing, very low down payments, you can even use the the rental amounts if the other units are at least help you qualify for a bigger property. But chances are you're going to live for much less than you'd live in a house, if not for free. And you've started your investing career. So please take my advice. It's called House Haggag. Really, it's plex hacking. But but you're hacking and you're living for free or very inexpensively. And I mean, I've interviewed people on my show that have multimillion dollar portfolios that did it one plex at a time. But I will tell you, it is easier to do commercial five units or higher because several reasons. Number one, the bank or the finance broker or finance company that's financing your commercial multifamily is going to look at the team that's buying the property. So they look at three things. They look at your experience. They look at your network. Earth and they look at your liquidity, OK, and what's great, though, is if you find a high net worth individual that's owned an apartment complex, they satisfy all three requirements. So you find somebody to act as a sponsor on your deal. And, you know, a lot of new commercial investors start that way and they'll bring in somebody to put up the money. They'll bring in someone to show their balance sheet for the net worth and liquidity requirements. They'll maybe align with somebody that's got some experience. They may put two or three, four, even five people or more together to put that team together. And then they're able to take down large properties and leverage all of these things, including the money. So it's just a fantastic way to do this. Business now requires you to be educated. You've got to learn the business. By the way, I've got a free book I'll give your listeners at the end. It's it's just like a textbook for this business. So, again, you can put all this together. And now, again, you've you've got to build your competence first, though. I mean, you've got to have the education. I do live events as other people do live events. If you learn the business, then you have the ability, then you get some confidence in the business and then you have the ability to influence people to put deals together, influence sellers and brokers and potential investors to invest with you. That's what's so beautiful about the multifamily space, especially the commercial multifamily space. The other thing that's huge is in the residential space, even the plexus, the values are based on comparable sales. So if you buy a fourplex and they appraise it, they're going to look and see what other fourplex is sold for. That's not the case. With five units or higher in the commercial multifamily space, five units are higher. They value is based on a multiple of the net income that called the net operating income. So and then multiples the cap rate, the capitalization rate. And I know probably losing a few of you here. But the bottom line is you can force appreciation, meaning you can ramp the value of one of these properties by doing one of two things, raising rents or decreasing expenses, either, either of which impact the bottom line. The Y in the impact is exponential. For example, I'll give you an example. You raise the rents on a twenty five unit. Fifty bucks, not a big increase. You raise 50 bucks. All things being equal, you've just instantly increased the value. Two hundred and fifty thousand dollars. Wow, that's money. That's the exponential increase. And so, you know, like when we find a property, like I've got a deal we're doing right now where the rents are two hundred below market and it's one hundred units. So, so, so, you know, we raise those rents two hundred bucks on one hundred units. I don't, I can't do the math in my head, but it's a it's a nice chunk, a chunk of appreciation that we have instantly foreston value on that property and that's, that's why this business is so freaking exciting.
Dave Debeau [00:12:43] And I can tell you're excited about it though. Right. Unfortunately only have a few minutes left because this is a shortcut podcast. We'll probably have to have you back because you love it. But here's what I want to kind of delve into a little bit with you is the whole mindset idea, because if you follow Tony Robbins around for a couple of decades, I did. And you went through that crap storm in 08 and lost everything and came back. It sounds like you're pretty successful right now as well. Talk to us a little bit about how to get on the right path.
Rod Khlief [00:13:15] Sure, sure. You know, I it's really about goal setting and it's about it's about visualization. At least it was for me and I at my life events and to my coaching since I teach a whole goal setting session. But I'll give it to you real fast. Bottom line is, you've got to know exactly what you want and why you want it. So it's not just writing your goals down, it's taking your goals to the level. You write down what you want. You write down what you want to learn. You write down who you want to help. It's everything you want to do or have you write it down. Then you write down why it's an absolute must be to achieve those things and you put positive and negative reasons. So I can so we can do whatever we want, whenever we want, wherever we want, with whoever we want, whatever it is for. You write down positive reasons why and put some pain in there if you don't achieve your goals. So I don't feel like a failure. So I don't live a life of regret. So that's part of I'm massively updating this process for your show here. But but you you go and you do your goals in your wife and then you get pictures of your goals. And I could show you I've got pictures here of things. You know, I built a ten million dollar house on the beach and I lost it through all of that crap. And because God's got a sense of humor, I've got this amazing compound on the water now and I've got six buildings and just incredible Zen like park like setting on the water because God's got a sense of humor. I see my old house across the bay. But anyway, you get pictures like you can see here. I've got my planner. These pictures have been here in here for twenty years. They start with gratitude pictures. But then I've got pictures of the houses that I wanted that I got I've got pictures of the stupid shit that I thought was important, like watches and stuff that I've got a couple hundred thousand dollars worth of watches. Again, stupid shit. I got the Lamborghini, the Rolls Royce, all this stuff that I got because I had pictures. So get pictures of your goals, too. That's how I got back from losing it all, remembering what I wanted and why I wanted it. Because and for those of you that hadn't even started yet, you've got to push through your limiting beliefs. We all have limiting beliefs from child. Would that hold us back? You've got to push through fear, and even bigger than that, you've got to get uncomfortable. You know, if you're comfortable, it can be it can be, you know, comfort kills. That's what Grant Cardone says, you know, if you know who that is and and it does, you've got the magnificent life of your dreams is on the other side of that fear. It's on the other side of that comfort. And so you've got to you've got to have the fuel in the fuel is knowing what you want and why you want it.
Dave Debeau [00:15:32] Very, very well said. Thank you. If people want to know more about Radcliffe and yeah,
Rod Khlief [00:15:36] I've got a free book, free book, text my name, it's 200 pages long. It's like a textbook text rod to four one four one one to give you a free copy. It's going on Amazon for twenty five bucks here and about 60 days. Also, I've got a closed Facebook group which is which is got twenty five thousand people in it that are interested in multifamily and no promotion is allowed there. It's just an educational platform's awesome platform because you guys know you are the five people you hang around with that's just go to multifamily community dot com. And it's a direct link to that. If you want to come see me live, I do three day live events and it's just me. I don't bring outside speakers, speakers to sell you stuff. It's just me for three days and tickets are really cheap. That's multifamily boot camp dotcom and I do three or four events a year and then I've got tons of free materials on my website. I mean videos and articles that I've written and books that I've written. And it's all free on Radclyffe Dotcom Dotcom. But thanks for having me on the show, brother. That's the fastest interview I've ever done.
Dave Debeau [00:16:37] My pleasure. Thank you very much. And you know, what's it like? Like we talked about before we start recording, we'll have you back because you're just a wealth of knowledge. So thank you so much for your time today.
Rod Khlief [00:16:47] Right. Thanks, buddy. It was a lot of fun.
Dave Debeau [00:16:48] All right, everybody, take care. Talk to you next time. Well, thanks very much for checking out the property profits podcast. We like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals,
Rod Khlief [00:17:10] then I invite you to attend one of my
Dave Debeau [00:17:12] upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.