Robert Kiyosaki The Lazy way to invest in real estate.

227 Replies

Have some of you read this book? Is there new unique methods that we should know that aren't discussed on Bigger Pockets? I'd appreciate comments or brief review. I'd love to think there WAS a (Profitable) lazy way to invest in real estate.
thanks 

Ron. 

Originally posted by @Joe Villeneuve :
Originally posted by @Trevor Aydelott:

I personally think your home can definitely be an ASSET 

 No it isn't.  Next to taxes, it's your most expensive expense.  It's not an investment.

Agree BUT what we do is make sure your RE investments are performing well enough to PAY all the expenses associated with living in your home, (but then again we have never had a mortgage). My wife is driven by this & when we bought & completely rebuilt our Lakehouse we started to invest in the immediate area to AGAIN reimburse us for any & all the rehab & ongoing operating costs of our Lakehouse. It's NOT the Lazy way per se BUT it definitely works !!!

That's not the same thing as a rental house paying its own expenses. A REI is only an investment if is self sustaining. Robbing Peter to Pay Paul here.

Now, I agree that the role of the CF from the rentals is to pay all of your personal monthly expenses...including your own home's, but just because it down, doesn't make your home an investment.  It's drawing funds away from other investments...that makes it an expense.

Let's say you had two rentals.  Rental #1 cash flowed positive, and #2 was negative where it sucked all the CF (or most of) from the #1.  Would you say #2 was an investment?

REI should be self sustaining.

...and don't compare it to a painting.  You don't have to keep making utility payments every month on a painting

@Joe Villeneuve

So renting is a better option. Last time I checked I made money on all my properties I personally have lived in and tax free if I live in it 2 out of the 5 years and sell it. So yeah I say it is an asset. 

Originally posted by @Trevor Aydelott :

@Joe Villeneuve

So renting is a better option. Last time I checked I made money on all my properties I personally have lived in and tax free if I live in it 2 out of the 5 years and sell it. So yeah I say it is an asset. 

No it isn't.  Just because you sold the property at a later date for more the the original price you paid for, doesn't mean you made money on it.  

Give me the following info on your best example, and I'll prove it to you:

- Original Cost to buy
- Down Payment
- Loan interest rate and term in years
- Rent
- Monthly expenses:  Utilities, taxes, insurance, cable/www, any REHAB you did, Landscape, Lawn/snow per month, misc expenses.
- Appreciation rate per year

...and how long before you sold the property.

Originally posted by @Trevor Aydelott :

@Joe Villeneuve

Okay keep telling yourself that Joe. Good luck in life. Also I'm a veteran, no down payment. And why put rent, if I buy the house I don't pay rent. 

And told you how long, this is why you got to read the entire message instead of jumping in to respond. 

And you're not proving anything to me, just being a keyboard warrior. 

 Why are do you feel the need to be in attack mode when someone disagrees with you?  I read the entire message.

Originally posted by @Trevor Aydelott :

@Joe Villeneuve

Okay keep telling yourself that Joe. Good luck in life. Also I'm a veteran, no down payment. And why put rent, if I buy the house I don't pay rent. 

And told you how long, this is why you got to read the entire message instead of jumping in to respond. 

And you're not proving anything to me, just being a keyboard warrior. 

 The rent request was so I could compare the same house being bought as a rental (investor) nad a homeowner.

Threads like these bring out people who are so ingrained in their beliefs that nothing you say will sway their opinion.

My mortgage is 950/month, 0 down payment, if I didn't own the house and instead rented, my rent would be 1600/mo.

Of that 950, 200+ of it is equity which is really just paying myself in terms of overall net worth. So essentially I am paying 750, in order to save 1600 since I get no equity while renting. Average appreciation rate in my area is a tad over 4% so as long as I don't buy and sell every 2-3 years to continually pay closing costs I come out way ahead. You seem to believe that something isn't an asset if it doesn't make you money every month and cover its costs, but my home DOES make me money, it makes me 1600-750=$850 every month in terms of overall net worth, or 650 in terms of raw dollars per month flowing in/out of my checking account. It all depends if you want to count your equity gain immediately or not. Either way its a significant win.

Your personal home is your BEST rental property you will ever own assuming you don't buy some overpriced McMansion.  You are simply renting it to yourself.  It comes with the lowest interest rates possible, a perfect tenant with 0% vacancy rates, a near 0 yearly maintenance cost since you take good care of your home and can easily repair most simple items yourself, and no property management team necessary.  

Opportunity cost is a legitimate cost.  If I wasn't paying this 950, I would instead be paying 1600 and not getting any equity either.  But hey, if you want to keep thinking that your home is not an asset then by all means you are entitled to your opinion, I have several properties that you can rent from me if you are so excited about renting instead of owning.



- Original Cost to buy (A homes price isn't predicated on it's use, if I buy it as a rental or for my own use it still costs the same amount)

- Down Payment (owner occupied homes require significantly less down payment)

- Loan interest rate and term in years (owner occupied homes have a much lower interest rate)

- Rent (will always be higher than your mortgage amount unless you live in a stupidly overpriced area like NYC, SF, ect.  The overwhelming majority of the population their mortgage is significantly less than a comparable rental would cost)

- Monthly expenses: Utilities, taxes, insurance, cable/www, any REHAB you did, Landscape, Lawn/snow per month, misc expenses. (I pay utilities, cable, internet etc regardless if i'm renting or buying, taxes and insurance are already factored into the mortgage payments, however if you are renting then your renters insurance will be in addition to your monthly rent.)

- Appreciation rate per year (You don't get any appreciation if you rent, so unless you live in a dying town with negative appreciation rates then owning wins)




It looks like you struck out Joe, each of the items you listed favors owning instead of renting.  30 years from now I will own my home outright and will have saved hundreds per month while experiencing nice appreciation.  After 30 years of renting all you have is an empty box of kleenex after wiping away all of your financial tears.

As usual no one answered the question and just went off on a tangent about whether a house is a an asset. Lol.

Has anyone read the book and is it worth looking into? From the description my guess is he's talking about notes. But I don't know that because I haven't read the book. If you have read the book it would be nice to hear your take on it.

@ ben Zimmerman

@ trevor aydelott

Joe is absolutely correct. 

You two have got it all wrong. Your personal home is not an ASSET! read a business book and not listen to real estate agent and everyone else that believes your home is an asset!

First, your personal home, in business, is never used to leverage any business investment. Why not? Because if your sued or go BK you lose your home!

Banks and Mortgage brokers use people like you 2 to leverage your own home to buy another home. I doubt you ever consider your balance sheet. 

It has nothing to do with how much money your saving from not paying rent. That analysis is absolutely stupid. Its not real! If your not paying out 1600 in rent instead your paying 950 on a mortgage payment. How does that translate into you making money??? If your paying out and not receiving 1600??? 

its like me telling you my mortgage is 900 a month but rents in my neighborhood are $3000. That doesnt mean i am making the 3000. No cashflow comming in! Not making my home an Asset because it does not generate cash flow. Equity yes but that isnt realized unless i sell. Only cash flow going out! $900 a month. How could you even consider that as an analysis???? Its not real! 

Considering your home an asset if you have mortgage is ridiculous. Its not generating cash flow!!!!! Making it a liability.

@Steven Aguirre   Words have meanings, you are somehow attempting to change the meaning of the word "asset" itself, such that an asset is only an item that generates cashflow.  However that is not what the word means. You can't just alter the fundamental meaning of a word and expect others to somehow magically agree with you.


An asset is an economic resource that a) can be owned, and b) is expected to provide future economic benefits.

Is a brick of gold an asset?  It doesn't provide any cashflow.

Is cash an asset?  It doesn't provide any cashflow.

Is a good contractor, property manager, and agent an asset? You have to pay each of these people so according to you they are all liabilities.

Is a home in rural america an asset if it cashflows 100/month, even if it is located in a dying small town and is constantly going down in value?

Is a home in California an asset if it had negative 200/month cashflow, but was resold after owning it for two years at a $250,000 profit?

Is a duplex an asset if you live in one side, and the rent from the other side pays your entire living expense?  Since you're just breaking even it doesn't provide any cashflow and is not an asset according to you.

Is a trademark or patent an asset?

Is a stock an asset?  -trick question since we didn't specify if it payed a dividend or not, since if it doesn't pay a dividend then it doesn't provide you any cashflow.


When you need to show proof of assets for qualifying as an accredited investor, what items do you list?  Surely you don't count your cash reserves and other such items since we have already established that you don't even count those as assets in the first place.

People need to stop inventing their own words and changing the fundamental meaning of words.  If you own a home then the home itself is an asset, and the mortgage on that home is a liability.  The debt is the liability, not the entire house.  

Have you ever once calculated your net worth?  Net worth = Assets - Liabilities.  If you have, then you will have agreed with me that the home is an asset, and the debt on that home is the liability.  

Furthermore I doubt that very many people would argue that renting a home for 30 years is economically superior to owning a home for 30 years.  So it's going to be real hard to magically argue that the economically superior option that is contributing massive amounts towards your net worth is somehow a liability.  How do you own something that is nothing but a liability, and end up profiting massively from it?  -Answer:  You made up your own definitions of assets/liabilities that are not based on reality.

 @Ben Zimmerman

Ben, Great points. However very wrong. Your points also prove my point.

You have also fallen for the philosophical school of the mortgage industry taking advantage of people; by making them believe a mortgage is an asset because it holds economical value. Robert Kiyosaki is a great man, and a better salesmen for the mortgage industry. He banks on making people believe mortgages are assets because the end result is ownership of a home. Wrong! Especially for your own home. It is a liability because it sucks cash in return for an asset, a home. 

Duplex, triplex and quadplex realize cashflow therefore using the argument of realizing cashflow by holding a mortgage is correct. One is physically realizing cash flow, or rent from   the tenants. The mortgage of these types of properties is an asset because holding a mortgage holds economical value to you the owner. Cash flow and the physical asset of the property.

A gold bar is an asset because its purpose is to be traded for a gain.

Same with a home in  rural america cash flowing 200 a month. 1. because its cashflowing and 2. it will be traded for a profit.

For an accredited investor showing proof of assets in the form of cash is difficult because; how can I as a third party prove the cash is absolutely yours. Also, it can physically be lost. Making it hard for the court to collect. Assets in this case are tangible items you can legally prove ownership of. Cash is tangible but difficult to prove absolute ownership and difficult to collect if lost in court.

Renting a home is not economically superior to the homeowner because owning your residence inherently  states you will live in the exact location. Therefore, might as well earn equity.

Renting is economically superior for people who move around a lot. For w.e reason that might be.

People do not need to stop inventing their own words and changing the fundamental meaning of words. Words change meaning all the time! This is not a valid argument. Your statement is the following " If you own a home then the home itself is an asset, and the mortgage on that home is a liability. The debt is the liability, not the entire house." That statement is incorrect. Yes the debt is the liability. However, its not the sole liability. Also the outflow of utility payments. Maintenance, remodeling etc. Those are also liabilities. This is what I mean about the owner not thinking it is an asset to the owner. The physical home is an asset to your lender, insurance company, the contractor because it generates them cash flow. The mortgage is not an asset to you the homeowner because it does not generate economical value unless traded.

A mortgage is not an asset to you, the homeowner, it is an asset for the lender. Its purpose of existence is to generate an asset, your home. The home is an asset because it holds economical value. For the homeowner it is a liability because it leads to an outflow of cash, paying the mortgage. The mortgage industry profits from providing you a home once the mortgage is completely paid for. During the life of the mortgage it is a liability to the owner and an asset to the lender because it is an asset with economical value that can be collected in court or foreclosure. Not because one thinks they are realizing a saving by not paying rent. By this I mean you can not say you are saving money because your mortgage is less than someone whos paying rent. You are not physically realizing the cash. You are simply comparing apples to oranges and stating your "saving" however, no physical cash flow is being earned. It does not exists. Its an analysis derived by the mortgage industry to sell you a mortgage.

The asset itself is a liability because it does not cash flow and can be lost in court either by civil lawsuit or bankruptcy. Therefore, should not be leveraged. The government understands this, which is why the preforeclosure and foreclosure laws where enhanced. Dont forget amortization.

The original argument was; a mortgage is an asset because instead of paying 3000 a month in rent; one pays 900 towards a mortgage thus realizing 2100 a month. I said that was incorrect because theres no cashflow. You should not consider it an asset. Consider it a liability. The physical structure or land is an asset,yes,  but not the mortgage, regardless of the savings one thinks they are realizing by comparing it to someone paying rent.

Furthermore, your last statement, "How do you own something that is nothing but a liability, and end up profiting massively from it? -Answer: You made up your own definitions of assets/liabilities that are not based on reality."

No. that is incorrect.

Yes, it is a liability that you own. The only reason you profit massively from it is because you rid yourself of the liability, thus now realizing a profit by no longer holding on to the liability. Liability in the sense that the home did not cash flow before you sold it. 

You  traded the liability for a profit because the mortgage industry are great at making people think taking out a mortgage backed by the physical asset of the home is an asset to the owner. When in fact even after paying off the mortgage the home continues to out flow cash. The asset, the home, in this case hold economical value because the mortgage is backed by the physical asset, the home. 

The liability of holding the asset generates you a  profit when traded. Not during the course of holding on to the liability. 

To a financial institution it is an asset; because it holds economical value long after the mortgage has matured. To you the owner. You now own the asset. Eliminating 1 less liability. However, it still continues to be a liability. 

Once you sell the home, rid your self of the asset, you realize cash flow.

You realize cash flow because you no longer hold the liability of the asset we call a home.

Originally posted by @Steven Aguirre :


Its not generating cash flow!!!!! Making it a liability.

A gold bar is an asset because its purpose is to be traded for a gain.


So which is it, a gold bar doesn't generate cashflow so according to your first statement it should be a liability, but then you call it an asset?


If the fact that it will ultimately be traded for a gain is the new definition of asset that you wish to use, then the house that I live in will also be ultimately traded for a gain.   Neither the gold bar, nor the house that I live in generate me any cash flow on a monthly basis.  The only time money is made is when the asset is sold.  If the gold bar is an asset because it will eventually be sold for profit, then my home is also an asset because I will also ultimately sell it for a profit, or if I die prior to selling then my children will at some point sell it for a profit.

There is no difference between the two, by YOUR original definition the gold bar shouldn't be an asset because it doesn't generate any cashflow, or by your new definition the house should be an asset because it will eventually be sold for profit.  Do you see what kinds of problems you run into when you start magically changing the definition of terms?



You said.... "Once you sell the home, rid your self of the asset, you realize cash flow."


...But wait, you keep telling me my home isn't an asset, so how can I rid myself of the asset if it isn't an asset in the first place?  Using your logic shouldn't I be ridding myself of a liability when I sell my home? 

...But wait, You also said when I sell I will realize cash flow.  If my home is a liability as you originally claimed, and it then provides me cash flow when its sold, shouldn't it be an asset?  By the definition of words, it can't be both an asset and a liability at the same time, so which is it then?

This is what happens when you invent your own terminology for what an "asset" means.  By your own logic nothing makes sense any more since you claim it isn't an asset because it doesn't provide cashflow, but then again neither does a gold bar.  Then you say the gold will provide cash flow when you sell and is therefor an asset but the house can do the same thing.  This fictitious definition of words leads to circular logic that no longer makes any sense and is mental drivel.  



You said, "The asset itself is a liability because it does not cash flow"


Wait what?!  What kind of mental gymnastics is this that it is both an asset and a liability at the same time.  The correct logic is that the house is an asset, the debt on the house is a liability.  By the definition of terms an item can not be both an asset and a liability at the same time.  Just like something can't be both hot and cold, or a coin can't be heads and tails at the same time.  If an item is an asset and a liability at the same time, the net worth equation changes from being..

Net worth = Assets - Liabilities, into..

Net worth = whatever you want - whatever you want.  It's like a game of "Whose line is it anyway with Drew Carrey, Where the words are made up and the calculations don't matter."


There is nothing magical about monthly cashflow, as opposed to daily cashflow, or yearly cashflow, or any other time interval of money coming in.  Regardless if a home generates 200/month of cashflow, or generates 250k in appreciation when it is sold in 3 years it still generated money for you.  The fact that I need to sell my home to realize that cashflow means nothing, as you also need to sell your gold bar to realize it's cash value.

If I buy at 950, as opposed to rent at 1600, then in 30 years I will have paid 342k towards my mortgage.  We'll say that I remodel the house at some point, replace the roof, hvac, etc, so maybe we spend 100k in expenses for a total of 442k, and at the end of 30 yrs my home is worth 500k.

Being extremely generous, and for simplicity sake we will omit annual rent increases due to inflation and say that you just pay a flat rate of 1600 per month for renting. That total then comes to 576k over the same 30 year time frame.

When it's all said and done, you've lost 576k, and I've made 58k in terms of net worth.  Thats a 634k spread in net worth between you and I when I decide to sell my home, and if I never sell my home and simply die then its still net worth for my children.  You can call that 634k a '30yr cashflow', or you can call it whatever you want, the only thing that matters is it made me a significant amount of money as opposed to your prefered method of renting.

You can call it an asset, you can call it a liability, you can call it a whatsamacallit for all I care, but at the end of the day it makes me a ton of money.  

-A rose by any other name would smell as sweet.

My rich dad always taught me not to listen to snake oil salesman, and that is what Kiyosaki is. He made his money in writing books and ripoff scheme workshops (search Robert Kiyosaki CBC on youtube), not in real estate. The lazy way to invest is through REITS. Please PM me $24.95 for this advice ASAP (this is a joke BTW).

I think you guys are missing the forest for the trees. Money used to be a medium of exchange, a unit of account, a unit of deferred payment and a store of value.

Now real estate doesn't fit three of these, but it does fit a store of value. While the home you live in doesn't create income, necessarily, it is a store of value. When you sell your home, and you've taken generally descent care of it, given the market is neither depressed nor inflationary, you will receive the sums of the purchase price, taxes, insurance and upkeep.

Given that inflation can eat your money up, then having that store of value in real estate will preserve your capital. After all, isn't the long run why we invest in real estate?

Originally posted by @Calvin Thomas :

My rich dad always taught me not to listen to snake oil salesman, and that is what Kiyosaki is. He made his money in writing books and ripoff scheme workshops (search Robert Kiyosaki CBC on youtube), not in real estate. The lazy way to invest is through REITS. Please PM me $24.95 for this advice ASAP (this is a joke BTW).

 I watched first 2 minutes of a video he has to sell the book and he specifically says it's not REITS. I'm curious to know what it is too. 

Originally posted by @Kevin Lefeuvre :
Originally posted by @Calvin Thomas:

My rich dad always taught me not to listen to snake oil salesman, and that is what Kiyosaki is.  He made his money in writing books and ripoff scheme workshops (search Robert Kiyosaki CBC on youtube), not in real estate. The lazy way to invest is through REITS.  Please PM me $24.95 for this advice ASAP (this is a joke BTW).

 I watched first 2 minutes of a video he has to sell the book and he specifically says it's not REITS. I'm curious to know what it is too. 

 What do to? Not listen to a snake oil salesman.  Mr. Kiyosaki is a (very good) author and a merchant marine.  He's not an economist.  He's not a developer.  He's not a property management company.  He knows how to write and sell his brand.  When a person buys a book or a seminar from Mr. Kiyosaki, you are buying him.  I've yet to meet a person who's said Mr. Kiyosaki made me rich or successful.  He teaches common sense, but his ideas that teachers are slaves and will never make it; for example, is wrong.  New York (outside the city), northern New Jersey and lower Fairfield County teachers are millionaires by the time they retire.  That's just one example.  Does he have some good advice, yes, but it's not gospel and needs to be tailored to a person's own tastes and interests.

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