Ken McElroy on Building a Billion Dollar Real Estate Empire – EP 61

December 23, 2021

Interview with Ken McElroy

Ken McElroy on Building a Billion Dollar Real Estate Empire

You don’t have to come from money to build wealth. If you can find a good deal, the money will always follow. What you do need is a strong work ethic, solid relationships, and a willingness to put yourself out there!

Today, I’m speaking with Ken McElroy, who went from a broke college student managing an apartment building to becoming a business mogul who has transacted over $1 billion in real estate.

Ken was by no means an overnight success. In fact, he spent 8 years managing properties before he would own any of his own. But his determination to learn and ability to surround himself with the right people eventually paid off.

Ken has gone on to experience great success in the world of real estate. Not only is he a bestselling author and internationally recognized speaker, but he’s the real estate advisor to Robert Kiyosaki of The Rich Dad Company.

In this episode, Ken talks about his unbelievable journey and his steps to go from property manager to property owner. You’ll learn why “not having enough money” is a limiting belief that’s holding you back, why relationships are the key to success, and how to take advantage of life’s unexpected opportunities, so you can live the life of your dreams.

Featured on This Episode: Ken McElroy

✅ What he does: Ken McElroy currently owns approximately $1.5 billion in real estate assets, including office buildings, condos and single and multi-family homes. He’s involved with development, construction and property management. He also hosts real estate training programs and has written six books, including “The ABCs of Real Estate Investing.” He hosts the podcast Real Estate Strategies with Ken McElroy.

💬 Words of wisdom: Ken didn’t come from a wealthy family, and it was only when he started finding success with real estate investing that he realized most deals are less mysterious than they seem from the outside. If you can prove that you can make money, investors want to give it to you.

🔎 Where to find Ken McElroy: Website | YouTube | Twitter | Facebook

Key Takeaways with Ken McElroy

The story of how Ken went from managing an apartment building as a broke college student, to acquiring over $3B in real estate.
The steps Ken took to raise money and secure a $9M multifamily deal as one of his first investments.
Overcoming the limiting belief that you need money in order to make a deal happen.
Why relationships are the foundation for success.
How Ken developed an unexpected friendship with Robert Kiyosaki.
The power of putting yourself out there—and how this mindset led Ken to working with Tony Robbins.
Why the most rewarding part about making money is giving it away.

Ken McElroy | Raising $2 Million to Close a $9 Million Deal

Episode Highlights

Everyone begins at the bottom

“I started with a two bedroom, two bathroom using my own money — like a lot of people, that’s how you start. I was scared to death, it was all my savings, and it was cash-flowing just north of $100 a month: that’s if it was full. I started small and made small mistakes, but I was in the property management business. I actually was pretty good at keeping it full and managing it. … But then I jumped right up and bought a property that I was managing, and I still own it. It’s 182 units. I bought it over 20 years ago. It’s in Sun City, Arizona, and I bought it for $9M. I didn’t know how I was going to do it: $2M down and $7M in debt, roughly. It’s probably worth $50M now.” – Ken McElroy

Success starts with hard work

“The good thing when you’re young is that you don’t know any better. I didn’t know any better. I’ll outwork: That’s the kind of wrestler I was too. I might not have been the strongest and fastest, but nobody was gonna outwork me. So that’s what I did. You started knocking on doors, calling, and trying to figure out people that had money.” – Ken McElroy

Find the deal and the money will follow

Justin Donald: When I first started, it took me a long time to get into real estate. I wanted to do real estate a lot longer than I was actually doing real estate because I had this limiting belief in my mind that I had to have the money to be able to do the deal. And it took me a handful of years to figure out, “No, this is holding me back. I actually just need to go find the deals. And if the deal is good enough, the money will show up.” And that’s the truth. The money like you have a good deal, trust me, money is the easiest thing to come by, even when you don’t have it. So, at a certain point in your life, like there’s this whole idea around scarcity of money and when you don’t have any, it’s very scarce but it’s truly an abundant resource. And when you have the thing that others want who have money, it is really easy to raise it. And I know you’ve experienced that as well.

Deals get done almost on a napkin now. Obviously, it’s not perfect. But if I called you up right now and I said, “Hey, we buy it for this. It’s got a “$20 million value-add, we got to put this much in it, and I’ve already got a debt quote.” You would say, “In.” Now, there are a zillion things that I have to prove out but a lot of people don’t realize that investors are sitting on a bunch of money typically in their bank account and/or they’re making a bunch of money and their companies are kicking off a bunch of money. And a lot of times their options are financial planners of the stock market. So, they’re just frothing for guys like us that can bring them something that provides cash flow tax-free.

Blending work and family life

“I’ve now written six books. We’ve been to Russia, Asia, Australia multiple times, all over Europe, all over the US, Canada, Mexico, Spain, you name it. I just go when I can, around my family: I put my family first. I would bring them on a lot of those trips. I brought them to a bunch of those places, as my kids were growing up, and made it a family affair. The whole thing was awesome. And at the same time, running my business, growing the company, buying assets.” – Ken McElroy

Giving employees the opportunity to be generous

“We said, Let’s designate a bunch of money from our properties into these foundations and bring on this director [of philanthropy], which we did. And that’s really taken off. Then we ended up doing partnerships with our vendors. Ross [McCallister, Ken’s business partner] and I fund the majority, but then our vendors fund [some], and our employees get an opportunity to fund too. I don’t know the exact number that we give out every year now. But it’s a lot, and the employees can write their own grants, and they go through a board and all that, and they get the grants to whatever charity makes them happy. It’s quite a few charities, because we have 250 employees.” – Ken McElroy

Companies that give back attract thoughtful employees

“The charity thing has been really significant for us. It’s one of our core values: We have five core values, and one of them is to be giving. … It’s always a primary issue in our firm, and as you would imagine, that attracts a different kind of employee. We found that just from doing something that Ross and I wanted to do, our culture got better, stronger, deeper and tighter, and we started attracting very good people, because they wanted to be part of something bigger than just making money.” – Ken McElroy

Ken McElroy Tweetables

“In property management, I was creating all this value for other people. And one day, I was like, I'm on the wrong side of the desk.” — Ken McElroy Click To Tweet “Deliver on your promise and everything else works. Stop bullshitting yourself: Be authentic, be transparent, and it will work out.” — Ken McElroy Click To Tweet

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Read the Full Transcript with Ken McElroy

Justin Donald: Well, Ken, I’m so excited to have you on the show. Thanks so much. I’ve just had so much fun getting to know you and learning more about your story. So, welcome.

Ken McElroy: Thank you. Awesome, Justin. It’s great to see you again. We had a good time in Dallas, that’s for sure.

Justin Donald: We did. You know, it was so fun kind of just hearing your story, learning about your connection with real estate and all the, I mean, you’ve been in it for years, the deals that you’ve done with Robert Kiyosaki. You know, it’s funny because I just recently did a podcast with Tom Wheelwright, and he spoke at our conference that we just had for The Lifestyle Investor Mastermind and private clients. And so, it’s really interesting seeing this world kind of just come together here. But your story is incredible, and I’d love to have you share some of it here with our audience.

Ken McElroy: Sure. Sure. It’s, well, untraditional I think like everybody gets into real estate. I don’t know if it’s ever intentional but quite simply I didn’t grow up with a lot and my parents were amazing but we couldn’t afford college for me, for sure. And so, I had a wrestling scholarship, thankfully, and I got in that way. While I was there, I was offered by a friend of mine and said, “Hey, we’ve got this 60-unit apartment building that you can manage and I’ll give you a free rent if you do it.” So, I’m in like I just said because I was racking up student debt, getting through school. I had a scholarship but didn’t pay for everything. And so, just scrapping it out, trying to be a little more educated than I was. And, boy, did I have an education at that place. So, I’m like, “How hard could it be to collect rent and pay a few bills and keep the place clean?” And, boy, that was when my lessons started. Literally, I had to fire the manager and the two assistant managers, and I was there by myself. I didn’t know what I was doing but, thankfully, property management was kind of my ticket for my next eight years. I ended up kind of being in property management and I learned so much but what I learned is I was creating all this value for other people. And one day I was like I’m on the wrong side of the desk here. I’m the guy that gets the call and says, “Hey, here’s a property. Would you clean it up and fix it up?” And I’m grateful. I don’t even know exactly, somewhere between 20,000 and 30,000 units up and down the western United States and so starting from Seattle area all the way down into California and Oregon.

And so, when I actually got the courage and decided I was going to start owning properties, I didn’t know what to do and I started finding mentors and coaches and things like that. And that’s how I got on the other side and I started doing that in the late 90s and I never looked back. And now we’ve acquired a little over $3 billion in assets. Right now, I own about not quite 1.5 billion. So, we’ve sold off some of those and we do development, construction, property management, all in-house. I’ve owned and built self-storages and office buildings and condo projects and single-family. But really, my love is multifamily, which is what I primarily do right now. We have a great company culture. I had to learn that. I went to learn how to scale a company, then you have to learn how to keep the people and keep them happy and all that. And so, I poured myself into that and that’s been a labor of love. And then, of course, philanthropy comes from there. And you know, in the last five years, we hired a full-time director of philanthropy. So, we give a lot. We’re a very giving company. In fact, that is one of our core values is to be giving. And so, we’re involved in a community. We’re having fun, we’re making money for our investors and ourselves, and our employees are having a good time enjoying all of it. I’m having fun.

Justin Donald: That’s incredible. I mean, just the level of success you’ve had is spectacular. I mean, any time you’re mentioning something with the word billions, you know that you’re doing something right. You know, it’s really funny because your reputation really precedes you on a few different levels. So, the call right before this was with a lifestyle investor mastermind applicant. And I told him that I had to get running because we had our interview and he goes, “Oh yeah, I know him,” and he’s from the Seattle area. He started telling me some of your story about how you’re doing property management in the early days and tied up with Robert. It was cool hearing all that he knew and he’s actually from Redmond, Washington, or lives there right now, so just outside Seattle. And I spoke with someone else earlier that also knew you. And then, of course, when I was hanging out with Robert Kiyosaki at the conference we were at, he just spoke so highly of you. I’ve never heard him speak so highly of anyone before. And so, that was really cool. And we had gotten a chance to connect before that but it was cool here in his perspective and his story of you and how you guys met and the whole nine yards. So, kudos to you for having such an impeccable reputation.

Ken McElroy: Thanks. Yeah. Well, as you know, I know you do this too, deliver on your promise and everything else works. Stop bullsh*tting yourself.

Justin Donald: That’s right. That’s right.

Ken McElroy: Tell the truth, be authentic, be transparent and it will work out.

Justin Donald: Yeah. That’s awesome. And you know, it’s interesting, my parents weren’t able to afford my education either. So, it was, “Hey, figure out a way to go to college and to pay for it. Otherwise, you’re not going to go.” And bless their hearts, they wanted to help so much, and even inside the first semester, they did what they could to like be supportive and they’re just incredible parents. But I’m still the first person in our extended family to actually graduate from college. And one of my professors at the school did what you did to a certain degree where he was property manager. He actually had an opportunity to buy the apartment complex as a college student and then manage it, which is just…

Ken McElroy: Oh, good for him.

Justin Donald: Unbelievable. So, I wish I would have gotten that early of a start but you got to run it while you’re in college. That’s incredible.

Ken McElroy: Yeah. Honestly, it was an incredible experience. I was laughing the other day because I started as a paperboy when I was 14. That was my first job. I’d get up before school and deliver the Seattle Post Intelligencer at like 5 a.m. And I did that every day for a couple of years and I would knock on the door and try to collect the money, you know? And the way that worked back then was that you got whatever you collected over a certain amount. So, they set a certain number and then you got kind of that over. So, I was hustle and hustle and hustle to get to that point, and I was laughing because there’s an analogy between when I was collecting rent and collecting for a $10 newspaper. It is like the same excuses, almost exact. It just didn’t matter. And so, the lessons of life they’re everywhere as you navigate things and you start to open your mind and see things for what they really are.

Justin Donald: So, what was the first property that you bought?

Ken McElroy: Yeah. So, I start with a two-bedroom, two-bath using my own money. And like a lot of people, that’s how you started. And I was scared to death. It was all my savings and I used it and it was cash-flowing I want to say just north of 100 a month, that’s if it was full. So, I started small and made small mistakes but I was in the property management business, so I actually was pretty good at keeping it full and managing it and all that. And then I started doing a bit of those. But then I actually had some duplexes, fourplexes, and things like that but then I jumped right up and bought a property that I was managing and I still own it. It’s 182 units. I bought it over 20 years ago. It’s in Sun City, Arizona, and I bought it for $9 million and I didn’t know how I was going to do it with $2 million down and $7 million in debt roughly. I think the thing’s probably worth 50 now or something. It’s because in Arizona, things are easily $300 a door right now and in some cases $400 a unit. And so, that’s how I started and it was interesting and it was all on a handshake from the guy that allowed me to manage it. And he was one of the richest. He was on the Forbes list at the time in New York, and I called him up and I remember as plain as day I was walking through the Portland airport and I was on the phone with him and we cut a deal right then over the phone almost in a handshake and he’s like, “I’ll send over the documents.” And it’s a long story behind it but I had his trust as being the property manager for a while because it had a rough start, I fixed it, and he had one investment. He owns over 10,000 units in Manhattan. So, he had one little investment out in Arizona that he did for a favor and then I asked him if I could buy it, and he sold it to me and the rest is history.

Justin Donald: That’s incredible. What was the market for that? Like, was that a fair price? Were you overpaying? Were you underpaying?

Ken McElroy: I didn’t overpay. I don’t think I underpaid. It was a senior and it still is a senior property. It’s in a 55-age restricted community. So, we had very low turnover. And the issue when I came on was that all the downstairs were full and all the upstairs weren’t for obvious reasons, right? The seniors didn’t want to walk up the stairs. So, what I did was I made the downstairs more expensive which drove the upstairs, again, just from being in property management you don’t discount the upstairs. You raise the first floor and there’s a bunch of other things that we did but we ended up filling it up. But we used an arm’s length. His name was Leonard Litwin. You know, he’s very bright, very smart, way smarter than me in a lot of ways. I would ask him questions. In a lot of ways, he was probably my first real estate mentor but I didn’t get a lot of face time with him because he was so busy. But when I did, I coveted it and it was a fair deal. It wasn’t a deep discount at all.

Justin Donald: Now, Ken, you’re used to just like doing some property management, you’ve got a single-family home, maybe you’ve picked up one or two more at this time but like this is a big move to move from property management on other people’s stuff. On your own asset, maybe you only have one at a time. You jump to a $9 million purchase price. You’ve got to come up with $2 million. I’ve got to assume you didn’t have this yourself. So, what’s the story there? How did you figure that out?

Ken McElroy: Yeah. In the 90s too. I was like, well, the good thing when you’re young is that you don’t know any better, and I didn’t know any better. But that’s kind of a wrestler I was too is I might have been the strongest and fastest, but there was nobody that was going to outwork me. And so, that’s what I did. And you just started knocking on doors, calling. Back then we didn’t have the internet and trying to figure out people that had money. And I start with my rich uncle. I already have my rich uncle. Even though he didn’t invest, the lesson from him was invaluable because you’re asking all the wrong questions, you’re doing all the wrong things, you’re looking at all the wrong things and you have all the wrong assumptions, and you think you do but you don’t. And so, when people like Mr. Litwin or my uncle can come in and say, “Hey, these are things that you should be looking at,” then you slowly change your pitch, you slowly change your business plan. And I end up raising money through my attorney at the time and his buddies. He was a real estate attorney, still my attorney, by the way, and an incredible friend. And he turned me onto his buddies and, as you know, the power of the math like once they saw the deal and they start to see the return and they were excited about the senior market because even in the 90s, they were talking about the aging baby boomers. You know, now it’s kind of old news but this is like, this is going to happen. And so, I just kind of hung my hat on that and said this lifestyle living, it wasn’t an assisted care, congregate care, or lifestyle living. Our turnover was almost nothing. People do not move when they’re seniors. It’s awesome unless they have to which is rare. So, yeah, I didn’t want to fail so I did it.

Justin Donald: I love it. Well, and by the way, I love hearing that story because I took a lot of pride early on in my career that I would outwork anyone. And that was a good differentiator because most people won’t work that hard. So, when you are willing to do it and when you have the resume to back it up or the reputation to back it up, it is much easier to raise money. I always tell people because when I first started, it took me a long time to get into real estate. I wanted to do real estate a lot longer than I was actually doing real estate because I had this limiting belief in my mind that I had to have the money to be able to do the deal. And it took me a handful of years to figure out, “No, this is holding me back. I actually just need to go find the deals. And if the deal is good enough, the money will show up.” And that’s the truth. The money like you have a good deal, trust me, money is the easiest thing to come by, even when you don’t have it. So, at a certain point in your life, like there’s this whole idea around scarcity of money and when you don’t have any, it’s very scarce but it’s truly an abundant resource. And when you have the thing that others want who have money, it is really easy to raise it. And I know you’ve experienced that as well.

Ken McElroy: Yeah. I was taught the same as everybody else. I believe that you had to have a bunch of money in the bank. In the beginning, Justin, I was going out and saying, “Hey, if I find a good deal, would you invest?” And the answer was always, “Yes, of course,” but then when the time came, they were nowhere. But what happened when I did find is that the deal drives the investor. So, with Robert and I, as you know, I kind of skipped over the whole books and all that kind of stuff because it’s a significant piece but it’s really my kind of give-back education piece is writing all the books. But Robert and I were at a conference in New York with Trump, and I remember we were walking through the Javits Center and there’s this booth. And all these booths trying to sell stuff around real estate, some were down in the Caribbean, some were passport issue stuff, and some were in Mexico, and some were local. And we walk up to these two just gorgeous girls with this big, beautiful black and white photo and there are two models standing next to it. And you look at the table and it’s like a bound book. You know, it’s beautiful, right? And so, we were walking through, we were just grabbing stuff and going into the green room, getting ready to speak, and I’m sitting there looking at all the stuff, and I go to Robert. I go, “Look at this brochure. This is probably $5 or $10 just this one.” I go, “The deal, it’s interesting.” I go, “The bigger the brochure, the worse the deal.” And he started laughing and we started saying, kind of to your point, like deals get done almost on a napkin now like the high math.

Obviously, it’s not perfect. But if I called you up right now and I said, “Hey, we buy it for this. It’s got a “$20 million value-add, we got to put this much in it, and I’ve already got a debt quote.” You would say, “In.” Now, there are a zillion things that I have to prove out but a lot of people don’t realize that investors are sitting on a bunch of money typically in their bank account and/or they’re making a bunch of money and their companies are kicking off a bunch of money. And a lot of times their options are financial planners of the stock market. So, they’re just frothing for guys like us that can bring them something that provides cash flow tax-free. And that was the little secret, Justin, that I didn’t realize is that I was syndicating in the 90s and it wasn’t a thing, and people were clamoring to find out how I invest in apartment building. And so, the first one was hard, don’t get me wrong, and then I had to work my butt off to prove out the numbers. But then the next one is a little bit easier and the next one became a little bit easier, and the deal started getting bigger. And then the broker started to take a look. You know, they’re like, “Oh, this guy is like buying buildings now,” and then the debt guys show up. So, all this stuff starts to happen. As my friend says, “Way leads the way leads the way.” It’s just things connect as you get into motion.

Justin Donald: Oh, I love it. Yeah. And so much of what you’re saying is just spot on, especially with like the deal terms. I mean, you hear the right deal and you’re in. It doesn’t take much like you can make a commitment in seconds. And I love that you’re so good about developing relationships with people that become long-term business relationships and then they become friendships. And so, you did this with your attorney. We were talking about a few other people in your pipeline that you did this. You did this with Robert. You’ve done that. You’ve made a career of being able to have these long-term relationships. And I think it’s a big red flag when you’ve got someone that is an investor that is always kind of turning to new relationships. They can’t keep the same vendors, clients, whoever it is that they use. Like, that to me is something to pay attention to. Like, how long have you had investors? How long have you used the same relationships and brokers and lenders and whoever it might be? So, I love it that you do that. And I kind of have this philosophy that as long as someone in my network is an expert at the thing, if I’m going to spend money on it, I might as well do it inside my family, my family of friends. And so, sometimes it’s friends first and then I do business with them but other times it’s doing business with them and then we become friends, and it’s just such a rewarding relationship.

Ken McElroy: It is. It’s funny. When my dad passed 10 years ago, I got to learn all about hospice and all of that. And one of the things that I learned from hospice was that there are as they measure them at the end of life are people’s top regrets. And one of those is relationships. I wish I would have forgiven. I wish I would have mended a relationship. Literally, those are at the top. I mean, just go google it. And so, obviously, when something like that happens you have to evaluate things. You have to evaluate your relationships with your people and you just never know when that is. And so, for me, I was already headed down that track but then it just solidified all of it. And so, I am relationship first and business is actually pretty low on the category for me.

Justin Donald: You know, it’s interesting. So, for example, let’s just use Robert. You guys have been friends for a long time. There is a point in time before you knew him you’ve had success before you ever met Robert but you guys became great friends. You’re neighbors now. You’re super close. I mean, in many senses, you guys travel almost everywhere together, which is so cool to see, and you both speak so highly of the other person. But how did you guys meet and how did you broker this relationship? Because when you take two people that have their own unique set of superpowers and you combine them that’s where you get that one plus one equals five. And I feel like that’s exactly what you guys have had.

Ken McElroy: Yeah. Thank you. So, what happened was obviously and we talked about my first building then I bought another one and I have a partner too, Ross McCallister, who we merged our companies as well and that made us stronger. He’s a general contractor. And he’s a little bit older than me and has a little more experience, too. So, the two of us together, we’re still together and he’s an incredible friend. And so, what happened was, what does happen, as you know, is all of a sudden you’re like, “Okay. This is working. Our investors are happy. We’re making money. Let’s try to scale it.” And so, that happened and then I joined EO. You know, we used to be called YEO at the time, which is Entrepreneurs’ Organization. And in my EO chapter, there was a guy that knew Robert and I was raising capital. I mean, plain as day, I was like, “Hey, I’m out buying properties and I’m looking for capital. And if you guys know anybody that is interested, let me know.” And so, I got a referral. I called Robert and I met him and Kim at the Phoenix Country Club because they were living in Phoenix at the time and they had a home in Hawaii. They had just sold their business and Rich Dad Poor Dad had just been released. So, this would have been almost 25 years ago, I guess. And I sat down with him and well, first of all, the first thing I did is I’m like, “Okay. If I’m going to meet this guy I better go buy his book and read it.” So, I went to the store and bought the book. I read it in one night. I met with him the next day and, of course, I made that the topic like you would.

And then for about a year, they passed on everything. They just said, “Sorry. It’s not for us. Sorry. It’s not for us.” And they owned a little 12-unit and some other stuff, and literally, they were on this kind of high with Rich Dad Poor Dad. It was not the phenomenon that it is today. And then he asked me, he’s like, “Hey, do you want to come to one of my events?” I swear this is true. I’m like, “Sure. Yeah, I’ll come. What is it?” I had no idea he did seminars or anything and he’s like, “Yeah. I teach this seminar and it’s in Cave Creek, Arizona.” I’m like, “Okay. I’ll be there.” So, I forgot. So, on Sunday morning I woke up. I was supposed to be there Friday or Saturday, totally forgot. On Sunday morning I woke up. I’m like, “Oh my gosh, I completely blew off Rob”. And so, I had flip-flops on, shorts, and a t-shirt. I jumped in my car and I drove up. I’m like, “Oh my God, I need to go up at least apologize.” I walk in and there’s like 400 people in the room and it’s a full seminar with all this stuff going on the walls and there’s stages and he sees me come in and he’s like, “Kenny, come on up.” He doesn’t care that I wasn’t there the first two days because they have, obviously, enough going on. So, I go up on stage. First time I’ve been on stage and he’s like, “Tell them what you do,” and he walked off. I’m like, “Oh my gosh.” And that was right before lunch and I remember Kim came up to kind of handle me a little bit because I was just like, “What am I doing here?” And I was completely not dressed very well, either. So, everybody’s all in sport coats and I’m in t-shirt and shorts. And then she’s like, “You’re going to get swamped,” because all I did was talk about what I was working on.

And then that’s when I realize there’s all these people out there trying to learn. I had no idea. I’d never been to anything like this. And so, I said, “This is kind of cool. You know, there’s all these people wanting all this information,” and all of a sudden I had some more investors. I was like, “Oh, this is pretty good.” And so, I was like, “Maybe I should do a little bit more,” and she’s like, “I’d like you to write a book based on what you’ve done.” I’m like, “I have no idea how to write a book.” So, then I found somebody to help me do that and kind of mumbled through that, and that’s how the ABCs of Real Estate Investing came out and then that opened more doors, as you know, to radio shows. And so, like you have your book, right? So, those kinds of things, they open doors and get you in spots that maybe you wouldn’t be at from a speaking standpoint or on a radio or whatever. Now, they’re all podcasts and things like that. So, that’s how it started and then I started traveling with them because I wanted to learn how to speak better. I wanted to learn how to articulate from stage and I wanted to see the world. And so, we went all over the world together, and now I’ve now written six books, I think. But we’ve been to Russia, Asia, Australia multiple times, Europe, all over Europe, all over the US, Canada, Mexico, Spain, you name it, Bolivia. So, I just go when I can around my family. I put my family first and I would bring them on a lot of those trips. So, I brought them to a bunch of places as my kids were grown up and just kind of made it a family affair. And just the whole thing was just awesome and at the same time, running my business, growing the company, buying assets, and obviously did very well by Robert and Kim and grateful that they had the confidence in our company.

Justin Donald: That’s such a fun story, and it’s so great being able to do life with people and to get past the surface-level stuff where you can really live and travel and break bread and just experience the depth of what a true relationship with time spent means. And for what it’s worth, I loved your book. Your book, The ABCs of Buying Rental Property, was the third book I read in the Rich Dad Poor Dad series. I’ve read every book but it was the first book I ever read on real estate. And so, I remember I read Rich Dad Poor Dad and I was like, “This is incredible. Holy cow. How did I not know about this? What a mindset shift.” And then when I read Cashflow Quadrant, I was like just totally blown away. I was like, “How did I have another level of mindset shift?” And then I read your book and I was like, “Man, I got to get in the game.” And at that point in time, I was in Chicago and I kept on walking by. I lived in Lincoln Park and I would walk by these 3 flats and 4 flats, and I just wanted to buy one so bad. And so, reading your book, I was like, “Man, this is possible. I can do this. I need to start making moves towards it versus not just laying in this limiting belief space where I think I have to have the money. So, I just wanted to share that with you, and it was really neat when we got a chance to meet. Because when we officially met, I hadn’t even connected the dots yet when you said, “Oh, yeah, I was that guy that wrote it.” I was like, “Ah.” You hold a special place in my heart.

Ken McElroy: Thank you.

Justin Donald: That’s awesome, Ken.

Ken McElroy: I appreciate it. I tell you what, my partner just laughs. He’s like, “That is the book that just keeps on giving.” It’s been wonderful. I’m actually revising it right now because it’s a bit dated, just on some rents and things like that, as you would imagine from over the years. So, I’m coming out with the new revised version next year but that book has been great, tried and true. It’s a true story about buying any unit building and how to do it. And it was fun to write.

Justin Donald: That’s so great. It’s interesting because you talk about how and I remember when we first met you’re like, “Yeah. Robert had me on stage. I didn’t even know he was going to talk to me. He’s like, ‘All right, just talk.'” And you’re like, “I kind of wasn’t prepared for it but it was my first speaking engagement.” But then you went on to do a lot of speaking with him and then also with one of my other favorites, Tony Robbins. So, I learned that you not only spoke on stage with him and I believe it was that wealth mastery but I think you’re the youngest speaker Tony had ever had. Is that right?

Ken McElroy: Oh, yeah. Again, Justin, you just got to like put yourself out there and you just got to put things in motion and anybody – listen, I grew up like you very humbly and thinking that this is where I was going to be for the rest of my life, and I just continue to work hard. And what happens is people recognize as you put stuff out there, you put books out there, you put podcasts out there, and all of a sudden one day Tony called, and Robert and Tony have a history too, which I didn’t know, a good history of studying together years ago. And the industry is very, very interesting and it’s a lot more collaborative than people might think. And I, of course, because I make a lot of money on my real estate, I don’t even know why I’m speaking. I’m not getting paid. I’m like trying to educate and I’m actually trying to figure that all out, too, but at the same token, in the beginning, I was trying to hold my own speaking and try to figure that out and deliver good messaging and all that kind of stuff. And so, I’m like trial by fire, I guess, and then eventually kind of turn that into the more of a learning platform like yourself and put some real effort behind it and some people behind it and put some wind behind it. And so, it’s been a heck of a fun journey, honestly, just speaking with all of these different folks over the years.

Justin Donald: Yeah. It’s so neat to just see how these worlds collide and who knows who and, I mean, one conversation, one relationship in the trajectory of change for the direction of your life, like the gravity of that one intersection is just mind-boggling. But I also love really what you’ve done on the charitable side. I know you talked about it a little bit, and I’d love to give you a chance to share because one of the things for me that’s so important with my book with The Lifestyle Investor, I really wanted to not only educate people on how to be financially free to create financial freedom so there are opportunities to impact mindset where people can take not only that but shift the behavior and have the tangible, practical application to be able to do it. But moreover than that, there are so many people that don’t even have basic human rights and human freedoms. And so, I wanted the money of the book, the profits, to go towards charitable organizations. And so, all the profits of Lifestyle Investor have gone to an organization. I love shining a light on Love Justice International because they are stopping human trafficking in 17 countries around the world. In fact, they’re opening nine more locations and they’re just doing incredible work. They rescued over 500 kids last month. It’s really an incredible thing that they’re doing and it gives me so much joy to see the impact that this focused energy and really just the book itself has been able to create. And I know you’re doing the same thing with your organization and I know you started a nonprofit and you have raised over a million dollars for your nonprofit or the nonprofits you’ve been part of over the last decade. I’d love to hear more about that.

Ken McElroy: Yeah. Well, I think what happened in the beginning, I was a check writer like a lot of people, and I did it for tax reasons and it wasn’t really meaningful. And then when I started to get involved, what happened was a friend of mine’s son was diagnosed with autism and this is years ago and before autism was – this is back in the day when I really didn’t have a lot of notoriety. So, I got involved with just a simple walk, and I started doing almost like a March of Dimes walk and it was a small growing movement and it grew each year. And I was a volunteer. I’d go there and get there at 5 a.m., help set up, help with registration, whatever I needed to do. I bring my kids and all that kind of stuff. And I realized when you see the faces of the folks and then the stories and you start to really connect with people, I realized that I needed to get more involved in things. And so, that’s when I started to be more intentional. And then so that started from a physical standpoint. And then my friend, he started California Closets and he was one of the founders at EO. He called and said, “Listen, I’ve got only a year to live,” and he got diagnosed with cancer. And so, I’m like, “Well, okay.” So, then I really got involved and I said, “Okay. I’m going to take this over,” and I became the chairman of the walk for two years while he was recovering. And then I really got immersed into it and my whole company got immersed into it. And what that turned into was a full-time Director of Philanthropy.

And in addition to that, my partner Ross, he had some things happen in his family around cystic fibrosis. So, the both of us, by this time, the properties that we had owned were quite a bit and they were kicking off lots of cash. And so, we said, “Okay. Let’s designate a bunch of money from our properties into these foundations and bring on this director,” so which we did. And that’s just really just taken off. And so, then what we did was we ended up doing partnerships with our vendors. And so, Ross and I fund the majority but then our vendors’ fund, and our employees get an opportunity to fund too and they actually can write their own grants to their own charities. So, I don’t know exactly the number that we would give out every year now but it’s a lot and the employees can write their own grants and they go through a board and all that, and then they get the grants to whatever charity makes them happy. So, it’s quite a few charities because we have 250 employees. But what really happened, which was really interesting was we had quite a bit of money in the foundation and then the pandemic hit. And we didn’t lay anybody off, of course, but some of our employees’ families had been severely impacted. Like, maybe their husband or the wife had lost a job or parents or whatever. So, we gave out, gosh, we were giving out $5,000 and $10,000 grants to families during that out of our foundation to our own people. So, that kind of got us through that period of time.

And so, the charity thing has been really significant for us. It is one of our core values. We have five core values and one of them is be giving. And if you look at our website, it’s to invest, to live, to play, to give. That is what you’ll see. It’s always a primary issue in our firm. And then as you would imagine and not by any kind of design, that attracts a different kind of employee. And so, we found that by having that just by doing something that Ross and I wanted to do, our culture got better, stronger, deeper, and tighter, and we started attracting very, very, very good people because they wanted to be part of something bigger than just making money.

Justin Donald: Ken, that is incredible, and I love that you were able to use your foundation to support your own team and staff in a time of need and of crisis. That is so cool. You know, it reminds me when I was younger. So, I didn’t have a lot of mentors in investing or entrepreneurship or anything like that. I didn’t know anyone when I was young that was a business owner that invested as a profession. And so, I remember that my mentors were authors. It was you. It was Robert. It was Tom Wheelwright. It was just a number of different people, Stephen Covey, and I mean just you name it, Napoleon Hill. I mean, these are people that had a huge impact whether they know it or not. Tony Robbins. And so, the interesting thing is when I finally started meeting successful people and I would say, “Hey, how can I meet more people like you? Like, where would I hang out with them?” The common theme was that I should get involved in philanthropies. And when I was young, I was like, “I don’t want to do that.” I wasn’t asking to like go give time somewhere or go donate somewhere. I want to know where the people that are doing the thing that I want to do. And it’s funny because over time, I kept getting the same answer and finally it clicked for me and that was, “Oh, the people that have figured it all out and are really successful in life and are so successful that they don’t need to work, they’re spending their time at these charities. They’re donating their time, donating their resources, they’re starting them themselves, they’re sitting on the boards of them.”

And I’m glad in many respects that I didn’t figure that out that I was a little too hard-headed because it would have been for the wrong reasons. And so, now I love it because I’ve come full circle. I understand this and I love spending time there and time as far as treasures, right? Your time, your treasures in these spaces for the right reasons and it’s amazing the fun synergies and connections you can have with other like-minded philanthropists that value this in their life and in their business.

Ken McElroy: Yeah, it’s true. And I’ll tell you, really, you want some purpose. And every time you want to maybe feel a little bit bad about yourself or feel down, all you got to do is go back to some of those moments. I know like, well, I climbed Kilimanjaro twice with my kids. Well, each kid I brought up, we summited. And part of that trip is working in an orphanage for the blind in Africa. And I remember my son, my older son, coming over here in about an hour, I said, “So, what was your takeaway from the whole week of that week and the climb in the mountain, which took another two weeks?” He said, “I can’t believe how happy these people are and how little they had.” And I was like, “All right, good for you.” Because when you’re around that stuff and you immerse yourself in that stuff, you start to realize how lucky, how grateful actually we really are.

Justin Donald: Yeah, that’s incredible. I love that you’re doing this with your kids and that this is a family value for you. And it is for us too, I think, there’s a lot that we are very similar on, and I think that’s probably why we resonated so well when we finally connected. I’d love for my audience to learn more about you. Where can we find you?

Ken McElroy: Well, thank you. Well, the best way is KenMcElroy.com and on there, you’re going to find all kinds of stuff. It has links to get to the company, which is MC Companies. That’s probably the best place you can look on there. We do videos and blogs and newsletters and all that kind of stuff to kind of support people that are trying to figure out things in the real estate community. We do have something for your listeners. We have at KenMcElroy.com/LifestyleInvestor we actually have a test that says, “What kind of investor are you?” So, you can maybe try that. It’s kind of fun. You fill it out. It’s like 25 questions but it kicks right to your inbox. It’s kind of fun.

Justin Donald: That’s awesome. Thank you for sharing that with us and with our audience. And I just got to say I’ve had so much fun hanging with you here today. I say this often in my podcast that the people that I meet and get to know better, it’s so fun. Like, I want to do this anyway, and it’s really neat that we get to share this with the world, you know?

Ken McElroy: It’s so true, Justin. I appreciate your time and being on your channel and I know we’re going to get you on mine. And, as you know, the world is made up of reciprocity. And one of my mentors when I was off base with somebody, she said to me, “Well, one of you is out of exchange.” I’m kind of like, “Oh, that’s a very interesting way to put it.” And it was true. And I think that people could learn that lesson. Just always try to be an exchange of equal value. And so, that’s one of my philosophies.

Justin Donald: Oh, it’s so cool. Well, thank you for sharing that and for your time. And I want to end this call as I end each call and that is with this, what is one step you can take today towards financial freedom and towards a life on your terms, a life by design, not by default? Thanks. And we’ll catch you next week.

[END]

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The Secrets to Building a Billion Dollar Real Estate Empire - Justin Donald on September 22, 2022 at 11:38 am

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