The Advanced Guide to Real Estate Investing

Rich Dad, Poor Dad, the stellar brand that teaches normal people how to focus their thoughts and finances towards greater financial strength has spawned a host of ancillary/supporting materials.  Because Robert Kiyosaki has leveraged his fortune into real estate it's only natural that he create a universe of materials around real estate.  This advanced guide follows half a dozen books that lead the reader step by step through the process.  In order to maintain full disclosure I want to say upfront that I have all of the RDPD books (over 30) and the Cashflow 101 and 202 games, and the Cashflow 101 E-Game, plus various cd's and dvds.  So I am biased.  To say the least.

This book, written by Ken McElroy goes into the use of multi-family apartment buildings as an addition to one's portfolio.  The strength of an apartment building has to do with the amount of tenants who are consistently bringing in rent.  The road to wealth has to do with getting others to contribute to your finances.  Being able to discern one's Income Statement and Balance Sheet allows an adult to understand the difference between Liabilities and Assets.   Once you understand this and begin experimenting with purchasing Assets and limiting Liabilities it becomes a natural step to purchase an Asset where multiple individuals lend their resources into increasing your net worth.  It might sound predatory but if you're currently renting looking at your rent receipt, that's the name of the holding company owned by a family somewhere that you're making rich.  How so?

Say your rent is $1000 a month.  The rent is generally higher than it actually needs to be to cover miscellaneous costs and repairs as well as a profit margin.  Your apartment may actually be market worth about $750 a month with a buffer in case of unforeseen repairs.  However it's more than likely that it won't happen so that $250 is profit.  The management company might get about $150 of that to manage your apartment, pay the landscapers, the janitor, paint the hallways, etc.. The leftover $100 is pure profit to the owner.  Now multiply that by the other 11 apartments in your building and the owner is making $1200 a month just for owning the building.  Multiply that by 12 and you have $14,400 in profit.  The building itself is probably worth about $1 to $2 million and is slowly  appreciating in value.  That $14,440 can be applied to purchasing another building.  To purchase the building from the get go might only require a $25,000 to a $100,000 down payment.  Are you starting to see the value of good credit?  It's the road to financial security and potentially wealth.

Consider that you're living in the most technologically advanced age ever on Earth, you'll potentially live well past your 70s, with regular exercise and no diseases that ravage you, to your 80s and 90s.  The question becomes will you have enough income when you can no longer physically work?  The broader question around race and gender for women and people of color, is the passing on of wealth to the next generation.  Caucasian people have 14 generations of wealth in America, people of color (Black and Latino) 4 to 5.  This affects being able to send your children and grandchildren to college and their subsequent success.  Tangible Assets and accumulation of them are a panacea to many of the social ills we see and might just be the difference between your living a good life and maybe giving up a few luxuries and frivolous spendings now or  when elderly being a Wal-Mart greeter for grocery money.

Kyle Phoenix
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