Posted by Rob FL on June 17, 1999 at 13:04:39:
They are explained in Robert Kiyosaki’s book “Cashflow Quadrant.” You should get your hands on a copy and read it.
"E"mployee
"S"elf-employed
"B"usiness owner
"I"nvestor
I just read Cash Flow Quadrant…NO LONGER WANT TO BE IN REAL ESTATE - Posted by THS
Posted by THS on June 16, 1999 at 15:37:37:
Hello,
I have been following this board for several months now and became very excited about the possibilities in real estate. Although I have yet to do a single deal, I was sure that real estate was a terrific vehicle for financial freedom. Then on the advice of this board, I read Rich Dad, Poor Dad and Cashflow Quadrant by Robert K. While some real estate can be looked at as an investment, most of what I was interested in (flipping, retailing, and lease options) would fall into the “S” quadrant because I would not really have a business, but a job. I am now convinced that real estate would not be a good vehicle because it is too “hands on” and to be successful, would be too time intensive for me to do anything else. If I misunderstood the points that were trying to be made, please let me know.
Thanks,
THS
Re: I just read Cash Flow Quadrant…NO LONGER WANT TO BE IN REAL ESTATE - Posted by George (NoVa)
Posted by George (NoVa) on June 17, 1999 at 07:32:40:
THS,
Robert Kiosaki never provides a plan in any of material, he only provides an insight into the possiblities. Cashflow Quadrant doesn’t provide a plan. He only describes certain personality traits of certain types of people. It seems that you view real estate through the eyes of an “S”, not through the eyes of a “B” or an “I”. Move your thinking to a new quadrant, and you will have a different view. And changing your thinking is certainly easier said than done.
After reading his materials, I am convinced that Real Estate is a very important part of my portfolio, but not the way I was approaching it. Because he has radically altered my thinking about how I do business, I have looked at other avenues and found new and exciting opportunites. I am about to invest $100,000 in a commercial real estate deal that will return my investment in 7 months and then provide $30,000 - $50,000 per year in passive income. I never would have found this deal the way I was thinking in the past.
Don’t think that reading Rich Dad Poor Dad and Cashflow Quadrant will give you all of Robert’s teachings. You should invest in Cashflow 101 and 202 (Casflow 202 is worth the price just for the tapes that come with it. You will understand his passion for real estate and better yet find out how he taught me to get the $100,000 I needed for the deal above).
If you play the Cashflow games, you will find that Real Estate will take you to the fast track quicker than any other investment except possibly the multi level marketing deals introduced in Cashflow 202. You will also find that you have to balance your portfolio between Cashflow opportunities, Cash opportunities and debt. How you apply these skills is YOUR challenge.
Robert only claims that he can teach you to think like the rich. It is up to you to act like the rich. And that requires a plan and time to execute that plan.
I would be curious to know what vehicle other than real estate you have chosen to reach your financial goals and how quickly will this vehicle produce passive income?
George
debates are generally useless, however something to consider. - Posted by Dirk Roach
Posted by Dirk Roach on June 16, 1999 at 22:57:18:
Hi Ths,
Although I feel Kiyosaki’s material is very good, it by no means should be a singular focal point for coming to investment decisions. I feel, however, that it could be an important part of the plan.
Of course to make an intelligent decision you will need to have as much information as possible. So I would suggest doing as much research as possible about anything that you are going to pursue.
An interesting aspect of Real Estate, is it is a “limited” commodity. There are no RE Factories pumping any more out.
Owning property is one avenue that a person could pursue in this arena, however “control” is another.
I found your post interesting because it has a key element that I have personally noticed that comes up a lot. A lot of people will read a book or a course and believe that if they follow it word for word they are guaranteed success (whatever their definition of that is).
What one has to take into account though, is the fact that these investment strategies have been working well for the author. That being the case there are also many additional factors which are thrown into the mix. Ones commitment, geographical location (can your environment sustain whatever venture), economic climate etc.
So my advice/opinion is to read and apply techniques and scenario’s to your investment strategy. Ask yourself, realistically if whatever strategy will work for your targeted deal. Devise a plan of attack and implement it.
Good luck to you and yours,
Dirk
Now read the E-Myth Revisited - and LEARN TO LOVE REAL ESTATE! - Posted by Carmen
Posted by Carmen on June 16, 1999 at 20:21:01:
I read the same books you did - and it got me so excited I couldn’t sleep. Then I grabbed The E-Myth (Revisited) by Gerber, and now I can’t even sit still.
Here’s the point - ANYTHING THAT BRINGS YOU PASSIVE INCOME REQUIRES THAT YOU BUILD IT FIRST!
Sure, it takes time to build it during which you may feel like an “S” - but if you build it right (per E-Myth), you won’t be doing it long - someone else will be doing it for you! The only other way to do that is to buy a franchise - and I don’t do burgers or ice cream.
I’m “building” my “business” - in 3 months, I’ve acquired 3 properties, will rehab, then sell or lease each one. If I sell them all, that will generate about $30-$45K of plain hard cash profit. If I rent them all, that will bring about $600-$900/month of cash flow (bought these real cheap). And that’s just the first 3 properties.
The way I figure it, finding and getting a contract on a property is worth 20%; getting the financing is worth 20%, fixing it is worth 20%, selling it is worth 20%, and the cost of doing business (of just owning it, rent, phones, advertising, etc) is 20%. Now, I don’t know about you , but I sure as heck think I can teach someone to do all those things for less than 20% - anything left over (after salary, etc.) is mine to keep - and eventually I won’t have to raise a finger to do it! I’ll hire an office manager. I’ve already got a contractor who does the work for free - and gets 20% of the profit. I have realtors throwing properties at me to look at, and who would love to list and sell my properties for 6%. I have 3-4 hard money lenders which will finance me in 3-4 days (and who put money in my pocket at close every time). Let’s see - what’s left? Oops! I have to make and take a few calls a day still, until I get a secretary… Not bad for 3 months of work, huh? I’m not rich yet, but my systems are falling into place, and I’m refining them every moment.
That’s the beauty of Kiyosaki and the E-Myth - but you do have to LIKE what you do. I happen to think there are few other ways to make as much - I’ve owned a business where my profit was 5-10% (computers) where I worked 14 hours days - a profit of up to 1000% (very little of my own money!) is not unheard of in RE - for just a few hours a day! Since I walked out of two closings with money in my pocket, and haven’t had to use a dime of my own money, the returns are fantastic - unbelievable - or “good 'nuff”!
Too bad , more deals for me to make then , thanks for backing out… - Posted by Bassman
Posted by Bassman on June 16, 1999 at 20:19:18:
Sorry to be so blunt , but the impressiion i got from Robert is to have Many businesses working for you .
If you set up your buying machine correctly and have other people doing the labor intensive work and you Focus on the important part - Making offers - i dont see where you can be going wrong .
But again if you want to back out , more power to you . That just leaves more deals for the rest of us.
I would suggest though that you reconsider .
Just my thoughts.
I felt the same way…went into tax liens (long) - Posted by Ben
Posted by Ben on June 16, 1999 at 19:14:31:
Four years ago I began looking into purchasing property at sheriff’s sales. Your concerns are exactly what turned me off. The headaches involved in owning properties, the bad condition of foreclosed homes, property management, high potential for liability, evictions, negative cash flow, not having tenants, having tenants from hell, etc. I found the perfect solution, municipal tax liens. Here I don’t own anything but a piece of paper in my safe (the tax lien certificate) but I CONTROL millions of dollars worth of properties and earn up to 30% interest on them, with a fraction of the aggravation and responsibility. In four years I have only taken title to one property through foreclosure but it was obtained at about 10% of market value and sold within a month.Each one of my liens are like little employees,working seven days a week, earning me money. Unlike regular employess, no one goes on strike or calls in sick. No tenants stiff me for rent, or leave roaches and dog sh*t as a going away present. Anyway, I’m getting long winded but this was my solution, look into it,maybe it could be yours.
Re: I just read Cash Flow Quadrant…NO LONGER WANT TO BE IN REAL ESTATE - Posted by David Alexander
Posted by David Alexander on June 16, 1999 at 17:36:21:
You can do both, generate cash and invest. Start learning more about notes, especially the Cash Flow forum, where we discuss this stuff, ala, John Behle.
What your missing is that at first you have to be able to generate cash first in order to invest and then reinvest, unless you have the capability to get your hands on private money or Institutional money to fund or buy your deals. Your better off funding the deals, to get your cash back out to continue your growth.
Real Estate is great for creating Passive Income, you can also do the same thing buy buying businesses with good systems in place, where you have a good plan to create excess cash flow, just make sure you don’t buy a job.
So what else would you be thinking of doing? Your not suffering from Paralysis Analyisis I hope. Go do a deal, create some passive income, it’ll change your life. I bet if you ask Robert himself he would even say he is Trader to some extent, because his cash flow is already more than he needs, he can go for the big cash. Remember, unless you can get the cash from some where, you have to do something.
David Alexander
If there’s no passion, whats the point? - Posted by Jimbob
Posted by Jimbob on June 16, 1999 at 17:30:05:
THS,
I think you’ve hit the key point in a round about way, if it seems like work and is labor intensive and a drag to you, then you have no passion for the real estate investing business. One of the major keys to being finacially sucessful is you have to be passionate about what you are doing, then it doesn’t seem like work. Too many people look at the possible money they can make without thinking if they really like it. If you don’t like what you do, then why do it?
There’s plenty of other ways to make money like in the computer industry for instance.
Jimbob
Re: I just read Cash Flow Quadrant…NO LONGER WANT TO BE IN REAL ESTATE - Posted by Matthew Chan
Posted by Matthew Chan on June 16, 1999 at 17:16:24:
Real Estate is only a vehicle. It is not for everyone. Even if it is for you, there will be people who will operate it as an “S”, “B”, or “I”. I believe it is in how you approach it.
I really don’t have any problems operating as an “S” in the interim until my momentum becomes the point I become either a “B” or “I”. Make no mistake, I believe it is better to be anywhere than an “E”. That is the ticket to captivity and eternal poverty.
I think it is unrealistic to become a “B” or “I” overnight. It will take some time and work but I believe the trip will be worth it.
If you don’t like RE because you have to exert yourself a little and have to be an “S” for a little while, then it is your call. But I believe it is a little short-sighted.
Although it is admirable you want to become an “I”, I think you are going to have to take an intermediate step before getting there.
Read it again, Real Estate is Top of the list - Posted by Mark R in KCMO
Posted by Mark R in KCMO on June 16, 1999 at 16:53:59:
THS,
Read the book again, yes you missed an essential portion of the information, there is Nothing wrong with having a “JOB”, just realize that it is one, real estate offer many ways to be a passive investor, which is one of the main reasons Robert Kyosaki Recommends it as one of the vehicles that you choose for your portfoilo.
Yes in the begining you might need to generate cash to create you cash flows, flipping, and rehabing can be a only a job if that is how you choose to look at it.
a rehab can be a passive income vehicle if you so choose to use it that way. Fix it up place it as a rental, and have long term cash flow, with the right numbers, there can be plenty of flow for you to hire management to take care of the day to day things.
Its not the item, that is important it is the sturcture that you use to manager that item.
Although I am a rehabber, I don’t swing hammers, (so what I tell 'em it’s cuz the insurance won’t let me)LOL
Hope this helps
Mark R in KCMO
Re: I just read Cash Flow Quadrant…NO LONGER WANT TO BE IN REAL ESTATE - Posted by Rob FL
Posted by Rob FL on June 16, 1999 at 15:47:00:
Flipping, rehabbing, and many other forms of RE can be construed to be in the “S” quadrant. If you don’t keep doing them, eventually you run out of money. However, I was just reading Rich Dad Poor Dad again today for about the third time and in Chapter 6 he talks about doing several flips himself.
One thing you have to realize, is that if you don’t have any cash in the bank it is more difficult to do some deals. Also, cash in the bank will make you feel more secure.
Scott Britton wrote a how-to-article entitled “Learn How to Generate Cash First.” I am not saying that building cash flow from mortgages or elsewhere is not important, but it is much easier to do real estate or any business venture when you have a nice nest egg of cash or liquid assets put away somewhere.
Re: I just read Cash Flow Quadrant…NO LONGER WANT TO BE IN REAL ESTATE - Posted by SCook85
Posted by SCook85 on June 19, 1999 at 16:33:02:
Very well said. There is no need in me saying it a second time, I couldn’t have done it better anyway.
SCook85
Re: I just read Cash Flow Quadrant…NO LONGER WANT TO BE IN REAL ESTATE - Posted by A. J. Ard
Posted by A. J. Ard on June 17, 1999 at 14:37:29:
Great Post:
I would like to hear more about the 100k deal and the details about it and how the tapes helped you find that deal
aj
Great post, George. Plus… - Posted by HR
Posted by HR on June 17, 1999 at 08:45:48:
THS,
You have gotten a lot of good, friendly advice. I agree with everyone else: I think you missed Kiyosaki’s boat completely.
Yes, rei will require you to act in the S quadrant for awhile. You may even have to be in the E and S quadrants simultaneously for awhile (ouch). However, let me ask you this: are you really prepared to jump right into the B quadrant? 99.99% of humanity never will be. Why? Because to be a B, you must have specialized knowledge in a product or service PLUS you must have all the leadership and management expertise to run a business system. Do you possess all this already so you can just go out and start a business (system) tomorrow?
I think its a pretty natural progression to go from E to S and then from S to B. In the meantime, one should always be investing, no matter what quadrant one is in. Don’t shoot down the S quadrant. B’s gain their specialized knowledge by being good Ss.
It sounds to me like you are in the E quadrant. The next, logical question, then, is what specialized knowledge or field can you learn to get into the S quadrant? REI is a great answer. It’s the best answer there is!
Good luck,
HR
Re: Now read the E-Myth Revisited - and LEARN TO LOVE REAL ESTATE! - Posted by Charles
Posted by Charles on June 17, 1999 at 06:02:22:
Super JOB, I want to here more about getting cash back at closing with using hard $. Please let us know.
Thanx
Charles
Re: Now read the E-Myth Revisited - and LEARN TO LOVE REAL ESTATE! - Posted by Mike_FL
Posted by Mike_FL on June 16, 1999 at 21:35:04:
What a stirring memo Carmen. I’ve been following this board for just over a week and this is fantastic. Please provide us with the methodology you used from beginning to the three month point to get where you expect to soon be.
Congrats and hope to see some reply.
Mike
Tax Lien question… - Posted by Mark (SDCA)
Posted by Mark (SDCA) on June 17, 1999 at 09:51:57:
Since you brought up tax liens, I wanted to ask one question which has always confused me. Let’s say the “promised” interest rate on your tax lien is 18%. I believe that is the max in Arizona. Does that get paid regardless of whether the owner redeems the property or not? In other words, is the state paying that 18% (and guaranteeing it)? Or is the owner paying it when he redeems the property? Finally, does the 18% get paid on an annual basis?
The reason I ask is that I looked at tax liens at one point. And the vast majority of the properties I looked at were raw land in the middle of nowhere. So my guess was that the property wasn’t even worth the back taxes and might never be redeemed.
Hope this makes sense,
Thanks.
Mark
Re: I felt the same way…went into tax liens (long) - Posted by Irwin
Posted by Irwin on June 17, 1999 at 09:10:14:
You don’t say how much you had to invest at the outset. What you do is a good business,( if you know what you’re doing) but it takes a lot of capital. Also, you don’t really CONTROL any properties. You’re just investing in a high yield vehicle. The actual dollar return still depends on how many dollars you have to invest.
“Insurance won’t let me!!” - Posted by JohnAz
Posted by JohnAz on June 16, 1999 at 17:26:12:
Mark,
You’re a rehabber…but don’t swing hammers because the insurance won’t let you.
Now THAT is creative thinking! I guess I’ll finish up the rehab I’m working on now and just sell all my tools. Now what am I gonna do with all the time I’ll have left since I wont be swinging a hammer or slopping paint?? Yea, I guess I can just go find more deals!
John