Rich Dad - question about one of his examples - Posted by Greg

Posted by GL(ON) on February 07, 2002 at 11:40:39:

Engineers and accountants DO run most of the companies in the world. The successful ones anyway.

I DON’T know everything. I’m not even an engineer or accountant. I don’t think anybody knows everything, either me or Robert Kiyosaki. That is the whole point.

DON’T follow either of us blindly. Use your head. Use your eyes.

Now that we are in perfect agreement isn’t it time to let this subject drop?

Rich Dad - question about one of his examples - Posted by Greg

Posted by Greg on February 03, 2002 at 18:08:03:

In RDPD, Robert K. gives an example of a house bought in Arizona. The market was poor, and $100K houses were selling for $75K. He bought one in forclosure for $20k (which he borrowed), advertised it for $60K with no money down. It sounded as though he financed the $60K for the buyer. How could he sell the house to someone with no money down if he already owed $20K on it? Wouldn’t there be a 1st lien holder for the 20K? What would they say about selling it to someone else and not paying off the original 20K. I assume Robert did not pay off the 20K since he sold it with no money down.

Re: Rich Dad - question about one of his examples - Posted by g

Posted by g on February 11, 2002 at 10:33:12:

It’s called a wrap around mortgage. Or he sold on a contract for deed. Nothing magical or illegal about it.

Re: Rich Dad - question about one of his examples - Posted by george

Posted by george on February 05, 2002 at 16:43:14:

As was explained by johnboy (i think) the property could be sold with a wrap-around mortgage. (if the 20K was secured by the property). Maybe 20K was secured by other assets, like a Rolls Royce, a book deal(grin), or maybe nothing at all for collateral. The point is, it was appearently not cash OUT of His pocket.
I believe that RK relates more of a conceptual idea about making assets work for you instead of a step by step guideline. Over all I like “RDPD” and “the Cashflow Quadrant” but, relize there might be some over simplicity or generalizations. I think they are
worth the reading especially for anyone stuck in the rut of a 9-5, grinding for a paycheck, thinking their big raise (?), will mean a better life.

If you interested in more related Rich Dad series books, drop an E-mail to
they have discount pricing and package deals on books and products.
good luck, george

Re: Rich Dad - question about one of his examples - Posted by Dave T

Posted by Dave T on February 05, 2002 at 14:15:57:

Not quite sure how RDPD did it, but a wrap-around mortgage comes to mind as an effective way to accomplish the same result as in the example.

Re: Rich Dad - full of boloney - Posted by GL(ON)

Posted by GL(ON) on February 04, 2002 at 12:02:06:

Don’t put too much stock in anything Kiyosaki says. If you analyse his examples, you will find there is very little sense to them. He is the Cliff Claven of investment advisors.

In fact if you try to follow his advice you could hurt yourself badly.

Since you found some flaws in that one example,that proves you already know more about investing than he does.

Re: Rich Dad - question about one of his examples - Posted by Utan Investor

Posted by Utan Investor on February 04, 2002 at 08:58:25:

It’s good to see other’s who know the power of Rich Dad/Poor Dad.

The other 2 responses are probably correct. But here are the secrets which he (Rich Dad) did but doesn’t come out & say “do this” or “do that”:

  1. Buy Foreclosures - he never mentions the word. But he says he borrowed 2K from a friend and “went to the courthouse steps”.
  2. Next - Houses are there for you to flip, not rent. A normal house doesn’t cash flow. Houses are there for you to buy and flip. If you want a rental, flip a few houses, and take your cash and invest in:
    apartments/storage units/mobile home parks.

Make Sense?

If you really follow what he did to get rich, that was it. Have you read Cashflow Quadrant? Do you own a Cashflow game? Many other answers lie within.

Good Investing

Re: Rich Dad - question about one of his examples - Posted by Rob FL

Posted by Rob FL on February 03, 2002 at 20:01:01:

It doesn’t say. The 20K could also have come from credit cards, a line of credit, etc. and never was a lien on the property.

We can only speculate… - Posted by David Alexander

Posted by David Alexander on February 03, 2002 at 19:42:26:

as he didnt give details…

I would say he took it subject to the first lienwhich was 20k… and then sold on a wrap for the 60k creating a cashflow of probably in the neighborhood of 400/month or so.

Stick around you’ll learn more…

David Alexander

Re: Rich Dad - question about one - Posted by Terry (Houston)

Posted by Terry (Houston) on February 03, 2002 at 19:40:17:

Well, I think you answered the question. Think of the return the investor would make on his money spread out over 10, 20 or 30 years. It may have just had a balloon on the note for a year or 2 as well.

But to keep it simple, the investor could be looking for monthly cash flow.

One thing that hit me real hard was when I saw John Schaub speak and he said “Why does a Roth IRA need monthly payments?”

Why not just do a note to the private money person that is payable in 1 payment with all acrued interest and the principle or for whatever undivided interest he has in the property?

If this happens in a Roth then the interest is tax free gains anyway.

And the investor does not have to make any payments to the Roth until it is time to pay the whole note off. He now has monthly income coming in that is real nice.

I am sure that is not the example that Robert is talking about, but it is an example of why an investor would not need to have his money back right away.

Just as I see it…

Terry (Houston)

The earth may be crumbling beneath us !!! - Posted by KennS

Posted by KennS on February 05, 2002 at 01:04:06:

My two cents:

I have read two of his books and I am pretty sure he is a poor investor and I am convinced he is an extremely poor money manager. I base this solely on the information he gave me in his books. If I have the wrong impression, it is solely because of his poor examples and inconsistancies. He does boast that he is a great at marketer. This tells me he made his money selling books.
This being said, I still recommend his Cashflow Quadrant book (with a warning of it’s weaknesses) because of it’s “big picture” message. I really got something out of it.
As you quickly found out, these are fighting words for many people posting on this site. My theory is that many of us on this site have built their Real Estate investment business and dreams upon a foundation laid for them by the information marketers such as Robert Kiyosaki and Carlton Sheets. Words such as these tend to put a crack in, or weaken the very foundation in which their real estate business is built upon.
Are you on shakey ground?

  • Kenn Swanson

Whatever… - Posted by David Alexander

Posted by David Alexander on February 04, 2002 at 15:08:23:

How much do you make… Who do you listen to…and how is what he’s talking about flawed?

Come on GL… I’ll take this debate…

I understand what he said perfectly… made perfect fundamental since to me…

I think he was right on target… In fact at the time I found his book… (reccommended to me on this site by Lonnie Scruggs… someone else I highly respect) it reassured me I was on the right path…

His book simply says to buy assets… and assets produce cashflow… You sound like Jack Reed again… looking for something that ain’t there.

David Alexander

And you?.. - Posted by JM

Posted by JM on February 04, 2002 at 14:32:21:

Even if Greg does KNOW more about investing than RK, is Greg MAKING more MONEY in investments than RK, or are you, for that matter? I seriously doubt it.

RK relies on his TEAM to invest. They are the ones that have the knowledge.


Re: Rich Dad - some of the best books I have read - Posted by Suzanne

Posted by Suzanne on February 04, 2002 at 15:23:08:

I got alot out of Rich Dad/Poor Dad and Cashflow Quadrant books also. It changed my mindset. That is why I am here and getting into real estate. I just ordered his game cashflow 101 to learn how to manage money.

What many people do not see is that he is writing to show you some of the options that are available, and that you don’t need to have money to make money. I do not know how many people are stuck in a rut because they believe that they have to have money in order to get into anything that can create money for them.

I seriously believe he talks about investing and real estate to let people know that it is not only a viable option, but to also show that if you do not have some type of money working for you, you will always be just getting by. He calls that being stuck in the rat race. He is not writing to give you how to advice.

He is writing to make you think about how you handle your money, what you invest your money in, and to challenge your mindset from the mindset from thinking pay check to paycheck to accumulating wealth so you don’t have to rely on that next check.

Many people have a mindset that they will just get by in life because that is all their job affords them, or that they have no hope of getting extra money let alone rich. Many don’t even understand the basics of how to handle or manage their money let alone how to create it. If they did, why do we have such a big credit card problem in almost every household?

I was taught in highschool in home economics calss on budgeting that the teacher taught to pay the minimum on the credit card and use the extra money towards something I wanted. I remember the teacher correcting me when I applied extra money to pay down the credit card. Most of the time when I hear about the credit card problem in the news or other major media sources it is about how many credit cards a person has or how much they wracked up in bills. They do not touch on how much interest is being paid on those cards. Only a very few organizations touch on that aspect.

The rich dad series is not for everyone. It is not for those who are happy with a paycheck each week or month. It is not for those who already know how to think outside of the rat race and out side of the just get by sydronm. It is not for those for whom poverty has become such a comfort zone that if they stepped outside of that zone they would have a heart attack. It is for those like myself looking for a way out, and never have been taught how to get out.

Re: Rich Dad - question about one of his examples - Posted by Marcos

Posted by Marcos on February 04, 2002 at 10:02:10:

No offense but be careful practicing what you preach.

  1. Buying on the courthouse steps is pretty risky for someone who doesn’t know what they’re doing. Many times these are houses that you cannot go inside and inspect. Plus it’s an all cash sale. Most new investors can’t handle all cash sales. In some states, the entire bid price is to be submitted in 24 hours. In others it’s 30 days. It just depends on where you’re located.

  2. Houses don’t cash flow?? Hmmm… that’s pretty interesting, as I have been able to get pretty decent cash flow from quite a few houses. Combine them with an agressive Lease/Option, and I’ve been able to get a house to cash flow over $500 a month. In fact, I don’t have a house that doesn’t cash flow at least $200 a month. Well, actually that’s a lie, I have one that is probably around $150, but it’s on a 15 year mortgage.

I personally have found that I get better cash flow from a SFH lease/optioned than my multi’s. But, that may just be me.


Re: The earth may be crumbling beneath us !!! - Posted by GL(ON)

Posted by GL(ON) on February 05, 2002 at 07:15:48:

Thanks for your support. I was beginning to wonder if I was the only one who saw through the smoke and mirrors.

It’s a little scary isn’t it?

YOu have a point there. A lot of what we believe is wishful thinking and won’t stand analysis. Maybe I missed the worst of it because I started investing years before I heard of Sheets, Kiyosaki or any other guru. I still like the books, even the cheesy ones, but don’t kid myself about their validity.

Piggy backing… - Posted by MatthewC

Posted by MatthewC on February 05, 2002 at 12:01:24:

Just to piggy back on this comment…

If the concept of buying assets is so hard to grasp for some people, I wonder what people will say of the notion of CREATING assets from nothing in RDGTI.

Re: Whatever… - Posted by GL(ON)

Posted by GL(ON) on February 04, 2002 at 16:52:17:

Hey, I haven’t got any books or courses to sell. What do I care if you like me, or believe me?

I’m telling you right now, DON’T believe me. When I tell you something check it out for yourself. Ask yourself if it makes sense.

In the original question, someone read where Kiyosaki claimed to have bought a $100,000 house at a tax sale for $20,000 and immediately resold it for $60,000 with nothing down.

The questioner wanted to know how he did it. I’m saying he didn’t do it. He made it up. And if you go and try to do the same thing, knowing only what you learned from Kiyosaki’s book, you won’t be able to do it either and there is a good chance that you will get hurt trying.

Buying and selling tax sale properties is difficult and full of pitfalls. Read this board for a while and you will hear from people who actually do it. It’s not that easy. Yet it is one of those things that amateurs love.

Kiyosaki does this all the time. He makes up some story that sounds good but if you look into it, it’s a bunch of boloney. That’s OK if you read his stuff for entertainment but don’t let him suck you in.

Re: And you?.. - Posted by GL(ON)

Posted by GL(ON) on February 04, 2002 at 16:40:28:

If RK invests the way he does in his books he sure isn’t making much.

I wouldn’t listen to his team either because they are sure to be a bunch of bozos. First rate managers pick first rate people. Second rate managers pick third rate people.

What makes you think RK is so rich? All you have is his unsupported word and you know that’s not worth anything.

If he makes any dough it’s from selling cheesy books. Not that I have anything against cheesy books if they make you feel better. Just don’t take them as gospel or invest your money by them.

It is not for everyone… - Posted by MatthewC

Posted by MatthewC on February 06, 2002 at 12:08:44:

You are absolutely right. The RD series is definitely not for everyone. There are some great distinctions in there that can make big differences financially. Some are receptive, some are not.

But I also know of many people who read it, said they understood it, then went right back to grinding away. Knew this RE Agent that read the book and allegedly understood it. Tried to show him a few things based on true results. But he put so many restrictions on himself through his own beliefs, he has almost choked himself off of accepting anything new. So he says, he understands it but he positions himself in such a way he can probably only do 1, maybe 2 deals a year. Whereas my new partner (younger guy) is more receptive to newer ideas will probably blow past him come next year. With any luck and if he keeps things up, he might quit his job within 2 years to do RE and businesses full-time.

True understanding is based on what you do and act on, not necessarily what you say. It is often measured in tangible results.

I read your comments. It was well written and well expressed. And as far as I am concerned “you got it” and your journey has begun.