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IN RICH DAD POOR DAD, author Robert Kiyosaki touts the virtues of owning real estate as a way to reach financial independence. He explains the difference between how his father handled money and invested in his education, versus his friend’s dad, who gained his wealth by investing in businesses.
There’s controversy over whether this is a true tale or just a literary device to explain how to invest in real estate. Either way, there’s a lot to learn from Kiyosaki’s book. One thing I learned: Real estate investing isn’t for everybody. That would include me.
I’ve been aware of real estate’s appeal since Robert Allen’s 1984 book Nothing Down. I would see his late-night infomercials and think, “That’s what I need to do to reach my dream of personal wealth.” I attended free seminars on real estate investing. It all made sense, except for one thing: It didn’t excite me.
At the time, I was renting a studio apartment in Brooklyn. I kept hearing about how all these people were making a killing in real estate. I wanted to be rich. But why would I buy a rental property when I was paying rent myself? Why wouldn’t I buy my own place first?
I’ve owned two pieces of real estate in my life, a condo and my current single-family home. Kiyosaki talks about the joy he feels owning real estate. But I didn’t feel joy buying either home. I decided real estate investing wasn’t for me.
That decision was confirmed by watching reality TV shows about real estate investing. One show stands out in my mind. It was based in South Carolina. The main character was a visionary with money. He could look at a house and see what needed to be done to make the house attractive to potential buyers.
He had a general contractor on his payroll who could tell him how much it would cost to make the necessary changes. Assuming the cost was reasonable, the visionary would buy the property using his real estate broker, who was also on his payroll.
The general contractor would hire quality sub-contractors to do the work. They’d improve whatever needed correcting and fix the house up to be more attractive. This included flooring, roofing, appliances, and painting or vinyl siding. The general contractor would oversee the work and guarantee it was done right. There would be a before and after view. It always impressed me. The visionary’s real estate broker would advertise the house and, of course, it would sell at a handsome profit.
My takeaway from watching the show: I had none of the resources this visionary had. I can’t look at a house and see what needs to be done. I don’t know any general contractors who I can call upon to review a potential buy and tell me the total projected fix-up cost. I don’t have a real estate broker at my disposal who could sell this newly formed real-estate masterpiece. In short, I have neither the resources nor the desire to run a successful house-flipping business.
I’m not saying real estate isn’t a good investment. It is for the right person. But just because someone has made a killing in real estate doesn’t mean we all can. Slick salesmen are skilled at convincing us all that, if we only buy what they’re selling, all our troubles will be over. If it were only that simple. Success is a personal pursuit. It’s not a one-size-fits-all type of activity.
Doing something that’s “not you” probably won’t end well. Instead, stick to your strengths and the things that interest you. That’s more likely to lead you to personal satisfaction and wealth.
David Gartland was born and raised on Long Island, New York, and has lived in central New Jersey since 1987. He earned a bachelor’s degree in math from the State University of New York at Cortland and holds various professional insurance designations. Dave’s property and casualty insurance career with different companies lasted 42 years. He’s been married 36 years, and has a son with special needs. Dave has identified three areas of interest that he focuses on to enjoy retirement: exploring, learning and accomplishing. Pursuing any one of these leads to contentment. Check out Dave’s earlier articles.
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I’ve never understood the appeal of that book. I read it about 25 years ago and recall only platitudes with little actionable advice. It also seems to denigrate the idea of getting a stable job, living within your means, and saving from every paycheck to get wealthy. It may not be sexy, but getting rich slowly is the most fail-safe way to achieve financial independence, in my opinion.
Having said that, we have increased our wealth immensely with real estate by building three new homes, doing much of the work ourselves to save money, and then selling and rolling the proceeds into the next house. We built in desirable neighborhoods and lived in the homes eight to ten years before selling and repeating the process. By the third home, we were mortgage free. I would not recommend this to most people. Acting as your own General Contractor is a big job with lots of headaches and most people do not possess the right skills or temperament.
Entirely agree. The only thing I would like less is owning rental real estate. Moving out of my 33 year old house to an apartment and then a CCRC was a big relief.
I enjoy watching those home rehab shows. They leave me with two emotions — admiration at what the star and his team have accomplished, and horror at the idea of doing it myself.
My other favorites are the one where people are looking for homes somewhere overseas with the help of very appealing local agents — Costa Rica and the Netherlands seem to be the most frequent destinations — and the one where a colorfully tattooed guy helps lottery winners find their dream homes. Definitely more relevant to me, since I am much more likely to win $10 million than I am to successfully rehab and flip a house.
I like investments with no to light touch involvement & minimal transaction costs. That excludes real estate, so I’m with you, David. But I do enjoy home improvement & decorating… just in my own home!
I’m totally with you on the real estate thing David. I also tried the insurance business and was not good at it. But I was good at and liked preparing tax returns. So to your point, it’s important to find your niche and do what you love.
Dan writes: “it’s important to find your niche and do what you love.”
I agree 100%.
We don’t even like having to care for our own shelter.
We have friends who rent rather than having even THAT responsibility.
And we know other people with second homes.
And at least one other couple who enjoy owning multiple pieces of real estate.
I don’t think any of those alternatives are either ‘right’ or ‘wrong’. It all depends on
personality and what you LOVE to do,