Think For Yourself - Posted by JPiper
Posted by JPiper on January 18, 2000 at 06:42:12:
One of the qualities that would stand most people in good stead is the ability to think for themselves. But particularly as a real estate investor this ability is paramount. The ability to look at a situation, analyze it, and draw a conclusion in an unbiased, rational manner is going to have a great deal to do with your success. This is what I really appreciate about John T. Reed?..that he gives us all an opportunity to test our abilities to analyze, size up, and logically arrive at conclusions.
For those of you who have been frequenters of this newsgroup, most of you will know that I am anything but a promoter of John T. Reed. What I am particularly against is Reed?s methods of critiquing authors of books. I found his criticisms to be heavily biased, emotional, and sometimes not based on having read the material. Mr. Reed is what I would call a HATCHET MAN?.he?s out to destroy?.often to build himself up in the process.
I noticed Mr. Reed?s latest HATCHET JOB several weeks ago, thanks to an overlooked post here that referenced it. As I read the critique of Kiyosaki, I found myself agreeing with certain of Mr. Reed?s assertions?.a new experience for me. Rarely have I been in that position. Kiyosaki was never a personal favorite of mine?.although I DID enjoy his talk last year at the convention, and I do feel that his book has value particularly to people new to the financial arena.
HOWEVER, this morning, searching for something to do, I REREAD Reed?s critique. I reread with Kiyosaki?s book in hand, so that I could check for myself Reed?s quotes versus the actual Kiyosaki material. I would encourage those of you who appreciate facts to do the same.
I think what you?ll find is that Reed clearly distorts the information. It?s tricky how he does this. He will quote a sentence as an example?..leaving a part of it out and signified by dots to show that something has been left out. Hmmmmm. Some of those left out parts make a difference! Further, sometimes he quotes up to a point?.then leaves the rest of the thought out?.a thought that may well have changed the meaning of Kiyosaki?s point.
Allow me to give you an example. Reed begins by referring us to the book and quoting Kiyosaki ?On page 172, he says, “I have found the principles of finding value are the same regardless if it’s real estate, stocks,…or a new spouse…”? Interesting quote?.and interestingly enough, definitely self-serving for Reed?s point of view. Reason, he leaves out part of the quote?.that?s what those dots are in his quote. Further, the sentence following this is ?The process is always the same. You need to know what you?re looking for and then go look for it!? Interesting that Kiyosaki is NOT making the point that ?Money is all that matters??..which is Reed?s claim and purpose in using the quote and leaving out the key sentence. Kiyosaki?s point is that there is a process that runs through looking for undervalued real estate, or a new spouse (and a number of other things that Reed leaves out in his quote), and that is to ?know what you?re looking for, and then look for it.? In other words, define your goal, and then begin taking steps toward the goal. A little different than Reed leaves us to believe isn?t it?
One piece of Mr. Reed?s analysis is so offbase it?s hard to believe. He refers us to pages 106 and 107?..the story actually starts on page 105. Again, my suggestion is to read the entire story, not just Reed?s description. Kiyosaki describes a real estate transaction in which he puts up $2K to acquire a property for $20K. He then resells the property for $60K, pulling his $2K out in a processing fee. Reed leaves this small detail out of his story (what a guy). So Kiyosaki does evidently 6 of these transactions, wherein he creates $190K in notes?..no money is in his deals. Reed criticizes this?he says? ?Competent note investors would never agree to such long terms. One expert I consulted called it a “nutty note.”? Reed then consults Bill Mencarow, who tells Reed that these notes are only worth $90K to $120K?.therein marking Kiyosaki?s notes to market. Now let me stop here. Is Mr. Reed nuts??? Is he really telling us that he would not do a deal for no money invested which created notes with a face value of $190K? LOL!!! For those of you who don?t know what LOL means?.that?s me laughing hysterically while I type. Give me a break Mr. Reed?..whether the notes are worth $100K or $190K?.who cares??? Kiyosaki has nothing in the deal! Personally, I?d like to see one of Reed?s deals if he thinks this was a rotten deal?..but I think we?re going to be waiting a while to see that.
Next Reed spends a number of paragraphs talking about all the things that are wrong with Kiyosaki?s deal?.the one that Kiyosaki has no money in. It seems that Kiyosaki is receiving $19K in interest on these notes per year?.and is receiving that in a corporation. Kiyosaki claims to have expenses that offset much of this income. Reed however overlooks (perhaps disbelieves this claim, just like he disbelieved the Merchant Marine claim of attendance) this, and tells us that this was a bad idea too?.that Kiyosaki will be double taxed. This I agree with to an extent?.BUT, it may just be that Kiyosaki has created expenses to offset against this income?and to the extent that he has done so, Mr. Reeds analysis starts to fall short.
Now, before this post gets too long?I?m going to stop. I can tell you that as I read Reed?s analysis, looked at his quotes, read Kiyosaki?s book to verify the quotes?.a pattern started to emerge. Can you guess what the pattern is? Reed?s analysis is at a minimum misleading and unfair. I hesitate to call it more than that?.although some might. But again, read the information for yourself. Don?t do what many do, and simply accept the written word as Gospel?.whether it be by Reed, or by me for that matter.
By the way, some of Reed?s analysis I found to be true. An example of this is the exchange into the limited partnership?..not possible of course. But here?s the thing?.it IS possible to exchange for property to a tenant-in-common interest. This particular structure is one that I was heavily involved in at one time?.and that many people at the time mistakenly referred to as a limited partnership. Whether Kiyosaki has made this particular mistake I can?t say.
Reeds comments regarding the Rolex watch are on target too. It appears that some of the Kiyosaki comments regarding taxes are ill-founded to me. But again, this isn?t that unusual, and perhaps Kiyosaki is one of those who refers his taxes out to his experts. Most of us do that ourselves. If this is the case, then Kiyosaki is guilty of discussing things that he knows little about. I do happen to wonder along with Mr. Reed why Sharon Lechter, CPA and Kiyosaki?s co-author did not catch some of these more obvious tax errors. Perhaps there is an explanation.
My suggestion to those of you who are reading this post, is to read the book and form your own opinion. You don?t need Mr. Reeds opinion in order to know what you think. Draw your conclusions based on fact, not on opinion?.there?s a big difference in the two.