When I start talking to people about building a passive income business by following the teachings of financial freedom guru Robert Kiyosaki, I immediately hear about people’s plans for buying real estate.

Anyone who has read the book Rich Dad, Poor Dad thinks that Robert Kiyosaki is all about investing real estate and buying rental or commercial property in order to achieve the financial freedom of their dreams. So, they instantly start putting all their money into real estate.

Reality check: That’s not book’s message. I try to listen patiently (after all I also believe that real estate can be a great investment vehicle), but the reality is you need a solid plan to achieve financial freedom, not a one off strategy.

Authors Robert Allen, Robert Kiyosaki, David Bach, and many, many talk about building multiple streams of passive income, that means having more than one investment vehicle, and making sure all those vehicles deliver passive income.

For beginners: passive income is income that comes in day in day out without you having to work to get it. Put simply, you are not trading hours for dollars. A true passive income business is one that if you were to leave it alone for a period of time, such as a year, you could return and find it more profitable (or at least generating the same level of income) as before you left. Passive income investments are the true path to financial freedom.

So what is the principle that Rich Dad truly talks about. He calls it the Power Investing Principle.

1 – Start a part-time business for the cashflow & tax advantages.

2 – When the market is right invest in real estate. (Now is not the time.)

3 – Invest your excess cash from the real estate in paper assets.

Unfortunately, a lot of people jump into step 2, real estate, without a lot of background knowledge about how to make that investment a lucrative one.

Here’s a clue, the property needs to generate passive income (that means it should be putting money into your pocket not taking money out). Capital gains (betting on an increase in value) should be a bonus not your sole reason for buying.

One of the first steps in building a solid passive income plan is to identify how you plan to generate passive income. The plan should include a number of sources including businesses, real estate and paper assets. The reason for this is to create a stable platform on which to build financial freedom you need all the elements.

Now, lets go back to the power investing formula and look at number 1: Build a business. Why do you want to build a business first? Simple: businesses provide the financial backing (cashflow) to support real estate investing. Makes sense right?

While there are only three steps in the power investing principle, you need to take the time to understand the systems behind each one. For example, master the business building system then move on to the system for residential real estate investing.

Taking it step by step will lead to prosperity and reduce your risks along the way.

Robert Kiyosaki talks about:

• The loser’s mentality.
• “If you can’t control your emotions, you can’t control your money.”
• Everybody wants to go to heaven, but nobody wants to die!
• “Why doesn’t our school system teach us about money in school?”
• “You know why they call brokers, brokers?”
• Understanding the 80/20 rule – Kiyosaki style.
• What the church will tell you.
• Are you in the right relationship to be wealthy?

Admit it — at some time in your life, you’ve said to yourself, “I wish I was rich.”

That desire is not a crime — but it may be leading people to waste their money, and their time, at a popular weekend workshop we’ve been investigating.

The workshop is called “Learn to Be Rich” — maybe you’ve seen the ads on the Internet, transit, or heard them on the radio? They feature Robert Kiyosaki, author of Rich Dad, Poor Dad — one of the bestselling financial help books ever written. And the workshops are popular — rolling into towns across Canada every weekend, filling ballrooms with people eager to learn how to turn around their financial fortunes.

People are told they will learn valuable skills in real estate development, or how to play the stock market. But at Marketplace, we were hearing complaints about the three-day workshops (that cost $500), so we decided to enrol in one on real estate.

The problems started within the first half-hour, where our instructor told us we weren’t, in fact, going to get the tools needed that weekend to get rich. Turns out, this weekend workshop was just a primer — we really needed to sign up for more advanced courses. And the cost for those? A mere $12,000 to $45,000!

But there was to be no discussion of the price — our trainer told us if we didn’t like it, he would tell us to leave.

In fact, throughout the weekend, we felt bullied and pressured to sign up for the advanced courses (where the real money was to be made). There was some instruction, but when we met with real estate lawyer Bob Aaron, he called what we were taught “bad advice,” and said many techniques were just plain “dumb.”

To make matters worse, our instructor misled us with a whopper of a tale, and later blew up at participants because not enough people took the opportunity to shell out up to $45,000 for more courses. You’ll see it all in our story tonight, but it left us questioning what financial guru Kiyosaki thought about it all.

When we caught up with him, even Kiyosaki admitted there were problems with some of the tactics used in the workshops that bear his Rich Dad brand.

Bottom line? That age old nugget holds stands — if a weekend workshop on how to be rich sounds too good to be true, it probably is.

Erica Johnson is a journalist and co-host of CBC News: Marketplace, Canada’s award-winning consumer affairs show. CBC News: Marketplace airs each Friday night at 8:30 p.m. on CBC Television.

Going to school, getting a job, staying out of debt, diversifying your stock portfolio and investing in a retirement plan in which the government will take care of you in your old age has, according to Robert T. Kiyosaki of Rich Dad’s Conspiracy of The Rich, become the new fairy tale.

The author of the #1 bestselling finance book of all time, Rich Dad Poor Dad, with follow-ups such as Rich Dad’s Guide to Investing, Rich Dad’s Prophesy, has upped the ante once again with his newest addition to the Rich Dad franchise by challenging societal norms regarding personal and financial success in light of the recession and repeated U.S. government bailouts.

According to Kiyosaki, the central banking system (most specifically, the Federal Reserve System of the United States) was designed — conspired — in a way that cash flows directly into the pockets of the rich, where hard-working taxpayers simply cannot win the old-fashioned way, especially in a deflated economy.

In simple and often pleonastic language, the author explains the relationship between big banks and government, debt and America, and financial education and the poor.

One of the biggest conspiracies Kiyosaki explores is the lack of financial education in schools, which the author pins all the way back to when industrialist John D. Rockefeller created the General Education Board under a Prussian system, churning students into cogs and not independent thinkers.

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About a year ago, I picked up the book ‘Rich Dad, Poor Dad’ by Robert Kiyosaki. The read was revolutionary for me and inspired me to move past fears that have stopped me from doing more with my life financially.

Since reading that book, I have read several others by Robert Kiyosaki and his ‘Rich Dad Advisors’. I have also attended several of his seminars and classes, both in person and via audio materials and workbooks. He and his advisors cover everything from real estate investing to increasing your financial IQ to starting your own business to conspiracies of the rich.

Robert Kiyosaki is a man from humble beginnings that learned 2 different ways of thinking from 2 different fathers. By employing them later in life, he was able to retire in his forties, never having to work again, and started a new life as a financial educator, business man, and investor. Everything he said about how his poor dad managed money – was the same as what I had learned growing up.

Reading through ‘Rich Dad, Poor Dad’ a second time, I really focused on the opposite of all I knew – and those were the ideas of his rich dad. These ideas were very logical, simple, and completely achievable. I knew then that I had to start thinking differently about how I managed my life not only financially, but personally and professionally as well.

 Here are the top 5 things that I have either gained a greater understanding of or learned more about from Robert Kiyosaki:

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Is the recession over? Are happy days really here again? Paraphrasing Dickens, my answer is, “For people who are prepared, 2010 will be the best of times. For many, 2010 will be the worst of times.”

The following are a few of my predictions and reasons behind them…

 Prediction #1:  The real estate market will crash again.

Pictured above is a graph of mortgage resets. In simple terms, a mortgage reset is when a mortgage comes due. In normal times, refinancing was a simple process…but these are not normal times. Some points of interest:

 1.  In September 2008, the mortgage resets hit $35 billion that month. That was the exact time the financial crisis hit. When people could not afford to refinance and began to default, the stock market and banking industry crashed. 

2.  The eye of the storm: In the summer of 2009 mortgage resets were low — around $15 billion a month. This is when optimists began to see “green shoots” in the economy. The green shoots were the eye of the storm.  In 2010, as I see it, the second half of the financial hurricane hits. By late 2011, the resets climb to nearly $40 billion a month. The storm will not end until 2012.

3.  The first half of the storm was primarily due to subprime defaults. The second half of the storm will hit more solid homeowners. The question is, can they weather the storm? Will Mac Mansion foreclosures be next?

4.  In America, there are over 40 million people who own more than two homes. Can they afford to carry and refinance two or more mortgages?

5.  Since home values have gone down, many homeowners will find they owe more than their home(s) are worth. Will the bank be kind to them?

6.  The time for using your home as an ATM is over. This is crushing retailers and retail real estate. Shopping centers are in trouble. Strip malls are empyting as shopkeepers close — permanently. This will lead to the crash of the office, warehouse, and other commercial properties.

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