The Truth About Robert Kiyosaki

The Good, the Bad, and the Ugly

Hi I’m Cassie Villela. Welcome or welcome back. I’m Cassie Villela, a Realtor®, property manager, and investor here in the San Antonio, Texas market. Today I’m talking about Robert Kiyosaki, the “Rich Dad” company, the good, the bad, and the ugly. This is a bit of a longer blog post.

I know I’m going to make some people mad because Robert Kiyosaki has a cult following in the real estate investing world. I guarantee if you’ve been investing for more than five minutes, you’ve heard about the book, Rich Dad, Poor Dad. This book really started off many real estate investors. If you’ve listened to the Bigger Pockets Podcast, about half of the investors mention reading Rich Dad, Poor Dad as how they got started in real estate.

Let’s talk about this man, and this company. There are some good things, there are some bad things. Just like anybody, I’m a big believer in nuance, that nobody is all good or all bad, we are all a mixture.

I am trying to give a measured, balanced review, of Robert Kiyosaki, and of Rich Dad, Poor Dad, and the Rich Dad company overall. Everything I state is my opinion, I did some research, and I found some facts that I will include.

My Personal Story

I’d like to start out with my personal story. I’ll follow up with some information about lawsuits, the bankruptcies, and some facts about the company. My husband and I met in 2008. We were introduced to the book Rich Dad, Poor Dad. My husband had a friend who had a mentor who gave him the book. The friend said, “You’ve got to read this book, it’s phenomenal.” We both read it. We were both 21 at the time (young and stupid!). We read the book and it totally blew our minds. We. Were. Hooked.

Before this, I was working for $10/hour at a non-profit, I had just graduated college and was broke. I lived in Waco, Texas in an unairconditioned apartment. I didn’t even have enough money for a bed, so I was sleeping on the floor. My husband was even more broke. He was still in college. We were both really vulnerable, poor, young, and naive. So we latched on to the ideas in this book. Now, some of the ideas and points are good. I’m really thankful that we read this book. Our lives would be substantially different if we had never read Rich Dad, Poor Dad. If we had never started real estate investing I would not be in the career I am in now. I can’t imagine what I would have done without this book. I want to give the book credit it’s due. The book really did have a life altering effect on us.

So some of the things in the book that changed our minds and helped us were the idea of Assets and Liabilities, and the overall realization that money is a game, and if you know the rules, and know how to play the game, then money is really not that hard to make, and keep. To these broke students, who had no money, and living in 2009 when we felt the world was in a pretty bad place. We were inspired to learn the rules and try to build wealth. I’m eternally grateful for that.

However, the story goes downhill from there. We read Rich Dad, Poor Dad, Cash Flow Quadrant. Then we found out about the “free” seminar. Someone was going to come to Waco and talk about how to get rich and the hidden rules of the game. We went, and of course, it was a hype session. We learned nothing there. It was a hype to get us to sign up for a $500 three-day course. And of course, we were young and stupid so we said, “YES…Take our money we don’t have!”. Remember, I was working for $10/hour at the time, so this was more than I made in a week. But we were excited, we caught the vision, and we were ready to go and learn the rules. We learned a lot – almost like a freshman level survey course in investing. The instructor gave us a good overview of real estate investing including wholesaling, flipping, buy and hold, multi-family, and lease options. He touched on these subjects which gave us a jumping off point. We felt the money was well spent and got us interested in learning more about the things that would actually help us later.

However, the manipulation in this course is where I have to raise alarm bells to people. On the first day, the instructor opens a binder of credit cards and said he had 57! He claimed it was important to get as many credit cards as possible because when you’re investing, you never know when you’re going to need access to a lot of cash. We were 21 and dating at the time, but all the other attendees were over 30. More of them were in their 50s and 60s. The seminar was focusing on older people because many of those people in 2009 had lost a large portion of their retirement in the stock market and were looking to other avenues to fund their retirement. People actually were thinking about taking out their 401Ks and putting it into real estate. We were 21 and like everyone else, was taking his advice applying for credit cards. They actually gave us a script, here’s what to say to get your balance, they gave us companies to try. In fact, there was a huge push on the first day to line up all your credit card limits raised. On the last day there was an emotional, high-powered sales pitch to buy even more courses. But instead of those courses being $500, they were $5000. They weren’t trying to sell you one $5000 course, he was trying to sell us a course on each of the topics: wholesaling, flipping, buy and hold, etc. All together it was about $50,000 worth of courses they were trying to sell us. And since everyone had gotten their credit card limits raised, they said, “we know you have the money to buy these courses.” That’s how they got their hooks in and getting people to sign up for the courses. Luckily for us, we didn’t even have credit cards walking in to the seminar, so we didn’t have any to raise the limits on. We actually had to apply for new credit cards. As much as we truly wanted to buy these courses, we were very manipulated and were crying because we could not afford these courses. That’s how hard the manipulation was. Now we laugh at ourselves at how young we were, but at the time, we desperately wanted to take the additional courses.

A few weeks later, I got a call from Rich Dad Coaching, and they said they knew we didn’t sign up during the seminar, and knew we had credit cards, so they offered to set us up with a mentor for one-on-one sessions, they’ll help you buy our first deal, and it just costs $10,000! …..And…. We bought it.

That got us about 10 weeks of a 30 minute “phone call” once a week with a guy (I don’t even remember his name, and we never saw him), I couldn’t check to see if he was actually a real estate investor. And that’s what we paid $10,000 for. Obviously, I think that was a scam. I feel what we went through was malicious up-selling, and sales tactics used on vulnerable people at that time. Unfortunately, that is still going on. I’m going to talk later about the seminars, people’s reviews, and the class action lawsuit.

I wanted to share our personal story. It ended up fine. Today we’re real estate investors, I’m a realtor, I would not change anything. I did spend half of my yearly salary, and it was a serious financial burden on me, but over the next two years, we paid it back, and learned how to be skeptical, buy in to the sales hype, and when to think twice. It was a good learning opportunity. We look back and say, “Yup, that was stupid tax!”

In the end, even though I’m a little bit bitter about what happened, I feel the ideas in the book helped us change our mindset, helped us make real estate a goal.

The GOOD

Millions of investors are inspired by these books. They influence many investors. There are other books, The ABCs of Real Estate Investing, and some tax strategy books. I think the books are ok. Kiyosaki is good at simplifying complex ideas that is easy enough for anyone to understand. He’s received a lot of criticism because the book Rich Dad Poor Dad is written as a story of his actual dad, and a “rich dad” who was an influence on his life. It’s been researched and the consensus is there is not “rich dad”, no one has been able to find one, in fact, he’s admitted it was a story he made up. It would be nice if he was upfront with that in the book, and be transparent. But regardless, he used it to illustrate a point, and that it’s change a lot of lives. I’m not going to bash him for the “rich dad” not being real. That’s the good. I wish he had just written the books, and left it at that.

The BAD

In my opinion, Robert Kiyosaki gave and is still giving very questionable advice. Firstly, one of the things that Kiyosaki promotes is Multi-level Marketing (MLM). I’m not going to address why I think MLMs are a scam. There are lots of resources that talk about the bad about MLMs. But Kiyosaki was involved with Amway and wrote a book called “The Business of the 21st Century”. So people from Amway would buy dozens of his book, hand them out to people encouraging them to read it, and it was about a new business model. MLM’s are not a new business model. They used that to manipulate people to join MLMs like Amway. Just the fact that you would put your name on MLMs seems very shady to me.

Kiyosaki has also over decades been promoting buying and selling silver and gold, mostly silver. He’s consistently telling people to buy silver, silver, silver. What’s suspicious is that he actually owns silver mines. He owns silver mines, has a cult following, and has that cult following buy silver. Is he recommending silver because he thinks it’s good, or because he has a silver mine? It’s also stupid to recommend buying silver, and here’s why. Silver peaked in 2010 and has fallen, is very volatile, it’s not an asset class that gives you an ROI unless you hold on to it and sell it at some point. Real estate, stocks, and other forms of investments, make money over time. With silver, you hold on to it hoping it goes up in value. Historically speaking, it’s not a great investment.

I’m going to give you some numbers. If you put $10,000 in to silver in 2006, when it was low, $12/ounce, which is 833 ounces of silver, today, the silver price is $23/ounce. So your silver would be worth $19,159. Ok. You doubled your money, but over 15 years! So the annualized investment is only 4.4% which is not great. If you had invested the same $10,000 into the SNP 500 – the dreaded stock market that Kiyosaki says is not a good investment, even with the 2008 stock market crash, you’d have $47,888 which is an annualized investment of 10.5%. Apples and oranges here. I’m asking, what do I put my money in to make sure that it grows, beats inflation, and is stable? The stock market is a much better buy over the last 20 years. Kiyosaki has spent all his time steering people away from the stock market and instead into silver and real estate. Of course, I think real estate is great. I feel silver is a really weird recommendation. In fact, if you had invested in 2011 when silver peaked, by 2021 you would have lost a third of your money over 10 years. I don’t recommend investing a lot of your money into silver, and do your research to understand what you’re getting into.

Part of his pitch of buying silver and real estate is fear mongering. I listened to Episode 500 of the Bigger Pockets podcast where they had Kioysaki on. It was basically the same thing that he’s been saying for the last twenty years. He says, Nixon took us off the gold standard in 1971, he’ll talk about hyperinflation, terrorism, China, Afghanistan, and Iraq. He talks about all of the scary things and puts it into a package that with all these scary things, don’t invest in the stock market, but rather silver and real estate. And now he’s adding bitcoin and cryptocurrency, because he’s coming out with a book, to sell cryptocurrency. His tactic is to sell you a course and teach you about this “imminent crash”. He’s been talking about a crash coming his entire career as early as 2002. So when there was a crash in 2008 he said, “see, I told you.” But if you say all the time there will be a crash any day now, eventually there will be one anyway.

Here’s some other predictions he has made. In 2014 he predicted a property bubble in Australia which was wrong. He predicted an historical crash in 2016. There were people who sold off all their assets for fear of this crash that didn’t happen. If they hadn’t done that, consider the current market, they would have realized their biggest growth. In 2018 he talked about another stock market crash. When will he be discredited as someone who is listened to for advice, when he is constantly missing these predictions? It’s akin to people who predict the end of the world. When do your followers not believe you anymore? He needs people to feel unsafe so they will invest in silver and gold and buy his real estate courses.

The UGLY

We already talked about the scam courses. I’ve shared my story, and that’s the experience of hundreds of thousands of people over the last two decades. I’ve found so many negative reviews and BBB complaints. Here’s a few:

2013. “My wife and I fell for this 6 years ago at the beginning of our marriage. We paid all that money and even got our credit card limit raised like they said to. We are still trying to pay off our debt. They promised so much and the only thing we have to show for it is this game, Cash Flow One-on-One. I feel sad just remembering how we were suckered in.”

2020 “I was scammed. I listened to an online sales pitch that promised several thousands of dollars of coaching materials for only $99. I purchased the program never suspecting it was actually going to cost me 5 payments of $99. I called the Rich Dad coaching company and the lady there informed me that the order form and the emails stated clearly that it was five payments of $99. It was like getting a punch to the gut.

I actually found a lot of people complaining about the $500 coaching course but it saying “ONLY $99” but in the small print, “per month for five months.”

2021 “I paid $25,000 plus for their education and mentorship package. Which includes a mentor coming to me for four days of one-on-one coaching with me. They were to come out in April 2021 but COVID postponed that. Since then, there has been zero communication or transparency from Legacy, (the company licensed to sell the Rich Dad courses). Dozens of other students have paid thousands of dollars and Legacy has not attempted to uphold their contractual obligations.

I read several reviews that when COVID hit, they stopped responding to people who had spent tens of thousands of dollars on their programs, in fact, the company doesn’t even answer the phone now. This next review sums it up the best.

“The Rich Dad Real Estate program is designed to do one thing: to separate you from your money. All of the smoke and mirrors training is simply an elaborate show albeit very convincing. It amounts to a legal way for an education business to extort large sums of money quickly from unsuspecting people. I would call it a predatory education business. Even after you’ve bought into a program, you’ll need additional money. Some on investments and some on additional training on areas you want to pursue. After having spent money on this joke of a program my new hobby is to warn others to stay far far away. There are far better ways to learn real estate. Try finding an actual mentor, someone you can work under or with.”

His review sums it up the best because the point of this is to sell you more programs which are so exorbitantly expensive and they’re not giving students the quality that the students are paying for.

Here’s what I recommend. In 2021 you do not need a course to learn real estate investing. You can go to Bigger Pockets and get more information than your brain can hold. You can get help there, mentors, a local meetup and talk to other investors, who are very friendly and willing to help and answer questions.

The number one thing I tell people who are thinking about purchasing a very expensive course, say a $20,000 course, you’d learn so much more if you took that $20,000 and JUST BOUGHT REAL ESTATE! Not rocket science. You’ll learn about contracts, the buying process, tenants, so much more just from doing it. Even a good course will not teach you as much as doing it yourself.

LAWSUITS

In 2007, Sharon Lector who co-wrote some of the books with Robert Kiyosaki, sued, after not having been paid, received $10 million in a settlement. In approximately 2011, a class action lawsuit was brought against Rich Dad and its affiliates claiming they used their free classes about financial success as a come on to a high-pressure sales scam to sell worthless courses for tens of thousands of dollars. The affiliates include: Rich Dad Education LLC, Rich Global LLC, Rich Dad Operating Company LLC, Cashflow Technologies Inc., Tigrant Inc., Tigrant Learning Inc., Tigrant Brands, Inc., and Robert Kiyosaki. If you’re looking for reviews or on the Better Business Bureau, search these names and see what comes up.

The last one I found; Rich Global LLC was sued in 2012 by Learning Annex. This company claims that they were the ones that started the Rich Dad live events and were not paid appropriately for putting on these events. They were awarded over $23 million. That lawsuit caused Rich Global LLC to file for bankruptcy. In my opinion, if you are promoting yourself as a financial guru, and you have to file for bankruptcy, something doesn’t add up. I’m okay with, say, Dave Ramsey, admitting to bankruptcy, but saying here’s what I learned and how to avoid it. In Rich Dad, there’s no admission or explanation of bankruptcy, its just suspicious.

In summary, read the books to get yourself introduced to real estate, get your mindset right and then go get your education on Bigger Pockets, local investor meetups, and by buying real estate. Do not buy the courses and get roped into spending your money on the programs. Kiyosaki is a broken record whose goal is to continue selling books and courses. The bottom line: don’t act on someone’s hunch or anecdotal story. Make your decisions based on numbers or data and get your own real life experience.

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