Being a Real Estate Industry Insider, probably most of you are familiar with Kiyosaki's Rich Dad, Poor Dad. When I first read it 10 years ago, I was hooked. Real Estate would be the only way out of the rat race.
In 2001, I cashed in my 401K, took a huge hit, and turned the money into a huge windfall. To this day, last I checked about 6 months ago, I had about $200 worth of stock leftover from an old company I used to work for in the late 90's. It's probably worth about $0.20 today.
As I watch the Dow Slide, it pains me to think of everyone who listened to Financial Planners telling us to "Diversify....Invest for the Long Term....Blah Blah blah."
I read Rich Dad's Prophecy many years ago...and if I remember right, his prediction was our country's market was headed for slide in 2010, or something like that...right around when all the baby boomer's (the first string of them) would be starting to be required to PULL their money their retirement accounts.
I took the Prophecy's recommendations to heart, and invested wisely. I didn't buy liabilities (like a $400,000 home that I had to pay for ON MY OWN)...I bought Assets. Items that make me money.
Look's like we might have hit the downturn early...well, not hit it early...but couple our recent turn of events with 2010's coming attractions...I do hope that everyone who was "investing for the long term", is ready for the long term.
I met with a Financial Planner about 6 months ago...the question of the meeting was....why do real estate investors (I'm talking about good/experienced ones, NOT speculators who bought homes in areas going up 25% a year, thinking their bliss would last forever) not buy stocks/mutual funds, etc.
My answers were pretty simple:
1) Leverage. When you buy $100,000 worth of stock...you buy it with $100,000 of your own cash. When I buy real estate...very little of my own cash gets tied up in the house. Hence the ROI in many cases is Infinity.
2) Strike Price. When a stock is selling on the market for $5.32, you get to buy it for $5.32 normally. Unless you are doing insider trading, etc, most people pay the going rate for stocks. In real estate, it is nothing to go out and buy your "stock" at 70 cents on the dollar. Suppose you buy a piece of $100,000 real estate for $75,000 and it takes $4,000 of your money to do so, you received an instant $25,000 of equity for your $4,000. That is soooo sweet. An Instant 600% return in 1 day is like....a Gazillion ROI over a yearly basis.
3) Inflation/Deflation Hedge.
If you think I'm on a roll right now...wait until I get on my soap box about UFF and "mortgage reduction software"...whew.
Anyway, Part II will be coming.