The Sky Is Falling! The Sky Is Falling?

The Sky Is Falling! The Sky Is Falling?

Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes

While re-reading one of my favorite books Rich Dad Poor Dad, I came across a powerful quote that speaks directly to pessimists and those influenced by their inactivity.

"WARNING: Don't listen to poor or frightened people. I have such friends, and while I love them dearly, they are the Chicken Littles of life. To them, when it comes to money, especially investments, it's always, 'The sky is falling! The sky is falling!' They can always tell you why something won't work. The problem is that people listen to them. But people who blindly accept doom-and-gloom information are also Chicken Littles."  -Robert Kiyosaki

While working with real estate investors in Philadelphia, PA, I have come across many who are "waiting for COVID to stop" or "waiting for the election results." I too have found, like Robert Kiyosaki, that the inexperienced, uninformed, and "poor" investors are the ones who are always frightened, stalling, and fumbling for excuses to postpone. COVID is just their newest excuse. 

For the EXPERIENCED, SUCCESSFUL, and WEALTHY investors, I have seen the opposite. They have changed their strategies, but they have NOT become INACTIVE. Losing time is more costly to them than losing profit. After all, time is our most precious commodity. These investors get it, and will for sure be the ones who succeed in the end. 

So I have a question... no matter if you're in Philadelphia, New York, or California. No matter if you're a buy-and-holder or a flipper....

Are you bracing for the falling sky? Are you changing your strategy? How are you taking action during this time?

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Rental Property Investor · Philadelphia, PA · Member since 2015 · 478 posts · 362 votes
6y

Sky is not falling. But the weather is changing and the winds are blowing in new directions. Every change is an opportunity. The only constant in real estate is that it changes. An active and professional investor will learn to shift with the change. We are in Philadelphia as well (plus other markets) and have learned to stay VERY attuned to the politics, the economics, the regulations, the neighborhood vibes etc etc in order to always be able to shift to what makes sense.

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  • Joe VilleneuvePro Member
    Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
    6y

    "They have changed their strategies, but they have NOT become INACTIVE."

    Exactly!

    "Are you bracing for the falling sky? Are you changing your strategy? How are you taking action during this time?"

    I'm always adjusting my strategies, changing markets, etc...but, this time, I'm carrying an umbrella...just in case.  I call it proactive risk control.  I found it works much better than dealing with "little chickens".

  • Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    If you do what the crowd does, you'll get the results the crowd does - Which are lower returns than someone that can accurately assess risk and make investments.

    Same thing happened in 2011 most people didn't want to buy.  Those that did double the price of what they paid for place by 2017 (which means their equity mad a large jump).

  • Real Estate Agent · Philadelphia · Member since 2020 · 28 posts · 28 votes
    6y

    You know what they say about scared money!!!

  • Investor · Montgomery County, PA · Member since 2020 · 255 posts · 238 votes
    6y

    Well said David! This truth is applied well across most markets but definitely most in real estate. Dollar cost averaging will always win out in the end. Never wait to time the market just right or you will miss out.

  • Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
    6y

    @David Haynes such a good post.

    I hear this all the time too and people who are waiting generally end up waiting forever. There will always a be a reason not to invest. People complain about there being no deals today but if we had a repeat of 07/08 those same people would say there’s too much uncertainty and miss the fire sale anyways.

  • Rental Property Investor · Philadelphia, PA · Member since 2015 · 478 posts · 362 votes
    6y

    Sky is not falling. But the weather is changing and the winds are blowing in new directions. Every change is an opportunity. The only constant in real estate is that it changes. An active and professional investor will learn to shift with the change. We are in Philadelphia as well (plus other markets) and have learned to stay VERY attuned to the politics, the economics, the regulations, the neighborhood vibes etc etc in order to always be able to shift to what makes sense.

  • Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
    6y

    @David Haynes As an agent, at what point do you move on from those scared clients? Have you had success in trying to get them to change their mindset? 

    I have found it is easier than I thought to distinguish the action takers from the bench warmers.

  • Real Estate Agent · Philadelphia · Member since 2020 · 28 posts · 28 votes
    6y

    @Sean McDonnell 

    On timid investors I normally give them the three strike rule. I've had success in having them change their minds, but overall I've found that my time was best suited elsewhere. As you know, time is our of of our most important assets. Now just because I'm not calling them on deals, it doesn't necessarily mean I won't work with them in the future. I just don't prioritize them over other clients from their on out. 

  • Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes
    6y

    @Sean McDonnell I find the best way to motivate them is to show them what's happening. My office is selling property to investors like never before, so honestly, they are not worth my time. But I do give them a chance to join by showing them the heated activity that's happening right under their noses. 

    When my properties sell within 24-hours, which is very common... I make sure they are aware that they are missing out on amazing opportunities. I think when you spend your day in a secluded office and stuck in traffic, you forget that properties are moving quickly all around you.

  • Joe SplitrockPro Member
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    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    I see your point, but he is referring to irrational fear. Here is what Kiyosaki is currently telling people:

  • Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes
    6y

    @Joe Splitrock I don't see how that contradicts with what he had said previously. In your quote, he is encouraging diligence which I couldn't agree with more. I'm not considering his book as the "Bible" of real estate investing either, but I do appreciate how he encourages both diligence and action. 

    Earlier in the book is another quote: "We play the 'What if?' game. 'What if the economy crashes right after I invest?'... These words of doubt often get so loud that we fail to act."

    So I disagree. I do not think Kiyosaki is contradicting himself. He is encouraging diligence, action, and creativity.

  • Real Estate Agent · Ogden, UT · Member since 2017 · 57 posts · 165 votes
    6y

    @David Haynes

    As a realtor and an investor, I can see both sides. It would be very helpful to know what the government is actually going to do as far as more relief checks and the like. It is also concerning when the government steps in and will not allow evection’s for non-paying renters. All of those things are Covid related, and they are absolutely factors to take into consideration. Also, a lot of people expected their markets to slow and prices to come down a bit. Here in Utah, neither of those things are happening. There is less inventory which is keeping prices high for the type of properties investors are looking for.

    All that being said, I did just buy another rental property. I think the important strategy to take into consideration now is what type of income your new tenants have. If you’re able to get a renter that can easily continue work from home, I don’t think there’s much to worry about. Essential workers will also be be able to continue paying rent. Section 8 renter’s will also still be covering the rent.

  • Member since 2020 · 6 posts · 2 votes
    6y

    Didn't Robert Kiyosaki also say, don't buy when everyone else is buying? the housing market is at its highest it can get, is it wise to invest in this field now? the keyword here is NOW

  • Member since 2020 · 6 posts · 2 votes
    6y

    I am brand new in this field and worry that encouraging people to buy or invest in this manner is not very helpful especially this time. Some well-established investors who have a "wiggle room" can survive a catastrophe, but some people here are literally borrowing to invest in the housing market. those who I worry won't survive. Sometimes, when listening to forums and webinars, it feels like investing in real estate is the savior that will, without doubt, make you rich. I worry about many taking this for granted. the current situation is unprecedented, I think it should be dealt with as such. 

  • Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes
    6y
  • Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes
    6y
     @Ahmad Qawasmi:

    You are correct. I'm definitely not encouraging ignorant investing or a herd-mentality. I'm just discouraging inactivity. Research and understanding will be very important in order for someone to guarantee progress during this time. New investors should be cautious and stay away if they aren't willing to do the research. However, new investors could also make a killing during this time. It all depends on their financial intelligence and thorough research.

  • Nic S.Pro Member
    Danville. CA · Member since 2017 · 313 posts · 220 votes
    6y

    @David Haynes I’m continuing to buy because of inflation. I think it’s coming hard and I want my cash in assets rather than a bank account.

  • Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes
    6y

    @Nic S. Amazing point Nic. The government is pouring money into the economy right now. That will definitely have a huge effect on the value of the USD. Many foreigners buy USD during crises which helps stabilize its value during tough times. However, the US may be the last to recover from COVID. I wonder how that plays into the predicament and if people are bailing out of the USD. It would be interesting to see the statistics on that.

    Build up that asset column! Cash may be a liability.

  • Investor · Richmond, VA · Member since 2016 · 1k+ posts · 2k+ votes
    6y

    @David Haynes,

    I live by 1 golden rule-- only take advice by people who you would happily trade shoes with! 

    That being said, you have to adapt, when COVID started in March, we waived all our late fees and offered to do split payments, it hasn't been fun, but it's helped a lot of people stay in their homes and kept us out of court!   

    If you're not rolling with the punches, you're going to get beat up-- plain and simple!  

  • Member since 2020 · 437 posts · 675 votes
    6y

    @David Haynes

    With all due respect most truly wealthy people (net worth north of $10m) will tell you they have never heard of the books or the investment guru you are quoting. So let’s get that out of the way.

    The fact is the so called investment gurus do very little investing themselves but print a fortune selling advice, videos, books and podcasts.

    How people feel about investing is a function of many things. This includes risk tolerance, personal

    circumstances, health, family etc.

    There is a saying everyone is fighting a battle, so in that context if people feel nervous or reticent about investing in this environment, they are within rights to do that.

    I’d give them credit for following their own circumstance vs some generic investment advice written by a motivational speaker masquerading as an investor. To be direct, Kiyosaki’s genius lies in the money he had made telling people how the “sky is often blue and sometimes grey”! Thats what the book will tell you and for sure it does not make the book a standard to judge people.

  • Investor · Philadelphia · Member since 2020 · 112 posts · 150 votes
    6y
    Originally posted by @Justin Thorpe:

    @David Haynes

    With all due respect most truly wealthy people (net worth north of $10m) will tell you they have never heard of the books or the investment guru you are quoting. So let’s get that out of the way.

    The fact is the so called investment gurus do very little investing themselves but print a fortune selling advice, videos, books and podcasts.

    How people feel about investing is a function of many things. This includes risk tolerance, personal

    circumstances, health, family etc.

    There is a saying everyone is fighting a battle, so in that context if people feel nervous or reticent about investing in this environment, they are within rights to do that.

    I’d give them credit for following their own circumstance vs some generic investment advice written by a motivational speaker masquerading as an investor. To be direct, Kiyosaki’s genius lies in the money he had made telling people how the “sky is often blue and sometimes grey”! Thats what the book will tell you and for sure it does not make the book a standard to judge people.

    Sorry, Justin, but you may not know what Robert Kiyosaki means by "poor." Apparently you haven't read the book you're criticizing, so I can help explain what he means. "Poor" people within his book are not necessarily low on money. They are low on financial intelligence. They do not know how to handle their money, investment opportunities, and risk. They are forever stuck in a never-ending rat race. In Kiyosaki's eyes, a rich person can be very "poor" by never escaping the 9-5 grind.

    I quoted the book because it is mentioned within BiggerPockets podcasts as an all-time favorite and a big reason why many successful investors have found an escape into real estate. Check out the podcasts sometime. The information gleaned from them is priceless.

    Having a masters in finance, I understand everyone has a personal risk tolerance. Obviously, someone planning to retire in five years should not be diving into risky investments whether real estate or stocks. My post was meant to create a discussion on strategy, and many have posted what they intend to do. 

    Nowhere in my post will you see "buy real estate." But I can see how you are confused. I am simply encouraging people to develop a strategy, adapt their strategy, and execute that strategy. Lastly, I'm encouraging people to share that strategy. 

    What is your strategy?

  • Real Estate Agent · Ogden, UT · Member since 2017 · 57 posts · 165 votes
    6y

    @David Haynes

    Rich dad poor dad is an absolute classic. Never be ashamed for quoting it. I’ve read it many times and I just read the passage you were referring to yesterday. It’s a wonderful book and I gets so many investors started. Robert Kyosaki is a legend!

  • Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    6y
    Originally posted by @Justin Thorpe:

    @David Haynes

    With all due respect most truly wealthy people (net worth north of $10m) will tell you they have never heard of the books or the investment guru you are quoting. So let’s get that out of the way.

    The fact is the so called investment gurus do very little investing themselves but print a fortune selling advice, videos, books and podcasts.

    How people feel about investing is a function of many things. This includes risk tolerance, personal

    circumstances, health, family etc.

    There is a saying everyone is fighting a battle, so in that context if people feel nervous or reticent about investing in this environment, they are within rights to do that.

    I’d give them credit for following their own circumstance vs some generic investment advice written by a motivational speaker masquerading as an investor. To be direct, Kiyosaki’s genius lies in the money he had made telling people how the “sky is often blue and sometimes grey”! Thats what the book will tell you and for sure it does not make the book a standard to judge people.

    Yeowch Justin, you just had to take those size 12 boots and go straight for the baby-makers didn't you.... 

    But... see... problem is, I fondly recall how I first came to read Richest Man in Babylon and Rich Dad Poor Dad. The man who gave that to me, I was helping tinker on his flip houses. I knew there had been a movie made about him, I knew he was beyond wealthy, but I asked once if he knew what he was actually worth and to his best guess was somewhere around $300m+ but not all that certain, would have to check with the accountants. 

    The problem in your statement is I actually know some of those persons your speaking of, in that class, and I can't think of a one who would agree that Kiyosaki is a fraud as you so clearly declared. That a great many of "gurus" are, absolutely without doubt, but Kiyosaki, and to say all he teaches is common sense, well then why is it so uncommon in persons knowledge or actions? 

    It's just not right my friend, it just ain't right.....

  • Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    6y

    @Joe Splitrock Kiyosaki is a huxter. He will sell whatever point of view people are willing to pay for.

  • Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
    6y

    My thoughts exactly!  Successful people don't say "I can't" but "how can I?" another Rich Dad Poor Dad quote I believe.  There will always be an excuse not to do something.  Those that are successful just adjust their strategy as needed rather than making excuses.

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