Robert Kiyosaki Blog

I remember a lot of comments from readers and also from people I meet in person who tell me that they are just looking for a place to live and are not really looking for a real estate investment.

My default answer is “Why not treat your first home as an investment?”

In reality, once you buy a property, you become a real estate investor. Buying a home is often considered to be the biggest investment one can make so it’s best to treat it as a real investment — one which will give you reasonable returns if you do decide to turn it into a rental property or if you sell it further down the road.

What are reasonable returns?

Normally, when a person buys a house which he intends to live in, he does not consider how much rent he would earn if he decides to rent the property out, and whether the possible rental income would be more than his monthly amortization. It is not uncommon for a homeowner who moves up the corporate ladder or improves his situation to move to a better home but keep his first home for sentimental reasons.

Thus, if in the future, the homeowner decides to move to another house and converts his first house into a rental property, the rentals are often not enough to cover the monthly amortizations, thereby producing a negative cashflow situation.

Had the homeowner considered his first house as a real investment, he could have dedicated more time to finding a property that would fetch better rental rates which could cover the monthly amortizations, thus giving the owner a nice positive cashflow.

More often than not, factors that may affect market values and appreciation are not given too much attention by a home buyer as the primary goal is just to have a place to live in. When the time comes to sell the property, it is very likely that there is little or no room for significant profits.

At times, the homeowner may even have to sell at a loss. This situation could have been avoided had the home owner considered buying a property that was way below market value*.

*-”Market Value” is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

Buying a property below market value would be in alignment with what Robert Kiyosaki often says, which is “You should make money when you buy, not when you sell”.

 Money is made in the form of equity* at the time the property is bought and the profit is realized when the property is sold. Robert Kiyosaki is the bestselling author of Rich Dad Poor Dad.

*- Equity is the difference between a property’s current appraised value or market value and the loan principal balance

The opportunity is there so don’t waste it

Everyone at one point or another will really have to buy his or her own home so why not make the most out of the opportunity? If done well, one could gain passive income in the form of positive cashflow, or a significant profit, or both. At the very least, the education one can gain from treating his first home as a real estate investment is priceless.

It is virtually risk-free

Since initially the goal of the home buyer is to have a place to live in, he would not really be concerned with holding costs associated with properties that take time to lease or sell. He/she lives in the place anyway so this makes it virtually risk-free in my opinion.

In fact, I apply the same strategy to all of the deals that I have done this year as my last fallback would be to live in the property just in case I am unable to sell or rent it quickly.

The challenge in deciding to live in one’s investment property

If one decides to live in his/her own investment property, chances are one will have the tendency to  fall in love with the property and over-improve it. I guess that’s the only risk that one should manage. Falling in love with a property can cloud one’s judgment and introduce costly improvements that one might no longer be able to recover.

If your first home is good investment, it can lead to more investment properties

If one buys his first home as an investment and not just as a place of residence, it can help ensure that more real estate investments would follow or at least it won’t prevent the homebuyer from buying more investment properties. Believe me when I say that buying a home that costs too much and is considered to be a liability can really hinder one’s ability to build enough capital to buy the next investment property. This is based on first-hand experience.

Ready to buy your first home? I wish you successful investing!

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Treat your first home as a real estate investment?

In my pursuit for further educating myself when it comes to achieving financial freedom, I enrolled myself in a free online coaching in the Rich Dad Poor Dad lessons of Robert Kiyosaki.

In one of the chapters of the e-learning that I’ve been reading, Robert Kiyosaki suggested the Rich Dads Get Rich Strategies in which he used to get out of the rat race and become a business owner and investor.

I would like to share it all to you my readers so we can also use it to achieve financial freedom just like what Robert Kiyosaki did:

STRATEGY 1: Become financially literate.

The number 1 strategy to get rich is to become financially literate. Financial literacy is not always taught in schools. It requires proficiency in several areas: economic history, accounting, taxes, investing and building businesses. These are difficult subjects but don’t let the difficulty scare you.

Becoming financially literate has nothing to do with how far you got in school. It doesn’t matter whether you’re a failure in school, a jeepney driver, a janitor, or an executive of the company. What matters most is that you’re willing to educate yourself.

One of the things that I learned about financial literacy is on cash flow patterns. Based on these cashflow patterns, you would be able to determine if you belong to poor, middle class or rich persons.

Kiyosaki compared people with average financial intelligence vs. people with advanced financial intelligence:

People with average financial intelligence know only:

• Bad debt, which is they try to pay it off.
• Bad losses, which is why they think losing money is bad.
• Bad expenses, which is why they hate paying bills.
• Taxes they pay, which is why they say that taxes are unfair.
• Climbing the corporate ladder instead of owning the ladder.
• Buying shares of a company rather than selling shares of a company they own
• Investing only in mutual funds or picking only blue-chip stocks

People with advanced financial intelligence know the difference between:

• Good debt and bad debt
• Good losses and bad losses
• Good expenses and bad expenses
• Tax payments and tax incentives
• Corporations you work for and corporations you own
• How to build a business, how to fix a business, and how to take a business public
• The advantages and disadvantages of various investment vehicles: paper securities, real estate properties, and businesses

STRATEGY 2: Work to Learn

Most people focus on working for pay that rewards them in the short term; over the long term, this strategy can be disastrous because it doesn’t build up enough assets for a stress-free retirement. You’re not sure if your employer will be there for the next 10 years. What if you were laid off? Or what if the company closed?

If you want to be financially free, you need to seek work for what you’ll learn, not for what you’ll earn. This is one of the main reasons why I left my previous company. With my tasks, I am no longer learning and in that way, I feel rusty. It’s not always the pay that matters. It’s the satisfaction and the amount of learning that you get. The skills you learn when you work for someone else can be invaluable when you begin to work for yourself—and if you want to be financially free, you’ll have to work for yourself.

Kiyosaki said that there are three essential skills that we need to learn from our job while we are working for somebody else. These are Leadership, Management, and Sales & Marketing.

STRATEGY 3: Find Mentors, Build a Team

They say that no man is an island and that two heads are better than one. The same applies when you want to get rich and achieve financial freedom. You need to seek out mentors and advisors who can teach you the valuable skills you’ll need to become a business owner and investor. No one climbs Mount Everest alone, and you shouldn’t try to climb your personal financial mountain without the aid of others. Without support, you’ll never reach the top.

Kiyosaki said that “business is a team sport.” One thing is certain: When you want to get rich, you need to set out to work for yourself. In doing so, you’ll need more than just friends and family—you’ll need a team of professional advisors. According to Kiyosaki, one secret of the rich is their humility. They surround themselves with people who know more than they do. They surround themselves with experts.

STRATEGY 4: Work For Yourself

Kiyosaki said that most people work first for the owners of the companies that employ them, then for the government through taxes, and finally for the banks that own their mortgages. No wonder they have little left at the end of their working days! To escape the rat race, you need to work for yourself.
You should think like Rich Dad. Instead of saying, “but the odds of a start-up succeeding are against me—nine out of ten companies fail within five years,” say to yourself, “one out of every ten businesses succeeds within five years, and mine will be one!”

STRATEGY 5: Create Money

Kiyosaki said that “Money isn’t real. It’s just an idea!” Today, we are now living in the information age. The information age allows some individuals to get ridiculously rich from nothing more than ideas and agreements. There are people who makes a lot of money in the internet either by maintaining a website or by trading stocks and forex online. Today, it’s not at all out of the ordinary for millions to be made instantaneously out of nothing.

How do you create money?

Finding an opportunity that everyone else has missed.

Learning how to raise money through investments and assets.

Working with knowledgeable people to help you reach your financial goals.

STRATEGY 6: Give Back

Kiyosaki believe on charitable giving. Personally, I also believe on the universal law of nature and that’s Karma: “Do unto others what you want others to do unto you.”

Also, we should not forget Newton’s Law that states: “For every action, there’s an equal reaction.” If you’re a greedy Scrooge, people will respond to you in kind. You have to give money to get it back. Remember, give and you shall receive.

The rest is here:
6 Strategies To Get Rich

Robert Kiyosaki is an investor, author, and motivational speaker.  You probably have heard of his Rich Dad Poor Dad books.

Here are some of my favorite Robert Kiyosaki quotes:

• Your business revolves around your asset column, as opposed to your income column. The rich focus on their asset columns while the poor and middle class focus on their income columns
• Remember to dream big, think long-term, underachieve on a daily basis, and take baby steps.  That is the key to long-term success
• You need to understand the difference between an asset and a liability. An asset puts money in your pocket and a liability takes money from your pocket. The rich understand the difference and buy assets, not liabilities
• Your future is created by what you do today, not tomorrow
  The size of your success is measured by the strength of your desire; the size of your dream; and how you handle disappointment along the way
• Your mentors in life are important, so choose them wisely
  The only difference between a rich person and poor person is how they use their time
• Academic qualifications are important and so is financial education. They’re both important and schools are forgetting one of them
• The poor, the unsuccessful, the unhappy, the unhealthy are the ones who use the word tomorrow the most

• Most people never get wealthy simply because they are not trained financially to recognize opportunities right in front of them. The rich have learned to recognize opportunities as well as how to create them
• The rich invent money
• Tomorrows only exist in the minds of dreamers and losers
• Inside of every problem lies an opportunity
• Remember, your mind is your greatest asset, so be careful what you put into it
• Face your fears and doubts, and new worlds will open to you
• If you want to go somewhere, it is best to find someone who has already been there
• Today is the word for winners and tomorrow is the word for losers
• When people are lame, they love to blame
• He said, ‘Raise your price. Make it ridiculous. ‘That would make people perceive it as a value
• Great opportunities are not seen with your eyes. They are seen with your mind
• The poor and middle class work for money. The rich have money work for them
• You have to be smart. The easy days are over

 The last one is my favorite of this batch of quotes.

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Words of Wisdom: Robert Kiyosaki

In this inspiring video by the world’s leading authority in Business and Investment, Rich Dad, Poor Dad author Robert Kiyosaki reveals the … tags: robert kiyosaki asset building management assets cash
from recent posts tagged financial – blip.tv (beta)

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Robert Kiyosaki Rich Dad Poor Dad Secrets of the Rich

Kim Kiyosaki (wife of Robert of Rich Dad Poor Dad fame) shares an interesting insight about what she calls: 4 kinds of people, grouping them by their mantras:

1. I must be right — people who love to be validated and proven correct.
2. I must be comfortable — people who like settling in their comfort zones and not push boundaries.
3. I must be liked — people who live to please others and patronize.
4. I must win — people who will do anything to succeed.

Although doubtless there are more archetypes than Kiyosaki claims (depending on whatever typology you subscribe to), the thing I find interesting about the 4 types above is how they would react and utilize critical thinking.

1. Critical thinking seeks to clarify, not simply validate.
2. It is often uncomfortable and involves challenging the status quo.
3. It is not patronizing, and is often deprecating.
4. It seeks to achieve its end goals.

Of the 4 types above, only those who seek to win would push criticism to its limit.

Kim says know who you’re dealing with and that will bring you success. In critical thinking it’s the same: it’s important to know who your talking to, who your audience is, and who you’re criticizing.

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4 Types Of People