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How Kiyosaki’s “Rich Dad Poor Dad” Can Help You Start Real Estate Investing

Robert Kiyosaki’s book, “Rich Dad Poor Dad” accentuates the idea of having your money work for you, strongly emphasizing the importance of learning about money first and foremost. In a world full of hard workers, why aren’t there more millionaires? When most people spend a lifetime working to make money, why then aren’t more people able to live the lifestyle they desire? Growing up in a middle-class family, Kiyosaki’s father (poor dad) encouraged him to do as he had done — go to college and earn a degree that would allow him to secure a job at a company that offered great benefits.

Similar advice is given to many young adults and adolescents today by parents, who themselves have not yet been able to reach the level of financial prosperity that they had once hoped for. However, from the father of his best friend (rich dad), an entrepreneur and business owner, he quickly began to realize that wealth and financial freedom could actually be achieved by not working for anyone at all, but having money work for you. This method, coincidentally, made more sense to a young Kiyosaki. Taking the advice of both fathers, he developed his own true understanding of assets and liabilities, a method for building wealth, and ultimately a financial position that many people are not able to accomplish through the “conventional” plan for success. Learn how to make your money work for you with this FREE e-book on real estate investing!

What to glean from “Rich Dad Poor Dad”

Contrary to what most people believe today, considering Kiyosaki’s definition of assets and liabilities, the home that you live in (your personal residence) is not an asset. Because a great deal of money is spent annually on home insurance, property taxes, and not to mention maintenance and upkeep — your home is actually a liability. Although money is put into that home consistently, returns are only made when that home is sold. Real Estate investing, however, is an asset because returns are achieved consistently throughout the time an investment is held.

After making a few small, less risky investments, Kiyosaki realized that this method of making money offered a lot of potential, perhaps more than any other conventional job. The more money he began to make from his investments, the more he would then reinvest into other ventures. During this time, although he was becoming wealthy, his spending habits remained the same in an effort to avoid adding liabilities to his personal balance sheet. If it wasn’t an asset or something that could potentially make him more money in the long run, he refused to spend money on it.

The reason people often do not actually get to “see” the money they’re making is because spending and earning are happening simultaneously. Many people change their spending habits in accordance with their income, which never allows them to get ahead when it comes to their finances. The more people make, the more people tend to spend, and these are the habits that end up hurting many people financially. Instead of spending money on things that won’t make you any money in return, invest that money into a variety of things that will consistently give you a return. Returns are generally related to risk; riskier investments often have the potential for greater returns. Rarely does an investor experience all gains all the time, however, by researching your investments and studying the local housing markets, an investor can gain valuable insight. Among Kiyosaki’s numerous successful investments, real estate investing has been tremendously rewarding and generally stable.

Endless possibilities

Real estate investing was Kiyosaki’s way to diversify his portfolio, reduce risk, and earn impressive returns on a consistent basis. Throughout his time of buying and selling investments, Kiyosaki always held at least a couple separate real estate investments in various geographic locations to diversify his portfolio even further. In educating our investors, the main themes of “Rich Dad Poor Dad” come into play quite often, especially among new or beginner investors who may be hesitant or leery about delving into the world of real estate investment. Once investors realize how their own money in the form of real estate investing can work to their advantage, the possibilities become endless and often times more profitable.

To think beyond the traditional route to financial success and to have an open mind to the possibilities of financial freedom are the first steps in becoming a successful investor of any sort. The values and investment models that are expressed in Kiyosaki’s book are similar to our standards at Smartland. For novice investors and anyone who has ever considered real estate investing, we recommend reading “Rich Dad Poor Dad” as a way to gain valuable insight and advice before beginning any investment journey.

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