Kiyosaki

[cute fuzzy bunny]

He really didnt like the kiyosaki book. Although in the quest to find out how much of a liar kiyosaki is, he spent time noting that one of the alleged lies - the rich dad - was both a restaurant owner and a construction business owner, and reed decided that nobody who owned one could or would own the other.

My brother in law owns a restaurant and a construction company.

So much for that issue.

[spideyrdpd]

I have to give Credit to Rusty on the richdad website for the following information on Reed.
I do like the intelligent responses of the people who dont like RK

Yes, I read it. I also wasted a lot of time reading his entire site.

I've posted this about ten times --


According to John T. Reed's own website --

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1. Reed currently owns no investment real estate. His last purchase was 21 years ago and he never owned more than 2 properties at a time.

quote:

I invested from 1969 to 1992. (His last purchase was in 1983, he lost it to the bank in 1992.) I cannot think of a single thing that I have written about since 1992 that I got wrong because I was no longer active. If there was anything, it would fall under the category of nuance. I believe I have been able to write about changes quite adequately by reading about them or hearing about them from my readers and friends. --- John T. Reed

quote:

As a non-investor, I now have no inhibitions about writing about any aspect of real estate investment. That benefit to my readers exceeds by far any value of current experience. --- John T. Reed

quote:

I prefer to spend my time writing. --- John T. Reed

http://www.johntreed.com/cando.html

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2. Reed did invest in the 1970's and lost money on almost every deal he ever did.

quote:

Buying real estate is scary. Anyone who has done it can tell you that. I was scared every time I ever bought a property, with good reason, it turned out. I lost $750,000 on my last two purchases. --- John T. Reed

(here's one he did make money on, several others he turned over to the bank in leiu of foreclosure)
quote:

my first duplex in April of 1969. I "seventupled" my money in that property in six years. Actually, I did little to make that happen. The whole market went up about the same. I was just lucky to have bought in the right place at the right time. --- John T. Reed

http://www.johntreed.com/analysisparalysis.html

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3. Reed does not believe that real estate can have positive cashflow.

quote:

almost all normal rental properties have negative cash flow. --- John T. Reed

quote:

the guru who told you that real estate investment was a way to pick up extra cash lied to you. He told you that because it was what you wanted to hear, not because it was true. In fact, owning rental property almost inavriably has the exact opposite effect on your cash flow. It takes your current annual cash flow and confiscates part of it to feed the rental property. --- John T. Reed

quote:

In order for a single-family rental house to have positive cash flow, the tenant must pay more to rent the house than he would have to pay to own the same house. That is obviously a stupid thing to do. And that’s why you almost never see it. --- John T. Reed

quote:

So how do you achieve positive cash flow ethically in the real world? You need to buy in the rare market where high cap rates are the norm. Such markets are usually severely depressed like Anchorage or Oklahoma City in the late 80’s. The reason tenants are willing to pay more to rent than they would have to pay to own in such markets is that they believe property values are falling or level, in which case not owning is a good idea in spite of the high rent.

Even then, the positive-cash-flow situation is typically a brief window that lasts only six months to a year. --- John T. Reed


http://www.johntreed.com/positive.html

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4. Reed believes that owning real estate is a full-time and tedious JOB.

quote:

gurus only have 24 hours in their day, same as you and I. That’s too few to operate both a guru business and an active real-estate investing business. For example, it takes 4.6 hours per unit per month to do the resident manager and property manager duties on a residential property. The more units the guru has, the fewer hours are left for writing and such. The late Paul Thompson was a professional foreclosures buyer. He calculated that it took him 165 hours of work for each property he acquired. When a guru says or implies he has this many units or does that many deals a year, multiply his figure by the above numbers and see how much of his 24-hour day he is devoting to investment activities. Invariably, you’ll find there are not enough hours in the day for him to be doing all that he claims to be doing. --- John T. Reed

(4.6 hours per unit per month? I should be working 36 hours a week!! LOL)

http://www.johntreed.com/cando.html

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5. Reed's only source of income is writing and selling an investment real estate newsletter.

quote:

I am a full-time writer. --- John T. Reed

http://216.239.41.104/search?q=cache...hl=en&ie=UTF-8

quote:

I try to get an actual case history in every issue.......If you have one, I would appreciate hearing about it. If you wish, I can disguise your identity and the location of the property in any article I write about it --- John T. Reed .

http://www.johntreed.com/deals.html

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6. Reed also doesn't believe "no money down" can work.

quote:

the only way a lender can loan 100% of value or any percentage above the prudent lending limit, is to get a guarantee from a borrower or co-signer or guarantor who is so strong financially that they would qualify for the loan in question on an unsecured basis --- John T. Reed .

quote:

It is extremely difficult to do a nothing-down rental property deal which is ethical, legal, & profitable. --- John T. Reed

http://www.johntreed.com/nothingdown.html

[califdreamer]

I've found Reed's info to be a mixed bag.*

I thought his book on maximizing tax benefits from RE investing was useful (can't recall title right now).* I also agree with his skepticism regarding P&L projections for apartment buildings.* Not only are real estate agents' set-up sheets full of lies about the financial performance of their listing, the actual cash return is almost always disappointing even when taking into account the bogus info.* Actual CAP rates are invarialbly a point or two lower than people think they will be when they buy.

OTOH, I think he is heavy handed on the downsides of RE investment.* Maybe because his history is not so good (as spidey's post would indicate).* For instance, he doesn't believe in picking a RE market to invest in to maximize the possibility of price appreciation.* I think you can look at some leading indicators and maximize your odds of doing well.*

[brewer12345]

Quote:

Originally Posted by vic You will not find them. They are not advertised anywhere. We just know the guy personally. I was also wrong about the numbers, it is 35% and up/year. Just about to get into another one. It is all real estate development. Vicky

Oh, well, that's different! No risk there...

[canent]

I liked the original book for the simple reason that it forced me to think about other ways to make money other than being an employee.

I agree that much of the book is fluff that can't be substantiated but the basic premise was good for my own thinking patterns.

[haha]

Kiyosaki is on the same level as those surgeons who advertise on late night radio to add length and girth to your schwanzstucker.

If it were only possible! Same goes for Kiyo's crap.

Ha

[haha]

Quote:

Originally Posted by spideyrdpd 3. Reed does not believe that real estate can have positive cashflow. quote: almost all normal rental properties have negative cash flow. --- John T. Reed http://www.johntreed.com/nothingdown.html

This is likely true most of the time. The other + cash flow situation would be one where your prospective tenant is so clueless or derelict that even in today’s atmosphere where a bank will lend to a zombie, they won't lend to your tenant. So she rents from you- for a month or two until she gets busted for turning tricks in the gazebo out back.

Maybe it would also work in a transient area where students, servicemen, etc. might make a viable market. But Reed is mostly right—you feed the property and hope that inflation bails you out. Which for a good long spell it has done.--
and who knows, it may continue to do so.

Ha

[Martha]

Quote:

Originally Posted by vic You will not find them. They are not advertised anywhere. We just know the guy personally. I was also wrong about the numbers, it is 35% and up/year. Just about to get into another one. It is all real estate development. Vicky

These sorts of things are usually private placements, offered to a select group of investers. Usually only accredited investers are allowed to invest; people with very high incomes or a million or more in assets. The securities laws limit the ability to offer these sorts of investments to non-accredited investers because of the high risk.

Can work out well. Or you can lose your entire investment.

[2B]

Quote:

Originally Posted by Martha These sorts of things are usually private placements, offered to a select group of investers.* Usually only accredited investers are allowed to invest; people with very high incomes or a million or more in assets.* The securities laws limit the ability to offer these sorts of investments to non-accredited investers because of the high risk.* Can work out well.* Or you can lose your entire investment.

I've been "offered" a few of these. I haven't bitten yet because they always seem big on hype and lean on "facts." Any sort of “due diligence” always fell apart. There always seemed to be a frantic rush required so I “didn’t miss out.” References were few or non-existent because of “confidentiality.” Notice all the quotation marks.

This may be because I’m a borderline “accredited” investor so maybe the people with real cash get the good ones. My suspicion is that there’s a whole industry dedicated to making money off of shaky, potentially big return investments and people with more money than sense. Some may actually work out. I suspect most don’t.

[PsyopRanger]

I am also from the Richdad website, I read some of his books back in 2001 and was inspired to find a way to RE. I do not take all of his advice as gospel nor do I take anyone’s advice as gospel without due diligence.

The original RD boards were filled with mainly REI and those truly working towards FIRE. These days, they have been flooded with any and everyone thinking they are going to retire in 5 years on some get rich quick idea.

There are however a good portion of us long term posters there that try to educate the “get rich quick” types in proper investing. As one poster has already stated, RK philosophy is a context of thinking rather than a step by step manual to riches.

Many of us have gotten together, shared knowledge and even partnered on deals together because of the website. We mainly use the richdad site as a forum to share knowledge not worship Kiyosaki’s ideals. Similar to this site.

I’ll address some comments made here in the spirit of healthy debate

“Although Kiyosaki has a few good general concepts, it is mixed with a lot of advice that is just very dangerous for the average person to follow.”

One of Kiyosaki’s main principles is do not be average when it comes to investing, learn about investing, learn about wealth, taxes, entities and invest where the masses are not. He has proven this time and again with Real Estate in the 90’s, Gold in 2003, etc. I find the masses are usually investing in the wrong cycle at the wrong time. Buying tech stocks in late 97, investing in real estate for capital appreciation in 2005, buying gold in 2006.

I have taken this to heart and have learned and invested in investments most people have to be accredited to get into. The Global markets (Frankfurt, London, Hong Kong, Toronto) offer far safer and better yielding investments than most US investments, as well as a hedge against the falling dollar They have been around a lot longer as well but simply do not want to register with the SEC, therefore no US investors can hear about them. 30% returns are not very hard when you know what to look for and where. PPM's are just the start. I only leaned of this by following RK’s advice and doing my own due diligence.

”Most people are best of to stay in a W-2 job and just keep on stashing it away with their employer match. Instead, based on Kiyosaki's books they spent a few thousand bucks on a real estate seminar and then buy crap they don't understand.”

Like the employees of Enron and WorldCom, how about the dozens of retirees I worked with in 2002 after their “Financial Advisors” put them into risky investments and they lost half of there portfolio for taking this very advice.

What happens when the market crashes 6 months before your retirement and you lose 50% of your portfolio, how do you recoup that money?

My last 401(k) meeting, I asked questions to the person giving the lecture about taxes, early withdrawals, and risk allocations. He said he didn’t know and just told us to pick an investment option? This is good advice?

Types of investments are not risky, uneducated investors trying to invest in them are risky.

Sure Kiyosaki is trying to sell books, who in business is not trying to make money? The point I am making is there is two sides to every coin; it is easy to make snap judgments without factual evidence.

While the “Millionaire Mind” concept works for business owners and high income earners, what is there for the middle class?

I am 29, “Bad Debt” free, own 2 real estate rentals with positive cashflow held in a LP with an LLC as the general partner,DW and I have Roth IRA's worth over $150,000 and earning 30% annual returns since 2002 (during the bear market). My kids ages 7, 6 both have Roth’s and will become millionaires around age 35.

Because of Kiyosaki’s challenge to get a financial education, I will retire at age 45 regardless of what happens to the markets because I have more than one option, I am diversified across asset classes and global markets.

In the end it is all a person’s opinion, everyone has an opinion and they are just that, opinions. Until science can prove a person’s opinion is a Law, we all have the right to our own, whatever it may be.

Lance

[justin]

Quote:

Originally Posted by PsyopRanger I am 29, “Bad Debt” free, own 2 real estate rentals with positive cashflow held in a LP with an LLC as the general partner,DW and I have Roth IRA's worth over $150,000 and earning 30% annual returns since 2002 (during the bear market). My kids ages 7, 6 both have Roth’s and will become millionaires around age 35. Because of Kiyosaki’s challenge to get a financial education, I will retire at age 45 regardless of what happens to the markets because I have more than one option, I am diversified across asset classes and global markets.

Hey, it looks like you are just the kind of investor I've been looking for. I've got a hot prospect coming up soon that will blow your measly 30% out of the water guaranteed*, and based on your investing and legal acumen that you have demonstrated on this board, this opportunity sounds like it is perfect for you. This opportunity isn't for someone looking to make a solid 5%, 10% or even 20% return (who looks for those marginal investments these days when there are so many better opportunities? : ). PM me if you like making money like I do.

[cute fuzzy bunny]

Having not read any of kiyosaki's books, or even having heard of him before (although I do remember the Khan get rich book scheme from king of the hill), it seems like the guys a semi scumbag book writer that makes his money off of semi fictional stories mixed with some not so great investment advice, which nonetheless inspires a range of people to invest and become successful, who then are very defensive of their inspiration.

All pretty understandable stuff.

Now what percentage of people who read this fine fellows books succeed in their investments and what percentage lose their shirts and fall down?

Based on prior experience, i'm going to guess that the former is in small single digits and the latter is in large double digits.

[d]

Quote:

i'm going to guess that the former is in small single digits and the latter is in large double digits.

i'm also going to guess that you can't verfiy most of the "formers" (but with upwards of 35% annual return, it's not important) and won't hear from any of the "latters"

[PsyopRanger]

and based on your investing and legal acumen that you have demonstrated on this board

Please explain?

[cute fuzzy bunny]

Quote:

Originally Posted by d i'm also going to guess that you can't verfiy most of the "formers" (but with upwards of 35% annual return, it's not important) and won't hear from any of the "latters"

Ding! Ding! Ding!

[PsyopRanger]

Has no one here purchased a stock that yields a 35% return?

Or do you simply buy the latest Money Magazine “sizzling stock for the summer?”

[cute fuzzy bunny]

I dont think thats the argument here.

I think the argument is whether the writer in question offers solid, sage investing advice thats well taken by the average potential investor.

Not whether the rare few who are inspired by the topic and follow through with a success story should spurn their inspiration.

Heck a couple of child killers have inspired individuals to start foundations and pass laws to better protect kids. Doesnt mean that we should line up to praise the inspiration...

[PsyopRanger]

It also seems funny that those of us who have read his books and apply his principles are attacked by those who have never read his books?

Let’s list some of Kiyosakis Principles:

Pay off debt and invest in assets

Get an education about investing

Use due diligence in investing

Leverage debt to buy assets

Use a business or entity for tax deduction and retirement planning options



No one here does these things?

[cute fuzzy bunny]

I really dont see any "attacks".

Justin just likes to throw around a little sarcasm.

And i'm sure the writer has said some positive things.

Anything in his theories thats dangerous in the wrong hands? Is he huckstering for money at the expense of people who dont know any better?

Sounds like thats the issue.

Not whether you can make up a list of the good stuff.

[PsyopRanger]

Quote:

Originally Posted by Cute Fuzzy Bunny Anything in his theories thats dangerous in the wrong hands? Is he huckstering for money at the expense of people who dont know any better?

What part of investing does not have potential loss?

If you get educated about investing, use proper stop losses and trailing gains stops, you cannot “lose your shirt.”

Throwing my money into a mutual fund that only rebalances once a year when the stocks are negative is not sound financial advice in my opinion.

This is the part that you are not seeing, he does not say “Run out and make millions” he challenges you to search deeper and do your own due diligence.

To my knowledge, he offers no specific financial advice. He recommends strategies and it is up to the end user to do the leg work.