Wisdom of Rich Dad

I have to say that this is one of my pet peeves. What the heck is up with real estate gurus hawking tele-seminars, webinars, bootcamps, courses and seminars of other gurus? I mean really – don’t they make enough money selling us their own stuff?

It seems lately that I am getting more and more emails from well known “gurus” that are promoting someone else all together! I have to tell you that since I am in this business and have my own real estate club – I know exactly what they are up to and I think it stinks to high heaven.

It’s only about the money baby. It’s never about them caring about you so much that they “don’t want you to miss this opportunity to see/hear ‘their good friend’…blah blah blah.” That’s just malarkey! The biggest culprits of these shenanigans seem to be those who have the biggest rip-offs to sell. Yes – believe it or not there are gurus out there selling overpriced junk as “educational product”. There I said it! (I hope I don’t wake up with a horse head in my bed tomorrow.)

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When I started investing in real estate in 2001 I had two main objectives: get my money working hard for me so I didn’t always have to work hard for my money AND create multiple streams of passive income.

Holding rental properties seemed like such a simple way to create passive income. Buy a house, put a tenant in there, and collect rent. Easy as making a pie. Or so I thought.

And, you know what? It actually is pretty simple. And it’s definitely enabled myself and my husband Dave to enjoy a lot more freedom than any job ever could. We are making money from our properties each and every month and each property grows our wealth a little (and sometimes a lot) each year. Once upon a time we would have said we are earning thousands of dollars each month in passive income, but we no longer do.

The problem with pursuing “passive income” is that you’re telling yourself you don’t have to do any work to make that money.

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Traveling is sexy, especially if you don’t do it very often. That’s why I was so excited to attend my first real estate investing seminar. I would soon learn everything I needed to know about how to get rich investing in real estate AND fly across country to do it. Okay, Phoenix to Denver isn’t exactly across country but it was still exciting nonetheless. The icing on the cake was I got to stay at a Holiday Inn – can you say free continental breakfast? Yes, I was a real jetsetter.

It was 2001. I’d just finished reading Robert Kiyosaki’s book Rich Dad, Poor Dad. His message was very clear – the only way a regular guy like me could achieve financial freedom was through real estate investing.

So I did what most newbie real estate investors do. I went online and found a weekend seminar. I spent money on airfare, a hotel room, meals and ground transportation. I listened to 8 different speakers in two days. By the end I dropped $600 on a lease/option tape set and another $600 on a foreclosure course.

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So you want to start investing in real estate do you? Well good on you for making that decision! Now where are you going to start? My suggestion is to find some education first and then begin your journey to financial freedom or to an extra income. Whatever it is you are looking at real estate to do for you is your choice.

Just let me ask you one question. What is going to be your area of focus? This could be one of the most important questions you need to ask yourself before you get started investing. Why you ask? A focused investor is a successful investor. Take Donald Trump for example, his focus is development, you don’t hear of him doing lease options, wholesaling, fix and flips, buy and hold, land development, commercial real estate and development, do you? More than likely not, his focus is development. Don Campbell, his primary focus is long-term buy and hold properties.

My mentor Ross Lightle’s primary focus is lease options. Robert Kiyosaki’s primary focus is buy and hold properties. Ron LeGrand is focused on wholesaling. Do you see the trend developing here? All of these investors above are highly successful, and they all have their areas of focus. There is a reason they are successful. They chose an area of focus, became an expert in it and took off to the skies. Now I am not saying these areas of focus are the only areas of real estate these investors work in, I am saying it is their main focus.

So take some time and decide what your main focus is going to be. Once the decision is made, stick with your focus and become an expert in that area of focus. And when people ask you what kind of real estate investing you do, be specific, “I buy single family homes and hold for long term growth.” Now you can get a lot more specific than that (how many bedrooms, what size, what city, what area in that city etc…), that is a whole other blog. For now, determine where you want to focus on real estate investing, become and expert in it, and go for it!

A little tip, make sure the area of focus is something you are passionate about and enjoy, this will also make a world of a difference. If you are not passionate about your area of focus or do not enjoy it, when the going gets tough for you, you will probably get going. If you are passionate about your focus area and enjoy it, the speed bumps you encounter won’t be a big issue.

So before you start investing in real estate, take the time to determine your area of focus and then put some rocket fuel behind it and take off! It will be an important decision you make in your real estate investing career.

Another method that people of varying economic means use to build wealth is to invest in real estate. Owning and managing real estate is like running a small business. You need to satisfy customers (tenants), manage your costs, keep an eye on the competition, and so on. Some methods of real estate investing require more time than others, but many are proven ways to build wealth.

John, who works for a city government, and his wife, Linda, a computer analyst, have built several million dollars in investment real estate equity (the difference between the property’s market value and debts owed) over the past three decades. “Our parents owned rental property, and we could see what it could do for you by providing income and building wealth,” says John.

Investing in real estate also appealed to John and Linda because they didn’t know anything about the stock market, so they wanted to stay away from it. The idea of leverage — making money with borrowed money — on real estate also appealed to them. John and Linda bought their first property, a duplex, when their combined income was $20,000 per year.

Every time they moved to a new home, they kept the prior one and converted it to a rental. Now in their 50s, John and Linda own seven pieces of investment real estate and are multimillionaires. “It’s like a second retirement, having thousands in monthly income from the real estate,” says John.

John readily admits that rental real estate has its hassles. “We haven’t enjoyed getting calls in the middle of the night, but now we have a property manager who can help with this when we’re not available. It’s also sometimes a pain finding new tenants,” he says. Overall, John and Linda figure that they’ve been well rewarded for the time they spent and the money they invested. The income from John and Linda’s rental properties allows them to live in a nicer home.

For some people, the real estate mess is no game; it’s an open sore of a subject. But, games can be great ways to learn for good–or ill.

One company that’s turning lemons into virtual lemonade is an outfit called AddictingGames.com. They just released Mortgage Meltdown, a spin on the old Monopoly game.

In Monopoly, you tried to dominate the real estate market. In Mortgage Meltdown, you just try to stay above water. And, just like in real life, there are lots of things that can go wrong from property tax hikes to earthquakes. There are some good things (or less bad things) that can happen, too–just like in real life.

AddictingGames.com is doing two things.

First, they’re showing just how powerful new computer technology is. They’re able to lift the headlines from today’s papers and turn it into a computer simulation. It used to take years to bring a game to market. And, if you noticed, these games are pretty robust.

Another thing the company is doing is, I hope, creating a learning experience. As funny as it may seem, people learned lessons from those Monopoly and Life games. That’s where I learned about rent and mortgages, come to think of it.

Some other games on the company’s websites run the gamut from laundering money to the dental business.

As AddictingGames create more experiences like Mortgage Meltdown, maybe it will help us avoid the costly mistakes of the past.

Unless you’re learning how to launder money. Then you may get a go-to-jail card.