Rich Dad Poor Dad Summary: Real Estate Takeaways From Robert Kiyosaki

Updated: Oct 23, 2020

Whether you are entering the world of real estate or the world of personal finance, one of the first recommendations you are bound to hear is “read Rich Dad Poor Dad!”

Robert Kiyosaki’s NYT bestseller has a massive base of raving fans, and it has sold tens of millions of copies since its original publication in 1997. It’s also gone on to spawn workshops, follow-up training, and an entire ecosystem of programs that have netted hundreds of millions for Kiyosaki’s brand.

If you know absolutely nothing about personal finance or real estate, we encourage you to read the book. It’s an entertaining read, and it’s #1 strength is getting people excited about taking control of their financial future.

If you aren’t a complete noob, on the other hand, or if you are already planning on making financial moves, the book will be a waste of your time.

It’s incredibly light on specifics and practical advice, and you’d be better suited investing your limited time on training with more specifics (like our free, comprehensive guide to real estate wholesaling, for example).

In this article, we are going to give you a quick Rich Dad Poor Dad summary and pull out all the key takeaways, as well as the common misconceptions that readers like to spread around.

If you already have a baseline understanding of finance and real estate and would rather read a 5 minute article than go through 40,000 words worth of stories and platitudes, this summary is for you.

Who Is Robert Kiyosaki?

Before we dive into Rich Dad Poor Dad, let’s quickly explain what you need to know about the author.

Robert Kiyosaki is an American entrepreneur, businessman, real estate investor, speaker, and author of a range of personal finance books, including the Rich Dad Poor Dad series, The Business of the 21st century, and CASHFLOW Quadrant.

His story is a classic tale of hitting rock bottom, only to build back up and reach financial freedom. Kiyosaki started his career in the Marines, before starting his own company that launched the Velcro surfer wallet (remember those?) and a heavy metal band t-shirt company — both of which failed. He also invested a big chunk of his money in stocks, real estate and shares, which he took out to repay his debts.

At 40, he was broke and homeless, but instead of throwing in the towel, he used his experience to educate people on what NOT to do, highlighting his mistakes along the way to building a multimillion dollar training brand and becoming a bestselling author.

Rich Dad Poor Dad: Book Summary

Rich Dad Poor Dad is about the mindsets of the poor, middle class, and rich, and how these shape our financial future.

In the book, Robert Kiyosaki looks at the different attitudes to money between his “Poor Dad” (his actual father) and his “Rich Dad” (his father’s best friend). While both dads were successful and earned a lot of money, one stuck to the traditional route of going to school, getting good grades, and landing a well-paying job. The other went on to become one of the richest people in Kiyosaki’s home state of Hawaii.

Through the book, Kiyosaki compares and contrasts the philosophies of his rich dad and poor dad and distills these into a few big ideas that differentiate the rich from the rest:

#1: The Rich Don’t Work For Money

They make money work for them. Most people use their profession to earn money — but rich people use their assets, and that includes time. They find opportunities to earn money even if they have no money. The poor dad would say, “I can’t invest, I have no money.” Meanwhile, rich dad would look for opportunities to invest time to start a business to make money, or find additional sources of income,

#2: It’s Not About The Money You Make. It’s About The Money You Keep

Most people focus on earning more money. However, if it comes in one end and goes out the other, then Kiyosaki argues that it might as well be worthless. According to him, one of the key differences between the rich and the poor is that the rich try as hard as possible to keep their money and make it work harder for them.

#3: The Rich Acquire Assets, While The Poor Acquire Liabilities

According to Kiyosaki, the poor spend their money on liabilities (expenses) that don’t generate a return. Rich people do the opposite. They find ways to grow their portfolio and generate wealth through assets, such as investments, bonds, stocks, income-generating real estate.

#4: Rich People Understand Taxes, And Make It Work For Them

Kiyosaki says the poor complain about taxes and the middle class pay taxes. Meanwhile, rich people understand tax law and search for opportunities to make tax laws work for them. They try to hold on to their money for longer and create opportunities to pay less tax.

The simple act of flipping the process from ‘Earn - Pay Taxes - Spend’ to ‘Earn - Spend - Pay Taxes’ is the reason why rich people save more money and pay less taxes.

#5: Rich People Invent Money

Instead of following the herd or opting for packaged investments, Kiyosaki says the rich find opportunities to customize their investments and spending to suit their objectives. They find things that others have missed, learn how to make money outside of a bank, and hire people more intelligent than them to build their knowledge base.

#6: Work To Learn, Not To Earn

The value of knowledge will pay back far more than a paycheck. Throughout the entirety of Rich Dad Poor Dad, Kiyosaki talks about the importance of acquiring knowledge over money. If you have the choice, he says, find jobs that offer opportunities to learn new skills — not just jobs with a higher salary.

#7: Mindset Matters

The main difference between a rich person and a poor person is how they manage their fears, habits, and arrogance. Rich people conquer their fear, find inspiration in loss, and see failure as an opportunity to learn. Poor people are scared of loss, and use doubt and fear as reasons NOT to do something.

The Key Takeaways For Aspiring Real Estate Entrepreneurs

Rich Dad Poor Dad is about financial literacy, money management, investing, and entrepreneurship. And while there are some drawbacks to Kiyosaki’s method (more on that in a second), there are plenty of takeaways that you can apply to grow your wealth through real estate investments:

1. Your Mortgage Isn’t An Asset

Most Americans think of real estate as a checkbox along the traditional path to ‘success’. You go to school, get good grades, graduate, get a high-paying job, and earn enough to buy a house. That house is then an asset that you own and that will appreciate in value.

Rich Dad Poor Dad flips this idea on its head. It looks at a mortgage as a liability and argues that instead, you should be investing in assets that build and grow your wealth. The takeaway? When you start looking at property as an asset, as opposed to a debt, it completely transforms the way you purchase and invest in real estate.

2. Train Yourself To See The Gold

In the book, Kiyosaki talks about a gold miner in Peru who once told him, “There is gold everywhere. Most people are not trained to see it.” According to him, the same goes for real estate.

The bottom line is: Not all properties are created equal. Some look shabby on the surface, but with a makeover, can easily make a savvy entrepreneur thousands back in profit. The real estate investors who win are the ones that can look beyond the surface to find the “gold”.

3. Invest In Learning

One of the most valuable takeaways from Kiyosaki’s book is that you should never stop learning. Even once you’ve got the basics of real estate down, there are always opportunities to gain new skills that will help you scale your money, make your operations more efficient, or streamline your business.

Sign up for a training course. Find a mentor. Join a community. Always look for ways to grow your knowledge base and use this to scale your property business.

Also, don’t ever underestimate the power of association. Choose your friends wisely, and surround yourself with like-minded people that are interested in property and finance. This means you can learn from each others’ habits and support each other.

4. Don’t Be Afraid To Take Risks

Every real estate entrepreneur will probably hear the words “What makes you think you can do that?” or “If it’s such a good idea, how come someone else hasn’t done it?” at some point. One of the best pieces of advice that any investor can take from Kiyosaki’s book is to not let doubt cause you not to act.

Analyze, rather than criticize. Acknowledge your doubts and the doubts of others. Conduct due diligence. However, don’t let your own doubts (or the doubts of others) rule you. To quote a time-old cliche: it’s only by doing what others won’t that you’ll get what they don’t.

5. Use Money To Make More Money

Take your property assets, and think of ways to leverage them to help you make more money. Use the power of inertia: When you invest $100,000 in a property and sell it for $112,000, you can use that extra $12,000 to grow your wealth even more — and so on, and so on. By leveraging your money to acquire assets that generate additional income, you can grow and scale a profitable business.

The Pitfalls Of The Rich Dad Poor Dad Approach

Rich Dad Poor Dad has a cult following, and for good reason: there are plenty of great ideas that are discussed in the book. However, there are also some parts that you should take with a grain of salt.

Kiyosaki’s book has come under heavy fire for a number of reasons. Below, we’ve listed some of the biggest drawbacks to be wary of if you’re going to pick up a copy of the book.

It Lacks Actionable Insights (And Pushes Kiyosaki’s Own Agenda)

Rich Dad Poor Dad does a fantastic job in teaching people how to think about work and money. However, when it’s time to get your hands dirty, it’s pretty light on actionable recommendations. In fact, after the success of his book, Kiyosaki went on to launch a series of free classes, followed by a number of paid ones. While there’s no concrete evidence, many critics have said that his book was just a sales tactic for his classes.

On top of that, there have also been widespread speculations that the Rich Dad in the book doesn’t exist — and that Kiyosaki himself never amassed any wealth before he published the book. Despite the fact that his advice might sound good, he himself hasn’t managed to maintain any solid financial health (and has filed for bankruptcy several times).

If you read Rich Dad Poor Dad, view everything Kiyosaki says through the lens of a man who’s sharing financial advice, while also promoting his own products and services. Take what he says as a work of fiction or motivational story, rather than a highly credible non-fiction work.

He Downplays The Level Of Risk Involved

Kiyosaki often talks about the role of fear, and how you shouldn’t let fear hold you back. While this is a great motivation tactic, it also downplays the level of risk involved in investment, particularly over time.

Yes, you absolutely shouldn’t let fear determine your actions. The difference between the rich and many others is that they feel the fear, and do it anyway. However, this doesn’t mean you should blindly pour your money into gold or property without doing your research. Investing is still inherently a risky business, and it’s important to take calculated risks while still ensuring you have enough to tide you over for the future — otherwise you’ll end up broke and homeless, just like Kiyosaki’s character does in the book.

Full-time Business Ownership Isn’t The Only Way Forward

Kiyosaki mentions time and time again that the rich own corporations and create their own businesses to earn income. First up: If you want to be an entrepreneur, go for it.

However, the reality is that today, it’s entirely possible to work for an employer AND have a side hustle at the same time. With the rise of the gig economy and a growing number of courses available online, it’s never been easier to work at a company and earn a stable income while also amassing wealth through other means.

Rentals Aren’t Always The Best Way To Make Money From Property

Rich Dad Poor Dad advocates buying rentals and positively gearing them to make a profit from your property assets. While this is a theoretically valid way of using real estate to make money, it’s not necessarily the most efficient.

This type of method has its limits. It’s hard to positively gear property, plus you tie up a lot of your money in debt for a long period of time. There are also a lot of extra ongoing costs at play. Even if you don’t have a tenant, you still need to pay back your mortgage — plus, unexpected costs can quickly pile up.

In today’s property market, there are more effective ways to grow your wealth through real estate.

A Better Approach For Modern Investors

Like many old school gurus, Kiyosaki does a great job with the fundamentals, but is wildly behind the times when it comes to modern investing methods, especially when it comes to real estate.

There is nothing wrong with slowly building a portfolio of rentals, but there is a tremendous amount of downside that comes along with that methodology, and it paces you in a high debt, high risk scenario for decades. We’ve seen thousands of rental-focused investors crash and burn over the previous two recessions.

In our opinion, the best real estate investing strategy is one that includes high cash flow and looks to grow via volume and increased revenue rather than simply stacking equity while risking your liquidity.

If you want to learn how our founder built one of the biggest real estate investing companies in the US and brings in 50-80 real estate deals every single month, click below to watch the free case study.

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