The Straight Path to Real Estate Wealth is a book by Kris Krohn detailing his personal experience and the real estate investing system that has grown out of it.
Kris starts out his introduction with a bold and challenging statement, “The real estate system you’ll learn in this book takes the least time, effort, and risk, creates the most value for society, and generates the greatest returns for more investors in any given market than any other system you will ever encounter.”
I think we’re all interested in saving time and effort, and in avoiding risk, but for me, the idea of creating value for society is an important one. It reminds me of the top level of Maslow’s Hierarchy of Needs, the need for Self-Actualization. Some systems focus only on self-gratification – getting rich, being able to buy fancy cars and boats, being able to take trips to exotic places – but Kris has a different perspective. He understands that some of the richest people in this world are also some of the most spiritually impoverished, but he also recognizes that the ability to meet (and exceed) one’s own physical needs can be combined with the ability to meet the needs of others.
But does the system work as claimed?
At the time the book was written (2010), we were in the middle of a very hot real estate market, so some of the figures quoted in the introduction need to be viewed in that light. Kris speaks of 50% annual returns, properties being purchased with 15% equity already in place, and a $50,000 increase in net worth at the time of property purchase, but the most important point he brings out is that his system, and his company (REIC at the time of writing, now Strongbrook Direct) are not in the business of teaching real estate. They are in the business of doing real estate. With 90% to 95% failure rate for those buying expensive training programs, this is an important distinction.
Kris points out that most investors who desire to get into real estate are faced with only two options, do it on their own with all the risk associated with a trial-and-error approach, or pay between $5,000 and $50,000 to some real estate “guru” for training that buries the investor in information that is difficult to translate into success. Having gone through the process himself, and having succeeded with the help of some compassionate mentors, Kris wanted to create a system where all the opportunities for failure could be eliminated. He wasn’t interested in selling information for a profit, he was interested in helping people find genuine success in real estate investing.
He named his real estate investing system, “The Straight Path” after the passage in Matthew which warns that there is a “straight” and “narrow” path that leads to life, but it is surrounded by a “broad” path which leads to destruction. Kris was determined to help people find “The Straight Path to Real Estate Wealth”. His book and his company are the tools he uses to guide people along that path.
Based on his experience, Kris identified six “core elements” of investing which had to be considered:
- Market Conditions
His goal was to find the system which provided the best balance between these six elements. Some strategies might provide better value in one or two of the areas, but at the expense of the remaining areas. What he finally settled on was a hybrid approach to real estate investing, one which combined the best of more than one strategy.
At this point in the introduction, Kris takes a step back and describes his own journey from aspiring pre-med student to successful real estate investor. He talks about his gradual loss of faith in the “get good grades, go to college, get job security” mind-set, his struggles with pre-med classes, his shock at learning the Social Security statistics that “At age sixty-five, 75 percent of all Americans are dependent on relatives, family, and charity; 23 percent are still working; and only 2 percent are financially independent.”
The turning point for Kris was the year when he and his new wife realized they didn’t have enough money to meet their future needs. A local business man recommended a book on real estate investing which he read in three days. Armed with more hope than knowledge, he purchased his first house. He and his wife lived in for two years before selling it for $54,000 profit. By the time of this book was written, buoyed by his initial success, Kris had gone on to complete a total of 407 profitable real estate deals.
The Straight Path system has been tried and perfected. It can be applied by any individual, from college student with no job or credit history, to bankruptcy filers, to already successful real estate investors, and it works in any real estate market. Kris acknowledges that the system isn’t without flaw, but he notes that, “on the whole it eliminates the risk of unforeseen circumstances far better than any other system I have encountered.”
Next week, I’ll continue my review with Chapter 1 of the book, “The Crucial Mental Shift“, but if you’re anxious to read ahead, the book is available through Amazon.com or as a free PDF download at http://book.gfiproperties.com.