Robert Kiyosaki’s book Rich Dad Poor Dad was a huge motivator for me to invest in real estate. However, it did not teach me how to actually invest: just that I needed to. I hear all the time how great the book is, and I agree that it was a great book, but I don’t think it did a good job of actually teaching how to invest. There is also the issue that Rich Dad Real Estate training can cost up to $40,000 and they do not use the most ethical marketing techniques. If you want to be motivated, I think that Rich Dad Poor Dad is a great book, but if you want to learn, there are better options out there.
Summary of Rich Dad Poor Dad
Rich Dad Poor Dad is written by Robert Kiyosaki and is about two families. One family has a dad who has a job and works very hard. However, the dad never gets ahead in life because he is always working to earn a living. The book compares this”poor dad” to another dad who is an investor. The “rich dad” who is an investor always has free time and plenty of money. The idea behind the book is that being an investor is good and working a regular job is bad. At least, working a regular job and not investing is bad.
There is more to the book than the point that investing is good, and the book is well written. It is also extremely motivating and has motivated many people to become investors instead of workers.
Does it teach us about real estate?
While the book makes point after point that investing in real estate is good, it does not tell us how to invest in real estate. I read the book when I was in my mid-twenties. It got me pumped up and ready to change my life. However, I kept searching for how to actually get started investing in real estate from the book and then the other books that Kiyosaki wrote. I never did find any details or instructions on exactly how to invest in real estate or any broad information about real estate either. It was all motivation.
What about real estate coaching?
Something else that was very disappointing for me was that Rich Dad Poor Dad offered real estate coaching in the form of seminars. Or at least, the seminars were created to sell the coaching. It almost seemed as if the book was one giant marketing tool for coaching. I have no idea if this is how the book was planned, but that is how it seemed to me.
I do not have a problem with all real estate investing coaching (I offer some myself), but I have a problem with certain programs like Rich Dad Poor Dad, Fortune Builders, and a few others that try to trick people into buying their coaching programs. They have a free seminar that teaches you nothing about real estate but is very motivational. That seminar is meant to get you to buy a three-day seminar, which again teaches almost nothing about real estate but is motivational. That three-day seminar was created to get people to sign up for a $30,000 to $50,000 coaching program. Often, these coaching programs use time-share sales tactics like keeping the rooms cold, keeping people hungry, and encouraging people to borrow money or use credit cards to pay for the coaching.
I have talked to many people who have taken the coaching, and very few were happy with it. Most of the people I have talked to say that their “coaches” barely had any experience investing in real estate themselves. I think someone would be better off using the money to buy a house and learn how to invest in real estate that way than spend $50,000 on a course.
Was there really a Rich Dad and a Poor Dad?
There has been some controversy surrounding the book because many people have accused Robert Kiosyaki of making up the story. What is wrong with making up a story for a book? Nothing, unless you say it is real and list it as a non-fiction book to get more sales. There is less competition in the non-fiction world and much easier for business books to sell copies as a non-fiction book instead of a fiction book.
I don’t know for sure if there was a Rich Dad or a Poor Dad but the book does say:
“Although based on a true story, certain events in this book have been fictionalized for educational content and impact,”
Kiyosaki admits that not everything that happened in the book is real. Does that make it a bad book? No, but it should caution you about pursuing any further education with Rich Dad Poor Dad.
One of the best pieces of advice from the book
One of the best ideas in the book is that the rich have money work for them, they don’t work for money. This is how I feel as well although I do both. I make money as an agent and by flipping houses. I have money work for me when I buy rental properties and the tenants pay me rent. I have a property manager who takes care of the properties and I have to do very little work if any. This is the idea of passive income.
This is the main point of the book that motivates many people and a great idea to take with you. My idea for retirement or being “rich” is not accumulating a bunch of cash that you can live on or making a lot of money, but having assets that make you money while you work or not.
One of the worst pieces of advice from the book
One idea in the book that many marketers have adopted is that a house is not an asset. The book says that you should not count on the house you live in being an asset because it costs you money.
This is some of the worst advice I have ever heard. The book goes to a lot of effort to show why a house is not an asset and changes the definition of an asset that banks and accountants have used for centuries. It also claims that you don’t own your own unless it is paid off, that the bank owns it.
A house is an asset, anything with a value that can be sold is an asset. Is it a good investment? Sometimes, but not always but an asset does not have to be a good investment to be an asset. The loan against the asset is the liability.
Even if the book’s definition of an asset was correct and an asset would have to make money or bring in cash flow to be an asset, the idea is flawed.
- A house does bring in cash flow because you are not paying rent. You would have a much higher expense for living when you don’t own a house since rent is usually more than the expenses on a house. That is how landlords like me make money. The only way his ideas work is if you live in your parent’s basement for free.
- Even Robert admits a house can be an asset if it makes money when you sell it. What? It is an asset sometimes and a liability other times? This makes no sense. How is he qualified to make up the definition of an asset? He won’t even tell us what, if any, real estate he owns.
- When you rent, the rent will keep increasing with inflation. The mortgage will stay relatively the same with a fixed-rate loan. This is a massive advantage over time. The value of the home goes up over time with inflation as well.
- Buying a house to live in can be one of the best ways to build wealth when you have little money. You can buy with very little money down, there are amazing tax advantages, and you can create instant equity by getting a good deal.
The video below goes into the details on buying verse renting homes.
Are there better books?
I own 23 rentals now and have flipped over 195 houses in my career. I learned how to invest in real estate through a mix of books, online resources, my father, and experience. While Rich Dad Poor Dad was motivational, other books had much more information in them about actually investing. Gary Keller’s Millionaire Real Estate Investor was a great book that taught me a ton about investing in rental properties.
After I found success in real estate, I also wrote a book about investing in rentals. I wanted to make my book the complete opposite of Rich Dad Poor Dad. I packed it full of as many details as I could about how to invest in real estate. I also did not hold back any secrets. The book is Build a Rental Property Empire and is in paperback, audiobook, and Kindle versions. There are more than 370 reviews currently on Amazon for the book!
While there are many ways to learn about real estate investing, I think spending $50,000 on a coaching program is not the best use of your money.
Rich Dad Poor Dad is a very motivational book but not a very good guide. It lacks the details to actually do what the book is motivating someone to do. I find that extremely discouraging seeing how the author supposedly got rich using the techniques in the book. I use my coaching to help people who want to go faster in this business or get personal advice, not to hinder learning because all the secrets are reserved for the big spenders. If you have not read the book, I would encourage you to do so, but don’t get your hopes up that you will actually learn how to actually become a rich dad.