CW 111: Robert Kiyosaki author of 'Rich Dad Poor Dad' Discusses How Income Property Investing Can Secure Your Financial Future

Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing, fresh, new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self made multimillionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to show number 111. This is your host, Jason Hartman. Glad to have you here listening today. We have our interview with rich dad author Robert Kiyosaki coming up in just a few minutes. After we chat for a little bit, I've got Brittany here with me.

Hi, Jason.

How you doing?

I'm doing well, thanks.

Don't just say hi to me, gotta say hi to them too. I guess. We'll start with you, Brittany. Okay. Since we just introduced you, of course you've heard Brittany on the show before and she just visited her hometown, Phoenix, Arizona and looked at some of our new property offerings out there. And it was hot, right?

It was 1:13 while I was driving around.

But you know, it's a dry heat.

It is dry. It is, but it's still, it's over. It's in triple digits. It's stinking hot.

Yeah, that's for sure. But you know, what about what, 5 million people live there? So, you know, it's funny when I talk, you know, being in California, we're pretty much the only place in the country with sort of great weather. But I think it's kind of boring weather because I love storms, I love changing weather and I love changing of seasons. Now, you know, you always like what you don't have, right. You know, if you're, if you're dating a brunette, you want a blonde or vice versa. Okay, none of that example, right. Well, I just threw that one in there. You know, everybody kind of wants what they don't have. So when I move, and I am going to move, I'll see how I like it, you know, maybe I'll hate it. And I want this boring Southern California weather where it's always, you know, 75, 80 degrees. Yeah. So, you know, a lot of people live in these places. That's what's kind of funny in Our when we have live educational events here in Southern California, all of the locals say things like, well, who would want.

To live in Houston?

It's hot and muggy in the summer. Well, the fact is, 5 million people live there, folks. Okay? You know, the rest of the world doesn't live in this Southern California climate.

You know, a lot of the people are moving from Southern California to Phoenix.

That'S for sure, and they're moving everywhere because California is kind of a failed state, in my opinion. It's a state with huge financial problems. I'm waiting for my tax refund. At least now I know that I'm not going to get an IOU. And the bank stopped honoring the IOUs when the state was issuing them. So this state is a disaster of epic proportions, chasing business out, and that's just the way it is. But here I am on another tangent. Brittany's pointing at the watch and saying, hurry it up. Brittany, what do you have to say?

All right, like Jason mentioned, I visited the Phoenix market, some of the properties we have out there. And yes, it is a hot market, figuratively and literally.

Well, it's kind of hot now because prices have been slashed in half. And you know, as I've said on prior shows, we were recommending the Phoenix market about four years ago. I bought a property there and it went way up and then it came way down. So now we think it's. Again, we're not optimists, we are opportunists and we think it's time to look at this market again because the prices have become so low, the RV or rent to value ratios are really desirable now. This is the time to get in when all the dead bodies are in the streets. You know, you pick up the great deals that way.

Yes, I was able to meet with one of our agents out there and view some of the properties that we have recommended on our site. Unfortunately for you, the listeners and the investors, about half of those properties that I viewed are now sold. And that was two days ago that I visited.

And like you said, the market is pretty hot. You know, it's properties are moving out there again, because it is literally now cheaper to buy than it is to rent in many of the Phoenix submarkets. And we're finding that in a lot of places. So that's, you know, one of many good signs.

The relationship that we have with the company out there, they have many great properties. They rehab the properties and they most of the time have a tenant in place by the time you purchase. These properties need little Rehab, they're pretty new, most of them built since 2000. And one property that was just uploaded onto our site today by one of our agents, there it is in Mesa, Arizona, a great growing area. It is only 107,000 is the listing price. Renting for 950 and that's a pretty low rent. Very conservative in the lower 25% for that area. And it's cash flowing, 21% return on investment. Great house, good curb appeal, great income property. I'd go on our site and look at that right away.

Yeah, and so what, what Brittany is sharing with all of you listeners is the proforma, the projection, which is on our website. So it's all detailed out@jason hartman.com properties. You click on the map of the United States of which state you're interested in and we have properties in many states. And then you'll see you click on list of properties in this area once you select sort of the bullseye of the city.

Right, the bullseye for some reason for Phoenix is listing more over to the Apache Junction area.

Even though just the way the Google Maps set it up.

Right? Yeah, unfortunately we can't change that. But all the properties will be listed there anyway.

They're in the Phoenix area. So you, you go and you click there, click list of properties in this area and then you'll see a whole list of properties. Well, you know, whatever we have available at the time. Then when you click on a specific property, a one page performance projection comes up and that gives you the projected return on investment and before and after tax benefits, cash flow, projected rental rates, et cetera, square footage, all of the details.

Okay, so anyway, that's current house that we have available in that area, Mesa, Arizona. Go ahead, check it out. We'll have new inventory hopefully there soon. Like I said, these are going fast purchase now.

Okay, excellent, good point. Yeah, the market, you know, in many of these markets, the markets are really heating up. And if you've been taking in what the news media has been telling you in the last month or two, you'll see that buyers are out. I mean, again, we are not real bullish on the general overall economy, but in many of these markets, the bargain hunters are hitting the streets and they're buying stuff like crazy because they're sensing a bottom or we're sensing very close to a bottom in many of these markets. And I interviewed Gillian Tett today. She's a award winning journalist with the Financial Times and she wrote a book called Fool's Gold. And we'll have that interview up soon. And one of the things all of the experts are saying remember, it's not just about price. Real estate or income property investment is a multi dimensional asset class. The interest rates are so darn low now. And the opportunity you have is that the treasury auctions China is not buying our debt like they used to. And what does that mean? That means we're going to see higher interest rates in the future because we will have to offer as the dollar is being so debased. And again, you've heard this discussion on prior shows. We will have to offer higher yields to attract buyers for these bonds. And that means higher mortgage rates, folks. That's not like some crazy prediction. It's just a fact of supply and demand. So look for higher interest rates. You want to lock in while prices are low? Rates are low. We're not saying we're expecting prices to rebound a whole bunch anytime soon. We're saying, but part of the multidimensional nature of the investment is the mortgage when you can lock in for 30 years at these low, low fixed rates. Okay, what else? Brittany? Anything else?

That about sums it up.

Okay, thank you so much for visiting there and giving us that update. Couple of other things before. I want to talk about a few more properties in just a moment before we go to the interview with Robert Kiyosaki. Couple of events coming up, of course, August 15th, our Creating wealth in Today's Economy event here in Orange County, California. We've got the Masters weekend on October 10th and 11th. That's our semi annual event. So it's only twice a year and be sure to come out for that. We'd love to have you. And I want to thank Richard Lillycrop who has been on the show before. We interviewed him a long time ago. He is in England and he is flying out for the Masters weekend. So I think that's our furthest away visitor so far. We've had many people fly in from New York and you know, all across the US before, but I believe, Richard, you have got the record. So thank you for joining. We really appreciate having you attend the event and we want to see more of you. So I know some of you listeners in Australia, in various parts of Europe, Asia, the Middle east, come on out. We'd love to have you for the Masters weekend and we'd love to meet you in person. Products we have got many new products that we're producing, not the least of which is our new newsletter, the Financial Freedom Report. And our editor Doug has put together a great third issue for August and we are about to go to print on that that is available for subscription. This is a There is a fee for the newsletter but we have some free samples@jason hartman.com in the members only section so you can get a free sample there and you can also subscribe under the Events and Store section of Jason hartman.com youm can buy a subscription there to make sure you don't miss any issues. And we have got the loan modification, the Do It Yourself loan modification kit there that is a 56 page PDF file as well as an audio download. So we had it read by a professional voiceover person. And then we have got the Creating wealth in Today's Economy seminar. Finally I know we've had literally thousands of people ask us for this. We finally got around to producing this in audio and printed format. So that also is available on the site and we edit it down to a nice streamlined. It's about 2 and a half hours long I believe. If you'd like a copy of that go to jason hartman.com click on events and store and it is there for you. We've got the five book series which is the hard copy of all the podcasts with extensive visual aids, charts, all kinds of great things that many of you have asked for as well. The first book is about to be published for the Amazon.com Kindle product. I have the Amazon.com Kindle ebook reader which is a great little product and it'll be available that way as well in print and PDF downloads. So look for that as well in that same section of the website. A couple of properties I just want to tell you about real quickly before we go to The Kiyosaki interview. Five bedroom house in the student housing development in Columbia, South Carolina, University of South Carolina or USC campus housing. So this one is 1836 square feet. It's 250,000. We got a $5,000 discount for you on that. The projected rental income is fantastic. Now remember, this is brand new. So this is not a rehab, this a brand new development. Projected rental income $2,350 per month. Cash flow is positive by $59 per month. Return on investment projected at 20% after tax benefits. And again that's a turnkey package. Real simple if you like that one. Here is a better kind of deal property but not as turnkey and not brand new. This is in Dallas, Texas area. Four bedroom, two bath. Projected rental income 1350 per month and the price is only $130,000. Price per square foot is only $65 per square foot. This is a newer property. Again, you can't rebuild it for that price. So when you're buying at or below the cost of construction, you're in for a pretty good deal no matter what. Projected cash flow is $1,598 annually. Projected return on investment after tax benefits, 27%. So call our investment counselors or contact our investment counselors through the website on any of these properties. Here's one in Georgia. If you saw the picture of this house, you would be amazed. I love the looks of this house. $102,000 down payment. $5,330. Again, these are really short on supply. So, folks, if you're interested, you got a call right away. You might have to wait to get one of these. They're a little bit hard to get. The projected return on investment here because of the additional leverage is projected at 52% annually. Don't try that in a mutual fund. Very low down payment. So go to jasonhartman.com and you can fill out the contact us form and contact any of our investment counselors by calling us at the number on the website at Jason Hartman dot. Another thing I wanted to mention to all of you listeners is how funny it is when you look at the precious metals community, the gold bug community. You know, I get this newsletter from a company called Lear Financial. It's just an email newsletter. Comes about once a week, I guess. And every single time I get it, it's always about how gold is ready to do this and that. And look it. You know my position on this. If you're a regular listener, I think gold and silver are okay. I don't think they are an investment. I think they're just money. They're just insurance. But if you want to really grow wealth, you're not going to do it with gold and silver unless, you know, you happen to get a lucky break. Okay. For 20, 30 years, they've been talking about how everything's about to collapse and gold is going to triple in price and it just hasn't happened yet. Okay, here, I'll just read you a couple of the headlines. Precious metals are ready to shine. Okay, is one article. Here's another one. Gold will hit $1,500 within the next five years. Well, if that happens, that's really no big deal. If you have a good leveraged income property, your return is going to be far better than that. Remember, these precious metals don't produce income. They don't have tax benefits. I've gone over Those characteristics before they're subject to manipulation, etc. Etc. You can't finance them, folks. These aren't investments. The problem is people are trying to treat metals like their investments, their money. I admit that they're better than dollars. I completely agree with that. So I take kind of a middle ground on this whole metals thing. So I just wanted to mention that because, you know, these gold bugs, I hear them on the radio and I look at their stuff and you know, we've got an interview coming up with Howard Ruff and he's a real famous gold and precious metals person. So I think you'll be interested in that interview. I already recorded it and it will be coming up on a show real soon enough. Talking about this stuff. Let's go to the interview with famous rich dad Robert Kiyosaki. And he has about 250 grand a month in cash flow from his apartments. And I think you'll really enjoy this interview. You've probably read his books. Here he is. We have a very exciting interview for you today. It is our Special Special Guest, Mr. Robert Kiyosaki, the creator of the Rich dad series and more recently the Real Book of real estate with 22 contributors, including Donald Trump. And it has had great reviews from Publishers Weekly and also his newest very creative venture which is entitled the Conspiracy of the Rich. We'll ask him about in the interview here today. Robert, welcome to the show.

Thank you very much.

It's great to have you on board. Tell us a little bit about your thoughts. You know, of course we want to get your take on the economy. I mean, you've had very distinguished career as an entrepreneur, an investor, an inventor, and of course a best selling author. What recommendations do you have for people wanting to create or protect their wealth in today's economy?

Well, I always recommend getting more financially educated. If you look at the people that are hurting financially today, most of it is due directly to a lack of financial education in our school systems. And then you look at our financial and political and banking leaders. They haven't been putting out the best advice for people to follow. So that's why people are in trouble. So if you want to protect yourself, the best way is to just make it, you know, dedicate yourself to getting financially educated. That's what my rich dad did for me. And one of the reasons I'm prospering in this time is very simply because I have an education. I didn't listen to those guys who sell mutual funds.

Yeah, no question about it. They want you to just stay Long in the market. And that doesn't work anymore.

Does, never has. That's suicide. You know, why would you put your money into such a volatile instrument, such as a stock or a bond or a mutual fund, where they'll, you know, they're good, they're really short term investments. They're not long term. I mean, you're in and out. Like Jim Cramer is a trader and he's in and out of the market. And then the financial planners tell you to go long the market. You've got to be nuts. That is crazy. That's insanity.

I agree with you completely, Robert. But you know, I'm sort of wondering why the mainstream financial services industry has that advice. I mean, is it because they're just lazy? Is it because they get, you know, in the olden days, the brokers got accused of trading or churning the accounts. I mean, now it's all like this managed money model and they just sit there and they're long on everything. It's just crazy. That whole industry seems like a big myth. It doesn't work. It doesn't work for anybody.

Well, that's what I wrote about in my book Conspiracy of the Rich, which is an online book that's for free. And it'll be taken down, I think, July 7th. You have until July 7th to read it for free. It's 12 chapters long.

And that's@conspiracy the rich.com.

It'S just no mistake that they're telling you to put your money in there long because that's how to get your money. The same as when a banker tells you to save money. That's how they get your money. And if you're not really intelligent or they tell you your house is an asset, it's not your asset, it's the bank's asset. So I really don't know why people believe that garbage. But like I write in Conspiracy of the Rich, this crisis was a long time coming, you know, coming for years.

Sure. The Conspiracy of the Rich project is fascinating. I remember when I first received an email on that and I went to the website and there was one sample chapter there. The subject matter's exciting and interesting, but also the way you're involving people in the project. Can you tell us a little bit more about that? It's really a fascinating model that you've created there.

Well, this crisis has happened before. It's happened all throughout history. And so I thought it would be kind of interesting to write a book about history as history was being written. And so as people were reading along they could actually see that this has happened before and this is no mistake, it's not an accident. Now the whole model was based upon bailing out the banks. And that's why we have the Federal Reserve bank, which as you know, is not federal, no reserves, it's not a bank. This whole thing was basically how to get your money and my money legally via the assistance of the government. If you look at the four things that make people poor every single month is number one is taxes, number two is debt, car payments, mortgage payments, three is inflation. That's like, you know, the price of gas going up, food can go up, and four is a retirement plan. So those are the four things that make the average middle class person poor. But they're the very same things that make guys like me rich. And if you have a financial education, you can pay, I can make millions of dollars and pay 0% in taxes. I use debt to get rich, not poor. I'm not against owning a home, but I own, I own an apartment house and I use debt to get rich. I use inflation to get rich. That's why I invest in oil, gold, silver, copper, and I don't need a retirement plan. Yeah, and all of that money goes to conspiracy.

Right. The 401k is probably one of the worst deals going nowadays, isn't it?

Oh, disastrous. And these morons are still out there saying, oh, I called my financial planner, this is just stay there for the long term. I said, well you have a, you know, sort of, I don't know where you came from, but you're not very bright person.

Yeah, no question about it. You know, we are definitely living in interesting economic times with government spending and the creation of fake fiat money at unprecedented levels. What are your thoughts on the opportunities that are out there nowadays for prudent investors? I mean I want to ask you geographically too as far as real estate goes and product type apartments, single family homes, mobile home parks. Any particular likes and dislikes there?

Well, my message is the same. If you're an idiot, you're going to lose your money. So you don't just go and buy something. There's four basic asset classes. Number one is the business. And the richest people in the world own businesses. That's Bill Gates of Microsoft and Apple, Steve Jobs. The second is real estate. The third are stock, bonds and paper assets. And then the fourth are commodity. So I own all four, but I am a student of all four. If you don't have any education, you're going to lose money at any one of them. People have lost money in real estate, they've lost money in gold and silver, they've lost money in businesses, and yet they sit there and they still think they can get lucky. I don't know where people get their heads off. Trying to get rich is like flying an airplane. You don't just climb in it and take off because you won't crash. So it's not investment, not the real estate or mobile home or apartment houses or business. It's you, the individual. It's your financial education that determines if you'll be successful or not.

You know, you can make money basically in any product type if you know what you're doing. That's kind of the takeaway. Okay, do you feel this is a good time to be stocking up on more income properties and more mortgage debt? One of our big strategies is, is you're buying these properties basically as packaged commodities. When you get the land cheap or free and you buy below the cost of actual construction, then you put long term fixed rate debt against them. And as inflation comes, it makes the value of the commodities increase and wipes out the value of the debt. We see this as the ultimate arbitrage opportunity. Do you feel the same way?

No.

How come?

Well, because you're counting on something else. I don't do it that way. I just don't do it that way. What I do is if it doesn't cash flow, I don't buy it. And then my whole thing is to buy it and then increase the debt on it, not reduce the debt.

We agree with that too. I mean, we definitely agree with that.

What I'm saying, Jason, is that if you're not smart, you're going to get your butt handed to you out there. Look, real estate, like the economy, is predicated upon jobs. So you can buy the best real estate in Detroit, and if jobs keep going out of Detroit, you're still going to lose money. So I only buy real estate where there's jobs. That is like Oklahoma City, Tulsa, Oklahoma, Dallas and Houston because there's oil there. And as long as there's oil, there's jobs. But the other thing is, it's not just buying it and hitting and missing it. In theory, your ideas work well. But there's far more to it than just real estate and financing and debt. There's a lot more to it. That's why I caution people on just because a stock is cheap or real estate is cheap or business is cheap, doesn't mean it's of any value.

You are so right about that. You Know, we see promoters out there all the time promoting these properties in Michigan, especially in Detroit. And you know, Detroit used to be one of America's flagship cities and the population has been virtually cut in half over the last couple of decades. And I just think there's no real future there if you don't have job growth, if you don't have population growth, you're dead. California, you know, this is one of the reasons we haven't recommended California in years. We like the markets you mentioned. We like Texas quite a bit. You know, we have a lot of investors buying properties there. We like the southeastern U.S. the mid Atlantic's pretty good. In the Carolinas, I definitely agree. But the property has to be sustainable, self sustainable, so that you know you're not in big negative cash flow situations and then you have that other stuff working for you. So I, I'm completely agreeing with you. I just want you to know that, yeah, there's no difference of opinion on that stuff.

And the other thing is that you have to know whether you're buying a B's or C's. A high end, B is middle, middle class and C is slumlord. And I have focused only on B. So the A guys are getting crushed.

Right.

You have to be highly specialized to do those, what do you call those, Section 8 and all that stuff.

Right.

I don't touch that. I'm not a slum lord guy.

Right.

I'm strictly in the B category. I have been there all my life. So I don't just jump around the place. I really focus and I know my product, I know my customer, I know my market.

Thank you for listening to the Creating wealth show. This is Jason Hartman, your host and we appreciate you following the show. We have many, many episodes, hundreds of episodes and some of the older episodes have been archived and placed in our members section and that applies to this one. So we include a sample that's about 25 minutes long. And then for the rest of the show you can go to our members section@jasonhartman.com Many of the other shows are still in their full length complete version. However, some of the shows like this one are in our members section where you can hear the show in its entirety. And again, you just need to go to jasonhartman.com and you can get the full show there in the member section plus a whole bunch of other great members benefits and resources, whether it be documents, forms, contracts, articles, other video and audio content. Just a great resource. So be sure to join as a member@jasonhartman.com and thanks again for listening to the Creating wealth show.