Robert Kiyosaki is considered one of the most important finance and investment experts of our time. This financial “guru” is recognized throughout the world through his books, in addition to having a series on the renowned Netflix platform where he tells part of his most relevant experiences, experiences, and advice, among other personal and professional details. But his fame and wealth are not only due to the creation of books such as “Rich Dad, Poor Dad”, but he has also found success in different types of businesses, managing to make large investments, including real estate.
About Robert Kiyosaki
Robert Kiyosaki was born on the island of Hawaii on April 8, 1947, into a family of educators. He managed to finish his university studies and later join the United States Marine Corps, and even participated in the Vietnam War. Once the war was over and his time in the Navy, he began an ascending career in the business world, managing to found his first company in 1977, placing on the market a novel product for the time: the first nylon wallet with Velcro for surfers, a product that had enormous reach in many parts of the world.
In the mid-80s he became one of the co-founders of an important company that was dedicated to educating and advising students on business and investments with a presence in 7 countries. By 1994, at the age of 47, he was able to retire with financial assets that qualified him as a millionaire. Robert Kiyosaki has dedicated himself to providing conferences and advice to investors, bankers and people interested in the world of investments around the world.
His retirement arose after selling his different companies since he considered that he had enough economic capital to live the rest of his life, in addition to the significant profits he obtained from the sales of his titles around the world. We can reiterate that his wealth is thanks to a journey throughout his life as an investor. On the other hand, said wealth has increased thanks to his repeated seminars, the use of his “Rich Dad” brand and the million-dollar sales of his books around the world.
How to invest in Real Estate according to Robert Kiyosaki?
Investing in real estate for decades has been considered by many financial experts as one of the smartest and safest investments you can make. Let us remember that we are talking about a world-renowned market that has led many investors to obtain their wealth. Of course, like any other type of investment, there are specific risks, which is why knowledge, timely advice from real estate experts and the ability to know how to take advantage of the best opportunities are so necessary.
Now, in “The Money Flow Quadrant,” one of the books written by Robert Kiyosaki, a quite striking example is given of how one should invest in real estate. “Be the bank, not the banker” this is the name of the chapter where this example is cited, and as we can see it is quite interesting, challenging and even witty at the same time.
This operation is not just about the purchase and sale of a property, but rather focuses on how we can generate an asset with “created” money, which means money that we did not have, in the same way as they do. the banks. Beforehand we can glimpse a quite persuasive thought, which challenges our sense and seems to adjust to our financial condition.
Analysis of an example from Kiyosaki
Kiyosaki was interested in a property with a value of $100,000, later he began the process of buying it by negotiating its cash price of $80,000 (which shows why he managed to be one of the best sellers, we can see here his negotiating power to buy and also to sell).
Now, of the $80,000 he only had $10,000 and to get the rectum he requested a bank loan of $70,000. Subsequently, in order to sell the property in a short time, he published a very striking and very tempting advertisement (definitely an advertisement that will captivate anyone).
Then he found a buyer in less than a month who paid $100,000 for the house but in several installments, therefore that would be $100,000 plus interest. In order to secure the business, Kiyosaki implemented a contract with a guarantee for $100,000 (it does not mean that the deal was closed at $100,000, it just represents a number to have as a guarantee). So, if the buyer stopped paying during the contract period, he could simply sell the property to another buyer, without the legal obligation to return the money paid up to that point. By putting the numbers on the table we obtain the following equation: The property has a value of $100,000 on the market, the price he was able to negotiate was $80,000, but Kiyosaki only puts $10,000 of his savings on the table and borrows the remaining $70,000 from the bank, and then sell the property for $100,000. If we pay attention, it is a quite revealing and interesting equation for investors.
Let’s look at this financial exercise more simply and more clearly
We can imagine that the bank charges Kiyosaki 10% interest (per year) for the $70,000 loan. In this same order, let’s assume that the advance payment that Kiyosaki requested from the buyer of the property was $10,000.
So, let’s assume that Kiyosaki charges the home buyer the same percentage interest that the banks charge, 10% (annually) for the remaining $90,000. Perhaps Kiyosaki will thus finance the full payment of the 1-year installments. So, the $10,000 that he took out of his savings to be able to pay for the property is requested from the subsequent buyer as an advance portion. This clearly gives us to understand that he was able to recover his $10,000 in a very short time. With that money at the same time he can advance payments to the bank.
The loan he had requested was for $70,000 minus the $10,000 he gave as part of the payment, leaving him owing only $60,000. The remaining $60,000 of the loan you requested from the bank, plus interest, can be paid with the installments paid by the new home buyer. It’s like transferring the credit he requested to the new owner. Of course this is not done in a legal way, but we can imagine it happening that way. In the end, Kiyosaki earned $20,000 from the fact that he bought at $80,000 and subsequently managed to sell at $100,000. He earned interest on the $20,000 he got in the sale plus the $10,000 he put down. Interest is 10% annually, so 10% of $30,000 is equal to $3,000.
Capital gain: It was the $20,000 you obtained from completing a purchase and sale.
Asset: The $3,000 you earned through interest represents the profits generated by an asset. Let’s remember that every month he had a certain amount of money without lifting a finger.
What specifically did Robert Kiyosaki do?
It’s pretty clear what Kiyosaki did, by getting a $20,000 discount on the house he bought, he made that amount as net profit. Later, by relying on the bank’s credit and somehow “transferring” the payment of that credit to the new buyer, he got a great opportunity. Then he went on to charge interest on that $20,000 that he earned, but that’s not all since he also charged interest on the $10,000 that he took out of his own savings. By recovering that $10,000 he advanced that amount to the bank’s debt, but why did he do this? Well, he did it so that he could collect the interest on that $10,000. If he had not done so, that interest would ultimately end up in the bank, because the bank would be charging interest on $70,000 instead of $60,000. Clearly, the advance of that $10,000 meant that he would receive the corresponding interest. Leveraging himself in the bank was definitely a smart move, he only had $10,000 which meant he could only earn 10% of that amount per year from an investment. But instead of only earning $1,000, he ended up earning $23,000 by relying on bank credit and doing all of the above. Real estate investments currently continue to be one of the best options to achieve great financial rewards through investment. As we mentioned at the beginning, investing in real estate is considered one of the smartest and safest investments that someone can make, it is only important to pay attention to the details, and seek advice from professionals in the field of real estate investment. He only had $10,000, which meant he only earned 10% of that amount per year from an investment. But instead of only earning $1,000, he ended up earning $23,000 by relying on bank credit and doing all of the above. Real estate investments currently continue to be one of the best options to achieve great financial rewards through investment. As we mentioned at the beginning, investing in real estate is considered one of the smartest and safest investments that someone can make, it is only important to pay attention to the details, and seek advice from professionals in the field of real estate investment. He only had $10,000, which meant he only earned 10% of that amount per year from an investment. But instead of only earning $1,000, he ended up earning $23,000 by relying on bank credit and doing all of the above. Real estate investments currently continue to be one of the best options to achieve great financial rewards through investment. As we mentioned at the beginning, investing in real estate is considered one of the smartest and safest investments that someone can make, it is only important to pay attention to the details, and seek advice from professionals in the field of real estate investment. He ended up earning $23,000 by relying on bank credit and doing all of the above. Real estate investments currently continue to be one of the best options to achieve great financial rewards through investment. As we mentioned at the beginning, investing in real estate is considered one of the smartest and safest investments that someone can make, it is only important to pay attention to the details, and seek advice from professionals in the field of real estate investment. He ended up earning $23,000 by relying on bank credit and doing all of the above. Real estate investments currently continue to be one of the best options to achieve great financial rewards through investment. As we mentioned at the beginning, investing in real estate is considered one of the smartest and safest investments that someone can make, it is only important to pay attention to the details, and seek advice from professionals in the field of real estate investment.
