Rich Dad Education: Real Estate Investing
The Rich Dad Poor Dad Book quickly became one of the most impacting books I ever read. So, if you are asking the question does this guy have something to say worth listening to?
Oh yeah…
(You can go to Amazon to pick up any books from this author you need.)
I remember picking up his book for the first time. It was in an airport. It was a small book store outside of the gate where I was about to leave for the millionth time. I was so tired of traveling all the time for my job. You know the drill….the alarm goes off at that god awful time… you are so tired but you know you gotta get on with it.
I remember being so tired, I laid down on the bathroom floor while the shower warmed up. Of course, I fell right back to sleep and woke up because the humidity level in the bathroom was rising to epic proportions. I was tired of it all, and with that the seeds of desire for another life had been sewn into fertile ground.
So back to the early morning airport scene (everyone is still grouchy), I was standing there with my laptop case strap draped over my shoulder, and I picked up the book to thumb through it. I didn’t even know who the author was.
Then like the old commercial that presented Coast “the Eye Opener,” My eyes popped open and I began to consume the information as if it were crack cocaine. (not saying I ever tried crack…just for the record). Seriously this was a bag dropper. You know what that is?
It’s when a corporate guy carrying a laptop case, takes it off his/her shoulder and drops it to the floor, so he/she can focus for a bit.
This guy knew what he was talking about, and I wanted to know more.
I remember the words dripped off the pages like pure honey. I just couldn’t get enough. I went on to go ahead and order his audio series and I listened to everything I possibly could to become more like this man.
He was in control of his life, and I wasn’t in control of mine.
The story as outlined in the book was simple. Mr. Kiyosaki had a biological father who was a working class individual. He was upstanding and honest. However, towards the end of his life he was broke.
I guess I’m probably pretty liberal on my paraphrasing.
On the flip-side the father of his best friend growing up was an entrepreneur. He was a mentor that Robert would never forget. He changed his life forever.
I remember relating to this story so well. You see my dad was an engineer. But, I kinda had another dad too. He was my boss and he is wildly successful. He became my mentor, and at the time, he owned a large international medical company. His name is Peter. I don’t want to list his full name because you would be able to Google him, and I am not trying to name drop. I am just saying that we need mentors. I am just kind of lucky to have such a successful one.
As a matter of fact, I just met with him for breakfast yesterday, and now that my biological dad is in heaven, he continues to be a huge role model and influence. He allowed me to see the world from his shoulders. It has been incredible. When my mentor walks into a room, it gets quiet. Pretty cool.
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Robert Kiyosaki Mentoring Program
Back to my point: we need these people in our lives if we want to grow and go on to do amazing things. I admire that you have chosen Robert Kiyosaki to be one of your mentors too. So, let me get on with the review.
Robert’s lessons caught my attention fully. I began to look at the relationship with my boss in a completely different way.
I remember Robert talking about the fact that most Americans really don’t have an entrepreneurial mindset. He said the problem is that when you get married you actually recognize that you can do exponentially more. Once you have a spouse, you really become a team and you can accomplish more things together. The only problem is that in the United States it is only legal to marry one person. Of course his comment was tongue-in-cheek. But the point of leveraging your time for money stands firm.
Who is Robert Kiyosaki?
Robert grew up in Hawaii. He spent time in the Armed Forces and was a heli. pilot. I don’t know if you know anything about being a pilot for a helicopter, but trust me when I say, to be pretty dang smart. So let’s start there. Robert has an amazing intellectual gift. He is worth listening to.
His Successes/Failures
Every great entrepreneur has experienced both successes and failures. It is really how we deal with these things that creates sustainable characteristics for success.
For starters, Robert was actually instrumental in bringing Velcro wallets to the market. Velcro surfer wallets were the thing back in the 80s. The only problem was at the time he didn’t recognize how the competition could come in and steal the market. His first company actually went bankrupt.
He did not let this failure stop him. Instead, in the 1980s he started his own T-shirt company. Yet, even that company went bankrupt in 1985.
He became a salesman for a copier company and during that time continued something on the side that many people did not know about. All along he was investing in real estate. You got it he made tons of money in real estate and he is reported to actually make $2 million a month now between all of his investments and business enterprises.
Say what?
Uh yeah…pretty impressive. Again, he is worth listening to even though he had to file bankruptcy for one of his companies in Jan. 2013 according to CBS News. Based on my research it looks like a deal that went bad. I don’t really put a lot of stock into is as far as how it will affect your education. But you can check it out.
Robert bought his first property at age 24.
Today he teaches that what Americans typically do is: they buy a home, and then move into it. This is a mistake.
His perspective is that you should look at life as cash flow and income.
A home can provide cash flow so you should not move into it. Rather, you should rent it out and make money from it. The only problem is is that you have to live somewhere. So you are gonna need to live somewhere else. He states that most people consider their home as an asset. He argues that it is a liability if you are living in it. It is only when it is useful for wealth building and rental income that it is truly an asset.
The whole concept is simply to ensure that your inflow of cash outweighs your expenses.
He recommends things like network marketing or investing in small businesses. He wants America to understand that you have to put your money to work for you.
I love Roberts demeanor and the way he presents information. He’s very systematic, pragmatic and easy to understand.
Overall Robert’s Mission is to teach financial literacy to people. He does this through his publishing. He has published 15 books.
Rich Dad Coaching and Real Estate Investing Tips:
Robert basically says that you can learn a lot from the game of Monopoly. He said you need for greenhouses and one red hotel, for greenhouses and one red hotel. This is what you need to do over and over again to be able to retire at an early age like he did at 47.
Robert teaches you to invest in real estate so that you have four things.
1. Cash flow/income every month
2. Tax advantages
3. Appreciation
4. Capital Gains
Robert Kiyosaki’s 6 Steps to Real Estate Wealth
Robert teaches the students to have a very specific mindset.
1. Decide to be an investor
2. Find an area to invest in
3. Identify potential investment properties
4. Analyze, negotiate, and put in offers.
5. Put together the deal. This includes financing and due diligence.
6. Property management
It is really important to make sure that you have all six of these items lined up. Without all six you do not have a successful real estate investment practice according to the author.
1. Decide to be an investor:
He suggest that you learn to be an investor by studying how to do it every day. He says that you should be learning something new every day and advancing your abilities. This sounds a lot like personal growth. This will enable you to have more confidence when you go out to find your deals.
Robert mentions that not having the money for down payment is really not the deterring factor. It should never deter you from investing in real estate. If you find the right deals, the money will come.
With his methodology he actually suggests that you might ask the seller to finance the down payment in exchange for a principal and interest payment back to the seller.
For example if you have an elderly couple that is going to put the money into a bank account you can offer them 6 percent return on their money which is better than the 2% that they might be able to get by investing into a CD.
In essence this way the seller actually becomes the lender and you borrow directly from the seller for your down payment.
2: Finding the right area:
He also recommends finding properties close to home to start with. These properties need to be either in an area that is slightly depressed and has not had an uptick in years, or has a solid trend of appreciation.
Robert talks about the first property that he and his wife bought together. He used to jog by it every day. I just want to make sure you don’t confuse this with the first property he bought at 24 on another island which required him to catch a flight to visit.
He says, “it is important to research the area to see whether it is growing and trending upwards.”
He suggests that you fall in love with the area not necessarily the house. He also tells you look for the dog of the neighborhood. He’s actually happy if you can find a property that has some problems. This will thwart most peoples’ intention to buy and give you an opportunity to buy it at a lower cost.
3. Identify potential investment properties
Note! This is important! Robert recommends that you look at 100 properties before you actually make a choice when you’re first starting out.
It is really important for you to also find a broker that invests in his spare time too. Investors think different than home buyers. If you’re dealing with a standard real estate agent, they may not serve you as well someone that knows about investing.
When you begin looking at properties make sure that the bones of the property are clean, make sure that the curbside appeal is solid and then make sure that the construction is quality. Everything else can be addressed by paint and aesthetics.
You also want to make sure that the house is congruent. What I mean by that is that the outside of the house and the inside of the house look like they were cared for similarly. You know. The inside shouldn’t look better than the outside and vice versa. It should all match.
4. Analyze, negotiate, and put in offers.
Robert talks about four types of cash flow.
1. Cash flow
2. Depreciation or phantom cash flow
3. Appreciation
4. A way to take the appreciation out relatively tax-free.
As you move towards putting your offers in, you want to take a look at the rental market. Make sure that your rental market is higher than your mortgage rate. You also need to factor in a 5% vacancy rate. Don’t forget to add about 8% for repair costs as well on-going.
These are the numbers that you would use to calculate your return on investment.
5. Put together the deal. This includes financing and due diligence.
Essentially you want to come down to percentage that makes sense. This percentage would give you a rough idea of what to expect to earn for every dollar you spend buying and maintaining the property. If this percentage is higher than what you can get in the bank, then it may be a great deal. Submit offers that are lower than the asking price or create a scenario in which you can make out a little better in financing by offering full price.
Another option is to request use of the property for 3 or 4 months before you actually close, so that you can improve the property and get a higher appraisal so that you fair better in financing.
6. Property management
I believe he recommends that you manage your first few property rentals on your own so that you gain an understanding of what the management company will need to do. Once you are versed in that information, you can move towards outsourcing property management.
Rich Dad 3 Day Seminar and Elite Training
Ok, so I have to move into some of the harder things to review here.I want you to know that I absolutely respect and admire this man. There are some negatives that I have discovered that I want to share below.
So, just trust me that I am not knocking him….I’m just trying to get you the information you need.
Robert is smart, he predicts that the stock market will crash in 2016. He originally wrote that in 2002 and has been featured on info wars. Overall he has a negative outlook on how well the average person will fare in today’s economy, and he recommends that people get some serious training.
Like many of the current gurus Rich dad education provides access to different levels of education seminars.
Free Training
You may not be surprised that the seminar series begins with a free training. The free training also offers a gift just for attending. At the time of this writing, the gift is called “Shooting the Sacred Cows of Money.”
But the process is just like a lot of other courses out there.
The concept is that they also want to expose you to their system and involve you in the potential for future trainings.
3 Day Seminar
The goal of the free event is obviously to upgrade you to their $495 three day training series. They claim to present the following information during that time
-Secrets to real estate
-Funding your investments
-Developing the right mindset
-Locating hidden deals
-Multiple streams of income
Rich Dad Elite Training
You might be curious to know that they also offer Elite training.
Although I pride myself in being the Real Estate Spy, it seems a bit hard to find out exactly how much money these elite courses cost. Based on the curriculum that I could find, there are various courses that you can sign up for.
They offer in person (live) and online components.
I was able to uncover a complaint that was registered through the Better Business Bureau (BBB) in which a gentleman said that he lost $16,707.73.
Rich dad did respond to the complaint however it shows me that obviously there is potential for spending tons of money with this organization.
So just like Armando Montelongo we again have a system which is serves to expose, involve, and upgrade people into their courses. Just when you thought you had enough information there always seems to be another course or training that you need to go through.
Again this seems to be a scenario where the individuals running this company are have made it their business to sell you the ideas and tools to be able to do real estate investing. They may make more doing this than in the real estate market itself. Of course this is pure speculation. AND it’s not necessarily a bad thing. It is just part of the puzzle.
I tried to figure out the break down of where the money comes from. But, I found it virtually impossible. In my research I found out that Robert keeps most of his properties in trusts and also LLCs that are so scattered I can’t track it to give you the specifics.
The Uh Oh’s and Oh No’s:
What the Better Business Bureau had to say about all this:
Over the last few years there has been:
-39 total advertising and sales complaints
-2 billing complaints
-20 problems and product service complaints
(I think this is pretty low.)
Pissed consumer had a total of 27 complaints and estimated the claim of losses to be around $81,900. One of the complaints stated that negotiations improved after he contacted the FTC.
I was also able to uncover that that individual complained about spending $4899.
My point here is that elite trainings simply do not have a price tag on the website. I get it. It might deter buyers.
But being an entrepreneur at heart, you really can’t blame this guy. Robert Kyosaki is absolutely brilliant. He has figured out a way to leverage his understanding of the real estate market and basically sell other people the tools to make their own money in real estate.
Still it is the equivalent of selling shovels pics and pans for those that are interested in the gold rush.
I believe overall that I can give Rich dad 4 stars. I believe he does a good job educating people and makes them aware of financial instruments. He does a good job teaching people how to think about money.
But, as far as real estate investing goes it’s just another one of those programs that’s designed to keep you coming back for more information.
Then again so are colleges.
So maybe I’ll bump that up to 4 1/2 stars.
If you choose to try his programs, I wish you all of the best. I hope you found the review helpful.
