Wisdom of Rich Dad

I have learned many lessons as a result of reading Robert Kiyosakis books.

These are just a few I would like to share with you.  But bare in mind, these principles may throw everything you may  have learned out the door.

Lesson #1: Your house is a liability, not an asset.

Lesson #2: Leverage is the reason some people are rich and others do not become rich. And most people do not become rich because they fear the power of leverage. And the most powerful leverage in the world is your MIND.

The poor and middle class have a hard time getting rich because they try to use their own money to get rich. If you want to get rich you have to learn to use others money…not your own.

Lesson #3: Good debt makes you rich, bad debt makes you poor.

Lesson #4: The choice of words you use will make you rich or poor. Words are powerful tools…tools for the brain. It does not take money to make money. “Getting rich begins with your words and words are free.”

Poor people say ‘I can’t afford it’ more often than rich people. Your words become flesh.”Poor people use poor words create poor people”.

Lesson #5: The problem with having a job is that it gets in the way of getting rich.

Lesson #6: The biggest challenge you have is to challenge your own self-doubt and your laziness. If you want to change what you are you must take on your self doubt and your laziness. It is your self doubt and laziness that deny you the life you want,”.  If you will take on your self-doubt and your laziness, you will find the door to your freedom.”

Lesson #7: It is your “Why” that gives you the power to do the how to. Instead of looking inside of themselves to find a ‘why’ they want to become rich, most people look for the easy road to wealth, and the problem with the easy road is that the easy road usually ends in a dead end.

Lesson #8: Unless someone has a passion for something, it is difficult to accomplish anything. Rich Dad used to say. “If you want something, be passionate. Passion gives energy to your life. Passion gives energy to your life.

Lesson #9: Take at least 1 hour each month to reflect on your life. Taking the time to reflect on Robert Kiyosaki life raised the following ideas.

1. What he thought was important was not that important.

2. What was important was where he was at, not where he was going.

3. There is no one more important than the person in front of you at that moment. Take that moment to be with him or her.

4. Time is precious., dont waste it…appreciate it.

5. Sometimes stopping for a moment is harder than staying busy.

Lesson #10: A high paying job without ‘Financial Education’ often means the person gets deeper in debt faster than someone with a low -paying job. That is not too intelligent.

A new survey of young workers published by the AFL-CIO suggests many Americans under 35 can’t manage the basic financial building blocks of an adult life. The union calls the last ten years a “lost decade” for these young people during which many fell short on critical responsibilities like getting their own place, finding a stable job with benefits and saving money for emergencies.

About 31% of survey respondents said they made enough money to pay their bills and set some money aside, and seven out of 10 respondents said they did not have enough money saved to cover two months’ worth of living expenses. Parents of these young workers know how far they are from making it on their own; one in three is living at home.

“Along almost every metric, people under 35 are doing much worse than they were 10 years ago,” says Jennifer Jannon, 29, a regional director for Working America, the ALF-CIO’s community organization for non-union workers. “People are literally putting off starting their adult lives because of the conditions they’re facing economically,” Jannon says.

She says the results should not be interpreted as laziness. “Young people are really yearning to move out on their own [and] to start their adult lives,” she says. “[But], they can’t find the type of work that supports an adult life.”

Some take issue with the suggestion that the current job market is more difficult for young workers than for their counterparts over 35. “It’s easier for younger people because they have less experience, and they don’t cost as much,” says Robin Ryan, a career counselor and the author of “60 Seconds And You’re Hired.” “If you’re over 40, a lot of employers see you as expensive,” Ryan says. Employers may also assume younger workers are more tech-savvy and can more quickly adapt to a changing workplace, she says.

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When it comes to lowering their monthly housing payments in the down economy, renters have homeowners beat.

Refinancing a mortgage requires plenty of paperwork, a stellar credit score and weeks of effort. But property owners faced with profit-sucking vacancies and cash-strapped tenants are increasingly willing to negotiate. According to a recent survey from rental property marketplace Rent.com, 68% of landlords reported lowering rents or giving one or more months free to retain tenants.

Try these five strategies to cut your bill:

Research the market

Learning what other people in your building and neighborhood are paying for comparable properties can help you figure out whether you’re overpaying, and how much room you have to negotiate, says Steven Cohen, the president of consulting firm The Negotiation Skills Company, which helps clients negotiate for better deals. Ask other renters what they pay, check similar property listings on Craigslist, and get a local comparison on RentoMeter.com. Cohen’s daughter Abigail tried that tip and found that others in her neighborhood on New York’s Upper West Side were paying an average 20% less than she was for a studio apartment. She brought those figures to her landlord and ended up with a new lease this summer for $1,550 instead of $1,850 — an 18% discount.

Play up qualifications

“If you aren’t a good tenant, you won’t have a strong case,” says Peggy Abkemeier, the president of Rent.com. “The landlord may not want to make concessions to get you or keep you in the unit.” Point out that you’ve always paid on time, have kept the property in great shape and haven’t had any complaints from neighbors. Renters hunting for a new place have less leverage here, but they can benefit from a reference from a previous landlord.

Take on a roommate

Obviously, the more people sharing your space the less rent you’ll pay. But landlords may also offer a break to fill under-housed units. When Eric Woodbury and two friends were apartment hunting in Medford, Mass., in July, one property manager offered them a three-bedroom unit for $2,000, or roughly $667 apiece. Or they could move into a $2,200 four-bedroom where one tenant was already in place, cutting the per-person rent to $550. “That was a big selling point for us,” he says.

Look beyond rent

If your landlord stands firm on the monthly rent, ask about other possibilities to cut costs. For example, you might negotiate for more utilities to be included or a discount on extras like storage space or parking. Rent.com found 38% of landlords were willing to reduce security deposits, and 8% relaxed pet policies (which typically include an extra security deposit).

Track vacancies

Turning over an apartment can cost a landlord thousands in upgrades, marketing and lost rent, Abkemeier says. If your building or community is looking more and more like a ghost town, you have plenty of leverage to negotiate. “I see and hear people moving out of my building all the time,” says Iris Karasick of New York City. Karasick already negotiated the rent on her one-bedroom on the Upper East Side down $100, to $2,155, earlier this year, and says she hopes the vacancies might help push it below $2,000 this fall. “I’m sure they’d rather have a good tenant in the apartment than have to hunt for someone new,” she says.

Making money through property investing by generating a passive income is a sweet proposition for anyone.

It is a rich man who doesn’t dream of making money without having to lift a finger for it, and the poor man who fools himself into thinking it is possible.

Talk to any successful property investor and you are bound to get the same story; that in order to create a passive income, you’ll have to work damn hard to achieve it.

Lisa Dudson, co-author of Create Wealth, a bestselling book on property investment, says many who go into in real estate suffer from a delusion that there is easy money to be made in housing.

“The whole passive income thing is a bit over-used and under-estimated, really, because nothing is free in this world – you have to work for it,” Dudson says bluntly.

A successful property investor, financial planner and entrepreneur, Dudson knows of what she speaks.

The tough talking 40-year-old Aucklander has sweated her way to financial freedom, and along the way advised hundred of clients and readers how to do it right in real estate.

Dudson says very few ever get to the stage of achieving a genuinely passive income, where rental revenues are creating positive cashflow instead of being used to finance debt.

Why?

Time for one. “It doesn’t happen in five minutes; it sometimes takes 25 years,” she says.

Patience aside, making a profit in property takes sound planning, strategy, wise counsel and firm financial foundations.

These four areas are the focus of talks that Dudson gives to property investors when she is invited to speak on the subject. She’s a regular on the lecture circuit.

Dudson drives home the same message for clients, most of whom she sees after the damage has been done.

“I’ve seen a lot people this year that have $3 million to $4 million worth of property, but they also have 95 per cent debt on it. They’re just sitting on diddly- squat at the end of the day, because if they sold it all today, they’d probably have zero in this market.”

Dudson says investors who blunder into property without a proper game plan are setting themselves up for disaster.

“They’re building up all these properties and buying all these things, but it’s not actually delivering a hell of a lot to their bottom line. Then they say they’d like to retire in five years and I say, ‘Well, how the hell are you going to do that!’ They haven’t actually given it any thought. They’re not sure what they are trying to achieve.”

If property investment requires air- tight planning, clear thinking and foresight, it also requires the right kind of personality.

Dudson says some investors might actually be better suited to the stock market, but they’ve forged into property often for no other reason than “because everyone else was doing it at the time”.

She believes that is one of the main benefits of professional advice; getting guidance about investment options that take into consideration risk tolerance, interests, desired and required rate of returns and long-term goals.

Ironically, many are drawn to property because of the belief that it is one area of investment that doesn’t require professional advice.

Andrew King, Dudson’s co-author in Create Wealth, says many view it as a safe alternative to the stockmarket, given what’s happened with finance companies and more recently the stock market crash.

“A lot of people view it as a bit more secure. They see it as something they can do themselves and have control.”

And while Kiwis have a reputation for being property crazy, King says the numbers do not back it up.

“People say New Zealanders over- invest in property, but it’s just not true. There’s only about 7 per cent of the population that does buy investment property. And that’s because it requires more effort than simply giving your money to a fund manager,” he says.

Tangible or not, at the end of the day most investors just want some assurance they’ll make some money.

Dudson doesn’t believe one is better than the other by measure of return.

“But there is for an individual – one that is better than another,” she argues.

“It depends on how active or passive you want to be with your investments; it depends on how much risk you want to take on, it depends on where your interests lie, what your skills are, all of those things are really important when deciding which investment strategy to choose.”

King agrees property is not for everyone but he has a personal preference for property. He thinks there is more be gained from it.

“A lot of sharebrokers and financial planners love to pull out these charts that show shares outperforming property but I haven’t seen a decent one yet. A decent property, done properly, will always out- do the sharemarket, I believe.”

So what constitutes a decent property done properly?

King points to several factors including buying at the right time, buying in the right area, building up equity and being a good landlord. The importance of the latter should not be under-estimated as a key factor in boosting the bottomline.

“You’ve got to treat tenants like customers, and if you treat them well, they tend to treat you well. If you manage a property well, maintain it, treat the budget well, spend money on maintenance, know the residential tenancy acts and know your rights and responsibilities – all those sorts of things – you save yourself a lot of time, a lot of grief, and you will maximise your income return.”

It is a formula that has served Rotorua’s Debbie Van Den Broek well. Last week, she was named Landlord of the Year by the New Zealand Property Investors’ Federation.

She started with one property 20 years ago and worked her way up to “less than 20″ with her husband.

Van Den Broek says persistence, hard- work and high standards as a landlord have landed her in good stead financially.

“No matter what area, lower or mid class, I like to have a house that is of a good standard of repair with unstained carpets, vinyl that is not all chipped to pieces, a stove that looks clean and you want to cook on and good quality thermal drapes. At least when your tenant moves in they don’t need to clean it immediately and you’re inclined to have people look at the house more if they move in when it’s in good condition.”

She demands as much from her tenants in return and is vigilant about screening.

“I do face-to-face interviews, reference checks, credit checks . . . I will try to go around to their existing house to see how they’ve kept it, I’ll pass by their car and if it’s full of empty McDonalds wrappers and rubbish, well, I think my house is going to look like that fairly soon, too.”

Getting to where she is today, didn’t come by chance or without mistakes. Van Den Broek credits a good friend and mentor in Wellington for inspiring and advising her. She also counts financial guru Robert Kiyosaki (of Rich Dad, Poor Dad fame) and real estate tycoon Dolf De Roos as key influences.

Dudson, also an avid reader, says personal interest is another driver of success. “You’ve got to have some kind of interest in it because you’re going to have some s . . . . . experiences.”