General wealth building vehicles & methods. (pet project)

[parttimepro]

So, correct me if I'm wrong, I haven't actually read Rich Dad, Poor Dad, but isn't the premise that you can get rich flipping real estate? Dressed up in language about assets and stuff, but basically that you can buy properties, fix them up, and sell them for a huge profit?

Next question: Isn't this a scam? I think the people who make the most money from real estate flipping are the ones leading the seminars and selling the books. The ads all feature people talking about how much money they made, with "Results not typical" in tiny print at the bottom of the screen. Kind of like ads for weight-loss pills. There's an infomercial in my area where two twin midgets sell this scheme. If that's not a sign it's a bad idea, I don't know what is.

This is just my impression. If someone has actually done it successfully, I'd like to hear about it.

[xxx]

I agree this guy is great. Unlike most of the real estate hucksters out there, he lays things on the line.
He also points out why real estate isn;t for everyone. A real breath of clear air.

[elus2]

depends on how bullish the market is. any idiot could have made money buying property in vancouver over the last couple of years. my parents' home appreciated in value by 40% over the last 2 to 3 years but it hardly appreciated at all for the previous 5 years.

[Nemesis]

no his premise is not about flipping properties, It's about no particular investment vehicle, just the way rich people think v. the way poor people think.

[TStoneMBD]

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no his premise is not about flipping properties, It's about no particular investment vehicle, just the way rich people think v. the way poor people think.

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the original book doesnt really get into biased opinions of investment vehicles, but as the series continues it does. kiyosaki does not fix up properties and sell them, and doesnt really go into detail about this area of investing as he does not specialize it, however he does mention that there are people who do this and it can be quite profitable. kiyosaki merely buys real estate using leverage and good judgment, and advises buying property with positive cash flow as your first investments.

it may seem unrealistic to a first time reader that there are investments out there with positive cash flow, but i have seen several. for instance, my apartment building is up for sale, and if i were to buy it i would have positive cash flow with the attendants in the apartment already. it is a fantastic investment. the only downside to it is that the economy in the area is collapsing, and so the property will most likely decrease in value. regardless, if i wanted to begin my real estate investing career at the moment i would almost certainly buy it. however, i plan on moving 7 hours away a year from now and therefore dont want the responsibility. i also dont want to start investing in real estate until i have a 100k bankroll, which i should be able to acquire by the time i turn 22 (2 years from now) according to my projected income. my landlord wants 75k for the building, it has a new roof and 4 active tenants. each tenant is paying $500/m. With a 30 year mortgage at 6% interest, monthly payments would be about $440, for a positive cash flow of $1560 before calculating other expenses.

my father's home is not up for sale at the moment, but if it was and i was interested in buying real estate i would certainly jump on the opportunity. the house is worth about 270k and if you did research, it would probably be projected to appreciate as it is in an increasingly populated area. with a 6% mortgage over the course of 30 years, the monthly payments would be $1618. he has a tenant living downstairs in a studio unit paying $800 a month, and the upstairs apartment would rent for about $1200/m, for a positive cash flow of nearly $400 pre-expenses.

[TStoneMBD]

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make sure to check out this webpage if you're gonna be reading rich dad poor dad.

John T Reed's analysis of kiyosaki and rich dad poor dad



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wow.
Quite an interesting essay to say the least. Its hard to argue with clear cut evidence, but it is also possible the random author of the essay is just making up falsified information. Regardless, I will be sure to read the entire report. However, he states his opinion early on that investing in real estate is not going to easily make you rich.

How can he say such a thing? Has he attempted to invest in real estate and failed? Why is it true then that the majority of the millionares of this country all acquired their wealth through real estate? As a poker player, I meet alot of abundantly wealthy people at my local casino. Why is it that the real estate investors there have always told me that I should invest in real estate immediately? I was once told and I quote, "Listen, you need a place to live right? 'Yah.' Then there is no reason why you shouldn't buy your own home."

Investing in real estate is hard work. It really is. Unless you have enough money to afford a management company to take care of your properties you will have to do it all yourself. That is one of the main reasons why I don't want to start investing until I have a gigantic bankroll, which I feel confidently I will acquire through the means of poker.

Kiyosaki doesn't say that investing in real estate isn't hard work. However, he believes that through that hard work you will acquire great wealth. Real estate is profitable when done correctly. How can anybody deny that? Kiyosaki's book is geared toward the financially illiterate public. He teaches people how to read financial numbers in a clear, concise manner for lamers to understand.

Anybody who has ever had to touch a dollar bill should read Kiyosaki's book, especially the Quadrant edition, despite whether his life story is true or not. His understanding of money is correct, and how he perceives life and his value of money is inspiring.

I feel quite strongly that the people who protest Kiyosaki's teachings have either failed at investing, or simply want to justify their laziness by proving to themselves that it is impossible. I have never seen a successful real estate investor, or businessman ever discredit Kiyosaki's teachings.

[DOTTT]

I'm guessing you don't believe there is a real estate bubble about to explode?

[DWarrior]

I read RDPD and then Cashflow Quadrant. Something wasn't adding up, it felt like he was all over the place with his life story and his suggestions. I read John Reed's essay, and Rich Dad's response, and concluded that I won't buy any more of his books.

That's not to say that Kiyosaki is a "fraud" as a lot of the readers of John Reed's essay seem to label him on line, but I find his advice not technical enough. I think he exaggerates the little details, so that the overall story gets totally skewed. For example, I just started reading Millionaire Next Door, and they say only about 1% of all millionaires spend the way Kiyosaki spends (Rolexes, Porches, Boats). Also, he oversimplifies his suggestions about cash flow, his advice about cash flow is similar to: you want to buy XYZ, go out, buy rental properties for cheap until you get enough cash flow, and the cash flow should pay for XYZ, repeat. In his game, there is no difference between owning one property and owning a hundred, the cash just magically gets added to you. In reality, it will take time and effort to rent the properties out and renew leases. You'll have to spend time travelling and physically doing the deals. It's not like you buy a property, it gets rented, and you can go back to your old job, but you'll have extra cash each month now.

While I didn't go out and make a website labelling Kiyosaki a thief, because statistics can be manipulated, I do have to agree with Mr. Reed's general advice: it's better to learn from technical books than from general advice. As I read The Millionaire Next Door, I find a lot of what Kiyosaki suggests, but with statistical data to back it up and no crazy dreams.

Also, I think my aunt made her fortune "flipping" properties, though she didn't do what Kiyosaki suggests. His advice is "buy, rent for +cashflow, sell when market goes up", where she had to spend a lot of time fixing the places up, and either rented them out or sold them. Kiyosaki seems to leave out the "fix the place up" part, which takes a lot of effort, since the discounted places are generally run-down.

Again, his advice is good, but can be found in the technical books. It's like poker: you can read the beginner books, and they will give you valid advice, but Sklansky and other technical authors will give you the same advice and a whole another world. Also, RichDad forums are overwhelmed with spammers, "i'm broke and need money to pay the rent tomorrow" people, and naive "investors" throwing money at studiotraffic.

[lu_hawk]

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Any use of bank money that returns higher than the interest charged on it, and does not require a large volume of personal time, is a successfull way to acrue wealth. Especially if you can keep doing it.



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This is called leverage. It is great on the way up, if things go bad you lose everything. Can you guarantee that RE prices won't go down?

[inishowen]

The most important thing right now, at 24, is your FICO score. This country is built on leverage and being a good credit risk is paramount to building wealth. If you have a bad number, fix it, and don't screw up again. If you have no credit record, which is conceivable at 24, create one by getting a credit card and paying it off every month or go to a local bank, take out a personal loan for $1500 or so, DO NOT spend that money but make a few payments then pay it off in full. The interest you pay will be offset by the record you create. Once you have good credit many doors open.
If I were you I'd try to live as cheaply as I can and pound money into some type of savings account. If you don't think your current job is career worthy and are doing it just for the money then find another job that pays more. Basically, what I'm saying is that you should invest in yourself first and be ready for an opportunity to invest when it arises. Putting $10k into an index fund is great but if that $10k represents 90% of your net worth then it is highly likely that you will need some of it back. Real estate is great, it has been the most important investment in my life, but it takes time to create wealth. Believe it or not those monthly rent checks do not make your landlord rich, it's the equity build up that does.

Once you have an adequate bankroll, I would look at real estate over the other choices mentioned, multi-family properties specifically. The decision to buy is a math equation; it either makes a positive cash flow or it doesn't. The leverage you gain in RE can not be matched imho. That said, the RE market is mature right now, if you are in a pos to invest, I'd only buy something that was a complete steal.