I can’t remember when I first read Rich Dad Poor Dad but I do remember thinking two things about it…
First was, “this has some ‘interesting’ concepts in it.”
Second was, “I think this is over my head.”
Then, through the years, I forgot about the book and never went back to it, as I have with so many others.
I considered a re-read a few times, but there was so much controversy around it I wondered if it had anything worthwhile to say.
Then recently the book was listed as #3 on the list of top money books millionaires read.
I thought, “I need to go back and read that book.”
And that’s what I did. Actually, I listened to it AND read it, underlining the juicy parts.
But let’s not get ahead of ourselves. Let’s begin with the controversies since some of you won’t get to the review until these issues are addressed.
Rich Dad Poor Dad Controversies
If you Google “Rich Dad Poor Dad controversies” you will find a wealth of articles saying:
- There was no rich dad — it’s a fictional account being presented as fact.
- The author, Robert Kiyosaki, is a fraud/cheat/swindler/you-name-it.
Here’s a summary from Wikipedia:
John T. Reed, a critic of Robert Kiyosaki, says, “Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice.” He also states, “Rich Dad, Poor Dad is one of the dumbest financial advice books I have ever read. It contains many factual errors and numerous extremely unlikely accounts of events that supposedly occurred.” Kiyosaki provided a rebuttal to some of Reed’s statements.
Slate reviewer Rob Walker called the book full of nonsense, and said that Kiyosaki’s claims were often vague, the narrative “fablelike”, and that much of the book was “self-help boilerplate”, noting the predictable common features of such books were present in Rich Dad, Poor Dad. He also criticizes Kiyosaki’s conclusions about Americans, American culture, and Kiyosaki’s methods.
So there are many critics of the book…and yet…
Support for Rich Dad Poor Dad
The same Wikipedia article says this about the book’s success:
The book was originally self-published in 1997 before being picked up commercially to become a New York Times bestseller. It has since sold over 32 million copies and become a household name. On April 2017 a 20th Anniversary edition of Rich Dad, Poor Dad was published and in a preface to this 20th Anniversary edition Robert T. Kiyosaki asserts that an estimated 40 million copies of the book had been sold worldwide.
The 20th anniversary edition also says (on the front cover) “celebrating 20 years as the #1 personal finance book of all time.”
I’m not sure about that, but there’s no doubt the book has been a massive success.
In addition, Kiyosaki and the book have received support from the following:
- Oprah Winfrey
- Will Smith
- PBS
- Donald Trump
- Daymond John
I’ll let you decide what you think of this list, but there’s no doubt he has some well-known supporters.
Forget the Controversy, Review the Content?
I don’t really care for all that — pro or con. As I’m sure you know by now, I prefer to dive in myself and see what I think of a person/topic/etc.
The guy may be the worst fake money “expert” out there for all I know. Or he may be a genius.
For this post I’m concerned about the content in this book. Not any other book. Not what he’s written elsewhere. Simply the content in this book. I’m not doing an expose on his entire life. Perhaps that will come later, though my guess is that some will do one in the comments below. I haven’t seen a financial person this polarizing since Dave Ramsey came on the scene.
What I did was simple — I read the book and formed my conclusions.
I’m a big boy, can read and think on my own, and I’m willing to let the book rise or fall on the value of its content.
Wikipedia summarizes that as follows:
Rich Dad Poor Dad advocates the importance of financial literacy (financial education), financial independence and building wealth through investing in assets, real estate investing, starting and owning businesses, as well as increasing one’s financial intelligence (financial IQ) to improve one’s business and financial aptitude.
I don’t know about you, but if that’s what the book’s about, it’s on the right path and worth a read. Not to mention (again) that millionaires rate this as a top book in influencing them.
So I dived in…
Book Overview and Six Lessons
Interestingly enough, the first several pages of the 20-year celebration version I got was spent by Kiyosaki addressing some of the controversies. These dealt with the content and whether or not there was a rich dad (he says there was). There was no defense (or mention) of him being some sort of money con man.
After that section, the book breaks down into these main parts:
- Six lessons that the author learned from his “rich dad”
- Five obstacles people need to overcome to be rich
- Ten steps to getting started
- 12 to-dos to become wealthy
Add all those up and the author gives 33 major points to consider and take action on. That’s a lot.
I might cover some (or all) of these steps in future posts, but for now we’ll focus on the six lessons as they make up the majority of the book (about two-thirds).
For each lesson, I’ll list the lesson itself, include a key quote to add more explanation, and then share my thoughts.
Here we go:
Lesson 1: The poor and middle class work for money. The rich have money work for them.
Key Quote:
Buying or building assets that deliver cash flow is putting your money to work for you. High-paying jobs mean two things: you’re working for money and the taxes you pay will probably increase. I’ve learned to put my money to work for me and enjoy the tax benefits of generating income that doesn’t come from a paycheck.
My Take
What a valuable concept! I wish I had learned this when I read the book the first time.
If I had gotten this concept early in life, I think I could have become financially independent five to ten years earlier.
I may have even employed the “buy one house per year for 20 years” strategy and been a retired real estate magnate in my early forties.
I eventually began playing the right game — investing in index funds and real estate — but I lost a lot of time figuring those things out for myself.
If a young person can read these ideas, internalize them, and take action, they can become quite wealthy at a relatively young age IMO.
Lesson 2: It’s not how much money you make. It’s how much money you keep.
Key quote:
You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is rule number one. It is the only rule.
My Take
Kiyosaki defines assets and liabilities as follows:
An asset puts money in my pocket. A liability takes money out of my pocket.
He does focus much of the book on assets that literally “put money in his pocket” (i.e. income producing assets like real estate), so much so that I was beginning to wonder if he also like growth-focused assets.
Then later in the book he clarifies these are fine by including the following in a list of real assets:
Anything that has value, produces income or appreciates, and has a ready market.
So we’re on the exact same page: invest in things that grow your wealth — either producing income, appreciating, or both.
BTW, he lists a personal residence as a liability, not an asset, because it has many associated costs with it. I get what he means and I also see the other point of view — that homes are worth at least something and can be sold for cash if need be, so they are assets in that sense of the word.
You can share your thoughts on this issue in the comments section. We’ve batted around the issue of whether or not to include a personal residence in your wealth numbers in How Do You Define Net Worth?
Lesson 3: The rich focus on their asset columns while everyone else focuses on their income statements.
Key quote:
Keep your daytime job, but start buying real assets, not liabilities or personal effects that have no real value once you get them home. Keep expenses low, reduce liabilities, and diligently build a base of solid assets.
My Take
I think Kiyosaki gets an anti-job label from some that’s not deserved.
It’s not that he says to abandon your career, he just advocates using career income for the right purposes, to invest in assets and not spend it all on consumer products.
He’s also very adamant about keeping expenses low, which is something I like. If you can earn a ton and spend little, you can create a huge gap that will fund a boatload of investing — which will make you wealthy.
I also like that he knows the difference between net worth (true wealth) and income (which may or may not lead to wealth). It’s something that many so-called “experts” (like journalists) frequently get wrong, as you find numerous stories of “rich Americans” with supporting facts based on income.
That said, Kiyosaki doesn’t follow the traditional definition of net worth, but defines wealth this way:
Wealth is a person’s ability to survive so many number of days forward — or, if I stopped working today, how long could I survive?
Unlike net worth — which is the difference between your assets and liabilities, and is often filled with a person’s expensive junk and opinions of what things are worth — this definition creates the possibility for developing a truly accurate measurement. I could now measure and know where I was in terms of my goal to become financially independent.
I actually LOVE this line of thinking. I’ve defined financial independence as “Having wealth to cover expenses indefinitely.” The author’s wealth measurement tells how close anyone is to this goal. Once you get to the point where you run out of days before you run out of money, you’ve reached FI!
Lesson 4: Corporations are the biggest secret of the rich.
Key quote:
A corporation can do many things that an employee cannot, like pay expenses before paying taxes.
My Take
This chapter left me a bit dry.
The basic gist is that taxes kill most people and by forming corporations you can reduce taxes.
Yeah, maybe, but you also have to do some things that could be considered shady like “have board meetings in Hawaii” (to effectively move personal expenses — which are paid with after-tax money — to corporate expenses which are paid before taxes.)
It seems a bit scammy to me even if it may be technically correct and allowed by law.
Personally, I prefer his other advice for lowering taxes (later in the book): work to reduce earned income (which is taxed at the highest rates) and increase investment income (which can either deduct expenses before being taxed or is taxed at lower, capital gains rates). This seems like a better way to lower taxes IMO.
This was my least favorite lesson of the six.
Lesson 5: Often in the real world, it’s not the smart who get ahead but the bold.
Key quote:
Once we leave school, most of us know that it is not so much a matter of college degrees or good grades that count. In the real world outside of academics, something more than just grades is required. I have heard it called many things; guts, chutzpah, balls, audacity, bravado, cunning, daring, tenacity, and brilliance. This factor, whatever it is labeled, ultimately decides one’s future much more than school grades do.
My Take
Agree 100%.
One example of the sort Kiyosaki is talking about who you might not initially think fits the bill is Warren Buffett.
Sure he’s patient, deliberate, and thoughtful but the dude also has guts (he invests billions at a time and takes big stakes in his investments)! And most would certainly say he is brilliant.
Of course, there are few Warren Buffett’s but the good news is that none of us need to be that stellar. If we simply push forward a bit here and there, small progress will add up and make us wealthy.
Many people limit their financial results simply because they lack the fortitude to take action. One example is growing career income.
It’s clear your career is vital to financial success and if you implement my seven steps to grow your income you can make it even more valuable. But most people can’t/won’t make a few, small steps to grow their careers. So they are left behind while others forge ahead.
Lesson 6: Job security meant everything to my educated dad. Learning meant everything to my rich dad.
Key quote:
I recommend to young people to seek work for what they will learn, more than what they will earn. Look down the road at what skills they want to acquire before choosing a specific profession and before getting trapped in the Rat Race.
My Take
Kiyosaki talks about a “synergy of skills” similar to the talent stack we covered from the book How to Fail at Almost Everything and Still Win Big, addressing how various skills working together can propel someone forward.
This is why he recommends learning new skills through work experience as well as outside education with books, seminars, and so forth.
We’ve noted that 1) continuing to learn and develop is vital to income growth, 2) layering skill upon skill makes an employee much more valuable, and 3) some skills are more valuable than others. Why not work to develop these?
I wish I had intentionally focused more on developing skills during my working years. I did develop some, but they were mostly learned by chance. Kiyosaki is recommending developing skills on purpose, something that’s extremely hard to disagree with.
Six Points that Make Rich Dad Poor Dad Worth Reading
From the above you can see that the book’s main content is quite good. Even those who dismiss the author as a liar/cheat/etc. should admit that. The guy above who says the book has “virtually no good advice” either hasn’t read it, doesn’t understand money, or dislikes the author so much that he ends up making himself look like a fool.
Let me summarize it all with a few reasons I think the book is worth reading:
1. It offers a contrarian point of view.
Much of what Kiyosaki says is contrary to “common knowledge” in the personal finance world. This is what I like about the book — it looks at things from a unique perspective.
I think many great money books do the same including Your Money or Your Life, The Millionaire Next Door, and The Automatic Millionaire.
This is probably why Kiyosaki gets so much hate. When you say personal residences aren’t assets, income isn’t as important as assets, and so forth, people tend to get upset (especially those with big houses, high incomes, and few assets!)
He’s also very much a “pull yourself up” sort of guy which angers those who would rather sit around and make excuses for their lack of wealth (while taking zero action).
I like reading different/unique perspectives, especially when they are explained in logical ways and backed up with solid financial principles (like keep expenses low). What’s not to love?
2. It focuses on turning earned income into income-producing assets.
I have to like this — it’s at the heart of ESI Money!
What else could anyone conclude when I suggest earning a bunch, saving a ton of that, and investing it? The process is designed to turn earnings into investments and thus make people wealthy.
So this is an absolute winning point IMO.
3. It advocates controlling spending/expenses.
Haha! It’s the “S” in E-S-I.
Again, very good and needed advice.
4. It pushes investing, especially in real estate.
Now it’s the “I” in E-S-I.
I’m also a big fan of real estate and wish I had started investing sooner (and had avoided some big mistakes). If I had done so I’d now have more money than I know what to do with.
Oh wait, I already have that…because I INVESTED!!!
Solid point of view IMO.
5. It talks about the power of the mind and continual learning.
Learning is not only great for your career but also for your finances and life.
I spent most of my career years reading books and blogs, going to seminars (paid for by my employers), and participating in work-related learning that grew my skills and ultimately my income.
I loved it and still learn a lot today, mostly by listening to podcasts and audio books while walking in beautiful Colorado.
6. It emphasizes action.
In fact, very close to the end Kiyosaki says:
Action always beats inaction.
He’s a do-er himself and recommends it for others. I do as well.
We’ve all met those who can talk a great game but when it comes to results they have put no points on the board — because they don’t do anything.
They yack, yack, yack but never attack (their goals).
Thus they doom themselves to a life of mediocrity.
IMO it’s much better to take action. Even if you fail you’ve learned something to make you better for the next attack.
Anyway, those are my thoughts on the book. I’ve also ordered two other books by Kiyosaki, Why the Rich Are Getting Richer and Rich Dad’s CASHFLOW Quadrant as they both seem like they could be worth the read.
Final Take
So what are your thoughts on this book? Do you like the content (maybe in spite of the author)?
Or do you think the author is a quack and even if the advice is good, he can’t be trusted and shouldn’t be read?
I’m interested in what you have to say, so leave your thoughts below.
David Elkins says
Kiyosaki has always seemed to me to be a slick snake oil salesman. All that aside, All of the above is solid and valid advice which should lead those who follow it to wealth. Perhaps we should pay less attention to the man, and more to his message.
Thank you for this excellent review!
Martin John Tate says
I’ve read both TmRich Dad, Poor Dad and The Cash Flow Quadrant several times. I think they have many great lessons including the ones that you mentioned. Both are in my personal library and I’ve given them to my grandsons to read as well.
rt-texas says
Read it years ago when it was first on the shelves of B&N. Really liked it then and thought enough of it I gave several copies as gifts to several people I thought might learn or appreciate it.
In a way, for me, it was sort of your ESI blog in a paperback.
His wealth measurement reinforced to me that my wife and I were on the right path with our finances. When your younger I think sometimes you just need something to validate your thought process and your choices. This did that for my wife and I.
As for counting your house in your net worth; we just sold ours and are spending the next five years traveling the world. Proceeds are about 75% of our five year budget. Ran the numbers after we closed, after major cost about a 3.2% annual return over 28 years.
Might go back a re-read as you have to see how it ages for me.
Michael Palombi says
This whole idea of buying a house every single year I believe is a little irresponsible. Most people don’t make enough cash flow to cover emergencies such as repairs and also lack of tenancy for that many houses.
Retire@55(akaM-147) says
Hi Michael, actually it can be done and we did it conservatively with little risk. No problem finding good tenants.
My husband and I bought a house a year between 2010 and 2017, combined income level as a couple $150k – $175k, low debt/expenses. At the time we had one rental we owned free and clear (this was our starter home) we mortgaged the 1st property 80/20 and purchased the second house, renovated, increased value and when we found the 3rd property, we financed #2 80/20 and purchased the 4th house, rinse and repeat. We lived conservatively and paid for rehabs costs from our income. In 2017 we owned 8 rental houses, $1M in equity and refinanced all properties at low interest rates 55/45 debt to equity. The equity came from market increases, adding value to the property as well as sweat equity.
We have since sold 2 of the properties, all properties are within a 1/2 mile radius of our home.
Our 1st rental was definitely the impetus to launch something bigger and better, as a team my husband is very handy and I love to put a good deal together.
Definitely not for everyone, but it worked for us!
Kristen Plaisance says
Not so fast on Lesson #4. Why so cold on this point? It’s been a decade since I read the book so I don’t remember the board meetings in Hawaii but I personally have found Lesson 4 profound in helping to build wealth. Why work in a daycare center where every dollar you make is taxed when you can run a daycare out of your home and deduct a portion of your home, car, utilities etc in taxes? The tax savings of this could give you a raise of thousands of dollars per year? Why work in a hospital as a nurse of you could start your own home health business? Why work for a construction company if you can own a handyman business? I could go on and on. Owning my own business vs working for myself has meant a net increase in our income of more than $100k over the last 15 or so years. Who wouldn’t like an extra $100k? There are so many legal and ethical tax savings when you own your own business vs working in a job that if you can find a way to own your own business you should. I think this was his point.
ESI says
I would suggest you read the book again and then come back and comment.
Yes, there are “many legal and ethical tax savings when you own your own business vs working in a job”. I don’t disagree with that point.
I do disagree with taking legal methods and bending them so that they are in very gray areas of the tax law…
Jerry Gordon says
This is why the advice of a good tax accountant is so important..It’s either lagal or it’s not
VM says
I haven’t read the book, but I have watched tons of videos of him presenting and lecturing.
I don’t think he is a scammer, quite the opposite, I think he is a very smart, knowledgeable and capable businessperson.
But the problem why people dislike him, I suppose, is because he can be very edgy, maybe even cocky and arrogant in the way he expresses HIS views. For example, I’ve seen numerous times where he makes fun of the “Get A Degree, Work Hard, Save Money” , and insists on creating cashflow by buying rental units for debt.
There’s no doubt he knows what he’s talking about, just he does tend to dismiss more “traditional” path that also leads to building wealth.
MI140 says
This is one of the first books I read, and still one of the top 10, maybe even the top 5. He does come across like a used car salesman at times, but just the one idea of how to think of anything that actively puts money into your pocket as an asset, and anything that takes money out as a liability, is such a simple yet groundbreaking idea, that the whole book is worth it for just that one concept.
Vicki Adelstein says
what are your other fave books in top 5? I LOVED Rich Dad and am looking for more financially inspiring reads (or listens – audiobooks are my fave…)
Thanks
MMiguel says
Do you like the content (maybe in spite of the author)?
– Ok so, I would have to agree that the book provides an interesting and catchy perspective, and also promotes a fair amount of ESI/FIRE wisdom. If I recall, having read it some 20 years ago, the first half of the book was pretty engaging and made sense, and then the second half of the book kind of fell flat once he started talking about actual implementation (but i’d have to reread to confirm that).
Or do you think the author is a quack and even if the advice is good, he can’t be trusted and shouldn’t be read?
– Yes, I still think he’s a quack, with a knack for writing. I simply cannot put aside some of the articles I’ve read by him that were just utterly insane ramblings. Maybe he overextended himself. He’s good with the basics, as in this first book. But, he really knows nothing of finance above and beyond that. For this reason, I would be hesitant to recommend his writing to others.
ESI says
I’m wondering if it’s because he’s not a great writer. I find his thoughts disjointed at times and had to dig for the gold.
After he said the was a best-SELLING author and not a best-WRITING author I began to wonder if this was the reason why I was having trouble and why so many see him as strange.
MMiguel says
I would say that in almost any personal finance book, if you are willing to dig deep for the “gold” you are going to come away with some nuggets, because you are literally filling in the blanks for the author based on your own knowledge and preconceived notions. I believe a lot of smart, competent people like the book (as I did for a short period of time) because they do exactly that. As I learned more, I came to see that of which I should discard of Kiyosaki’s ideas (a lot of them).
But this could be potentially dangerous to folks who don’t know how to fill in the blanks, find the nuggets, or apply critical reasoning. I have a very dear old friend who is a huge fan of his, a cult member so to speak, etc., but still to this day has very little to their name (despite being a relatively high earner) and continues to make horrible financial choices, because the aspects of his teachings that appeal to them are entirely unrealistic.
They are convinced real estate is a magical solution, but failed to recognize all kinds of other aspects of money wisdom need to come first. Wife and I are afraid our friend will need to work until they drop dead or try to come live with us, yikes, as if I would welcome any dependents in my old age.
At any rate, I do appreciate you drawing out the positives in the first book – it was impactful when I first read it. Fortunately, it was only one of many books and experiences on the path to FI.
Bruce says
100% agree with your comment about the disjointed nature of the book. I tried to read it many years ago, but found it infuriating. I sensed that there was good advice to be extracted (and also some advice that made my internal alarms go off), but the book was so poorly written I could not finish it. He needed a good editor…and the humility to accept the rewrite.
MMiguel says
Further on the topic of whether a house is an asset or a “liability” I think it “depends” and I’ve had both experiences. I have a big city apt building that I also live in and generate decent rental income off of. I could choose to move and have it fully leased out and generate a six-figure, tax-advantaged rental income. It’s also appreciated by more than a couple million since I bought it, which is a pretyt sweet bonus. I don’t even like living in the city, but this is where my career is, so c’est la vie.
I also own a semi-rural country property. This one is most definitely a liability, as all I do is pour money into it with no hope of any real value appreciation. It is a true luxury. Somethings always in need of repair, refurbishment, or upgrade. This year it was the pool, next year it will be a new barn or clearing some land, etc. I could rent it out during summers, but not sure the income would fully cover the costs.
And I’ve owned a vacation condo – that one is easy enough in that minimal upkeep, easy to rent, easy to sell, in a popular vacation/retirement community.
So, really, it just depends.
MMiguel says
Would add, of course, commercial property has been the biggest home run… rental income and significant value appreciation, but only if you choose wisely.
Jeff Young says
There are same shady practices Kiyosaki mentions, which I am glad you brought to the surface. But, I think there are some valuable lessons in there that makes the book worth the read. For example, how he defines assets and liabilities. These are basic concepts, but when you see it in a balance sheet format, a light bulk went off in my mind. Good review. The book has some good advice, and some advice, which should probably be taken with a grain of salt.
Mark says
I like your take on it. Very interesting points. I had a different take on it. I couldn’t get passed the fact he was a fraud. My brother was also sucked into his book by some multi-level marketing scheme., Maybe I should reread it and see if my perspective changed. My daughter had to read this book for her critical writing class.
WW says
I read most of his books, as they came out. Also bought the cashflow game and found it educational.
As you point out, there is much decent advice in the books. I had a hard time with some of the snake oil mixed in, though, regarding gray areas on corporations and some of the other guest authors he began associating with.
I believe I researched him at the time he was writing Rich Dad, and found that he basically had no net worth and was living off his wife’s income.
That sort of converted the whole series into a “do as I say, not as I do” type of affair, and I moved on. No unlike Napoleon Hill, who died alone and broke, for all of his “Think and Grow Rich” advice.
I tend to prefer books by people that lived what they wrote, and succeeded from it. Kiyosaki has been successful from writing about ideas he did not practice, so that may explain why some of his mechanics are disjointed.
Retire@55 (aka M-147) says
This is my husbands favorite financial book. The lessons on balance sheets, income and cash flow were invaluable to my husband in his early 30’s, he was already good with money a hard worker and mechanically inclined, he did not understand cash flow or investing (real estate or paper assets) we purchased the board game and had a lot of fun with it.
I am grateful to Robert Kiyosaki, he published a book that did provide interest and a flashy title and for someone like my husband who knew nothing about growing wealth it did help him. My husband retired early because of our passive income from real estate investing.
It is not my favorite financial book, I have read many, it is the only one that my husband read from cover to cover.
My husband and I did not learn about finances from our parents, the book does a lot to encourage people to seek out a mentor and to learn and grow out of their comfort level from others.
We played the board game with my niece and nephew 10/13, they immediately realized why we owned an apartment building.
The Crusher says
Thanks for your thoughts. I am one of those millionaires who included this book in their Top 5 recommendations. It is one of the earliest personal finance books that I ever read and it definitely got me to think about money differently and in an overall more progressive light.
I recommend it to many including my sons. It is also an easy read which helps the casual reader to read it completely.
My advice to all – do not get caught up in the negative drama around the book, read it and enjoy it.
Danielle says
I’d be interested in your thoughts on something I’ve been considering lately.
Currently, I max out my 401k, and both my husband and I’s IRAs each year. However, does it make sense to NOT invest in my 401k beyond the company match, and instead save that money to purchase real estate properties which I can rent? How can I make this decision wisely?
ESI says
Maybe, depends on your long-term goals, interests, skills, etc.
I wish I had just contributed enough to get the match and then use the rest for real estate as I would have retired even faster. So that may work for you as well.
Danielle says
How can I research this to make the best decision? I would love to have more time flexibility. I also have a lot of project management experience, which I think could translate well to property management / renovation projects.
Apex says
About 8 years ago I made exactly that trade off. Only contributed to get the match and put the rest into real estate. I had already started investing in real estate 3 years earlier and already had a small portfolio. Using the extra capital along with refinancing equity out of existing properties and financing future properties I was able to leverage that seed capital into a considerable expansion of my portfolio over the next 6 years or so.
It was a very good trade off for me. The key was that I was able to buy properties at great prices that produced great cash flow even when leveraged 80%.
Today that is considerably more difficult to do. Properties are not available at prices that provide the margin of safety that was afforded 8 years ago. Consequently the cash flow margins are also considerably tighter. This makes the risk higher, but not necessarily unacceptable. Interest rates have returned to historic lows making the opportunity to extend returns with leverage more plausible.
The research you need to do is to determine what kind of real estate properties you feel equipped to purchase and manage and what kind of returns you can get on those based on purchase costs, finance costs, operational costs, capex reserves, and rental rates.
If those numbers work then it may be worth it try your plan and purchase 1 property and see how it goes. If it is working you could keep going. Once you get a few properties the ability to leverage those into more starts to get easier, but you need to get a base of a few solid properties that you can count on to build upon. If your first few deals are a bit shaky and you keep expanding you will have built a house of cards (no pun intended) that will fall with the first down turn.
Danielle says
Thank you for sharing, Apex. I will definitely do some more research!
Dave says
My fav part of this book is when he says if you want something, first give it away. That was a different take on accomplishing a goal…