Kris Krohn is a well-known real estate investor, investment coach and author. As the founder of Strongbrook, Kris Krohn has developed “The Strait Path,” a real estate investment formula that helps people achieve financial stability by generating residual income. Here Kris Krohn answers questions about the creation of a long term investment strategy he calls a “game plan.”
ZRYLW: Kris Krohn, what is a “game plan” in your way of thinking about real estate?
Kris Krohn: Like anything else in life, to achieve something important, you need a plan. A solid portfolio-building game plan in the Strait Path system requires the following elements: identifying and leveraging hidden assets; a 10-year, specific, customized goal; and enduring to the end.
ZRYLW: What do you mean by that first set of terms?
Kris Krohn: Most people have assets, but those assets just aren’t working that hard for them.
ZRYLW: You mean they have money or potential going untapped?
Kris Krohn: Yes. Low-yield assets are often hidden and may include home equity, qualified-plan funds, income, job history, credit history, relationships or cash.
ZRYLW: Sometimes people don’t think about those as investment tools.
Kris Krohn: This may require a paradigm shift in thinking. Identify low-yield assets and leverage them by moving them to high-yield investments. Achieve this and manage your risk through education.
ZRYLW: How long do you work with investors?
Kris Krohn: Everyone I work with creates a 10-year goal along with a customized plan for achieving that goal. The beginning goal is to uncover and transfer enough existing assets to purchase one home.
ZRYLW: That’s the first step you talked about.
Kris Krohn: Yes. People with more assets can begin by purchasing multiple homes. The end goal is to create enough cash and cash flow to be able to technically retire within 10 years, which is a realistic goal for most individuals. When financed and positioned properly, investment properties create a chain reaction; the more you have, the more you’re able to leverage.
ZRYLW: Do you have a step-by-step game plan?
Kris Krohn: Yes, four steps. The first is to prepare. Obviously, real estate investors must be able to purchase properties. The first and most important step is to establish one’s ability to do so.
ZRYLW: What’s the second step?
Kris Krohn: Purchase. The next step is to start purchasing properties to generate cash flow, but more important, to build equity that can be leveraged into more deals.
ZRYLW: How does one make more purchases?
Kris Krohn: That’s the third step: using financial leverage. As a person buys properties, he or she is able to use the equity in those properties as a down payment on more property purchases.
ZRYLW: That sounds logical. How do you keep it going?
Kris Krohn: Momentum. At this stage, an investor simply has to duplicate the process to achieve critical mass and create exponential growth. That’s the fourth step.
ZRYLW: And how do you keep the plan on track?
Kris Krohn: Develop discipline in your investing by creating a 10-year portfolio game plan and sticking to it.
ZRYLW: Is it easy to get distracted?
Kris Krohn: Perhaps, but having this goal in place will help delay gratification.
ZRYLW: What do you mean by that?
Kris Krohn: Delay the gratification of spending your profits by reinvesting them, especially in the early years. Then, endure to the end by repeating the investing process over and over until you achieve your goal.
As a nationally recognized public speaker, Kris Krohn has taught thousands of Americans about investing in the real estate market.