Real estate investing has long been considered a viable path to financial independence and wealth creation. The concept of using real estate as an investment vehicle has been popularized by various influential figures, including Robert Kiyosaki, the author of the renowned book "Rich Dad Poor Dad." Here are 5 principles Robert Kiyosaki wanted everyone to know about real estate investing...
#1 Think in Terms of Cash Flow:
One of the fundamental lessons from Rich Dad and Poor Dad is to think in terms of cash flow when considering real estate investments. Unlike the traditional mindset of focusing solely on property appreciation, the Rich Dad philosophy emphasizes generating positive cash flow from rental income. By investing in properties that produce consistent rental income (exceeding expenses & mortgage payments), investors can create a sustainable stream of passive income, which can be used for reinvestment or achieving financial freedom.
#2 Leverage Other People's Money:
The Rich Dad and Poor Dad both recognized the power of leveraging other people's money (OPM) in real estate investing. The key lies in using borrowed funds, such as mortgages or private financing, to acquire properties. By harnessing the power of OPM, investors can multiply their potential returns while conserving their own capital. However, it is crucial to exercise caution and conduct thorough financial analysis to ensure that the investment generates sufficient cash flow to cover debt obligations.
#3 Seek Opportunities in Market Downturns:
Rich Dad's philosophy encourages investors to adopt a contrarian approach and seek opportunities during market downturns. When the real estate market experiences a slump, property prices tend to be lower, creating favorable conditions for purchasing assets at a discount. By practicing patience and long-term thinking, investors can capitalize on these downturns, as the market typically rebounds over time, allowing them to realize substantial profits when property values rise again.
#4 Continuously Educate Yourself:
Both the Rich Dad and Poor Dad emphasized the importance of ongoing education and self-improvement. In the context of real estate investing, this means constantly expanding your knowledge about the market, investment strategies, financing options, and legal aspects of the industry. By staying informed, attending meet ups/conferences, reading books, and networking with experienced investors, you can make well-informed decisions and adapt to the ever-changing real estate landscape.
#5 Build a Reliable Team:
Building a reliable team is another essential principle of real estate investing. Rich Dad highlights the significance of surrounding yourself with professionals who possess the necessary expertise and can provide valuable advice. This team may include real estate agents, property managers, attorneys, accountants, and contractors. By delegating tasks and relying on the expertise of others, investors can streamline their operations and enhance their chances of success.
The principles derived from the Rich Dad and Poor Dad's teachings offer valuable insights for real estate investors. By focusing on cash flow, leveraging other people's money, capitalizing on market downturns, continuing education, and building a reliable team, investors can pave the way towards financial prosperity. Remember, successful real estate investing requires a combination of knowledge, patience, and calculated risk-taking. By embracing these principles, you can set yourself on a path to building wealth and achieving financial freedom through real estate! If you want to learn more about how to better implement these practices in your life, schedule a 15 minute call with me by clicking the button below.