­

John T. Reed' analysis of Robert T. Kiyosaki' book Rich Dad, Poor Dad 2 How much money does Kiyosaki have? A number of people have accused me of being jealous of Kiyosaki"”I guess because they think he has more money than I have. Others have said they are going to follow him because he is fabulously wealthy and that' what they want to be. How do we know this? I know approximately what my net worth is. But I have no idea of what Robert Kiyosaki' net worth is. Neither does anyone else. He implies he has money. He has had four books about how to get rich on the business best seller list. He brags about owning a Porsche, Mercedes, Rolex watch, $400 golf club. The Honolulu Star Bulletin"”the newspaper where Kiyosaki grew up"”wrote a puff piece about him. You can see it at https://starbulletin.com/2000/07/10/features/story1.html. In it, Kiyosaki says a number of things that imply he is rich. For example, "I"m free to do exactly what I want, when I want, where I want. I can stop working if I want to. Money buys me freedom." The article says "Kiyosaki' got his"¦" and that he lives in a $3.5 million dollar home in Phoenix. A real-estate broker visitor to this site ran a computer search on Kiyosaki and said Kiyosaki owned two properties in Maricopa County, AZ (Phoenix). The assessor' records (https://www.maricopa.gov/Assessor/ParcelApplication/Detail.aspx?ID=164-14-005) showed a purchase price (10/6/99) of $1.2 million and a "full cash value" of $980,000 on his residence, 62 Biltmore Estates Circle, Phoenix, AZ 85016. Neither value is any slouch, but it ain"t $3.5 million. A visitor to this Web site who lives in Phoenix said Kiyosaki spent a lot of money on improvements finishing around April, 2002. A caller in July of 2003 said the house was worth about $2.5 to $3 million then. The other property (a five-room house built in 1979, 2,300 square feet, 1809 East Lane Avenue, Phoenix, AZ 85020) had a current "full cash value" of $171,500. He purchased that 8/8/91. It was the house he moved out of when he bought the Biltmore Estates house. A visit to the Maricopa County Recorders Web site shows that he bought the Biltmore home from an odd home seller"”the National Model Railroad Association. You can see at the Web site that the down payment was originally $23,000, but that was

crossed out and $300,000 was written in. The recording number from the assessor' records is 990929308 10/6/99. My search of the Maricopa County recorders office by Internet found a bunch of documents related to Kiyosaki. You can see that list at Below are some deeds to Kiyosaki. I do not know Phoenix real estate so I would be interested in hearing from anyone who is familiar with these properties who can interpret whether they support or refute the notion that Kiyosaki is a big success. https://recorder.maricopa.gov/recdocdata/Frame.asp? I once investigated best-selling real-estate author Robert Allen who wrote Nothing Down. At first, he claimed to own his home. But when I checked the address which appeared on IRS liens filed against him, it was nonexistent"”no house at that address. When I again asked where he owned his home, he admitted, "I rent." I have the conversation on tape. One of my MBA classmates, Paul Bilzerian, became a very successful corporate raider for a time. He stood silent while others claimed he was a wiz who had made $150 million in Florida real estate before age 30. I called him up to ask if that were true. He said I should read the article in the Wall Street Journal carefully. Indeed, it said he was "reported" to have made that much and all Paul would say in the article was, "That' a good guess." In other words, Paul was pointing out to me that it was not he who said he had made all that money. Paul subsequently was the subject of a Forbes story. They said they investigated his purported Florida real-estate profits and could not find a "trace" of him in Florida real estate. He later got into trouble with the law and was the subject of a 60 Minutes segment about his mansion in Florida that creditors could not get to after he declared bankruptcy. According to the Honolulu Star-Bulletin, "Kiyosaki won"t say how much he is worth or in what he' invested." Kiyosaki claims, "I own companies. I"m a major shareholder in oil and mining companies, plus real estate companies. I have intellectual property companies." But he won"t identify any of them. Why? As you will read below, one of my readers checked Kiyosaki' claim that he was a major shareholder out in a securities industry data base and found not a trace of him in spite of the fact that major shareholders are required by law to be identified. If he is a "major" shareholder, it is in minor corporations so small that their shares are not traded publicly. Kiyosaki says, "I keep my holdings private. You know why that is? Lawsuits. If you have money, you get sued." Let me get this straight. Kiyosaki says he is rich, that he "makes millions of dollars," and is about as high profile about his wealth as you can get about it"”best-selling how-to-get-rich books, appearances on TV shows like Oprah, interviews to daily papers and national magazines. Yet he won"t disclose any details because he doesn"t want people to know he has money. Huh? Not only is the guy a B.S. artist, he insults our intelligence. Somebody needs to give Kiyosaki a book on how to be low profile. I"m sure it has a chapter that says going on Oprah to discuss your best-selling book on getting rich is not a good way to prevent would-be litigants from knowing you have money. Kiyosaki is, in fact, shouting from the rooftops that he has money. He just refuses to prove it. Or to let us investigate how he got it if he does have it. I have always felt that implying you have money was worse than revealing your net worth. When I was in grad school, I took a labor relations course where actual union leaders were in every other seat with us MBAs. One said that one of the things they love about employers is when they keep earnings secret. That allows the union to tell the employees that the company is "getting rich on their backs." That, in turn, causes the employees to vote for the union. Kiyosaki' implying he is wealthy, but refusing to disclose how wealthy, will almost certainly cause would-be litigants and others to overestimate his net worth, thereby increasing the chances of his being sued over what they would be if he were more forthcoming. Many small businesspeople adopt grandiose company names, like Pritchco Interplanetary, that make them sound much larger than they really are. I tell my readers not to do that because such names encourage lawsuits. I encourage small real-estate investors to use their own name, because people are more inclined to sue big-sounding corporations than an individual. I suspect the real reason Kiyosaki refuses to disclose any evidence of his purported wealth is either "¢ It is much smaller than his followers imagine "¢ He did not get it the way he implies"”for example, his wealth may come almost entirely from telling people how to get wealthy and he may not have been wealthy himself until he told people how to get wealthy "¢ He achieved wealth in an unethical or illegal way "¢ All of the above For the record, I created another page to address the jealousy issue. Click here to see it. On 1/14/02, a reader told me Kiyosaki was more forthcoming about his wealth at https://www.thestreet.com/funds/meetthestreet/10006507.html. Indeed, in an interview at that Web site, he says his net worth is "between $50,000,000 and $100,000,000 depending on the day." (I don"t believe that. He also says he was bankrupt and homeless in 1985. More about that later.) So which is it"”Kiyosaki will not talk about his wealth because he doesn"t want to be sued or he will give figures, locations of his properties, and the nature of his corporations as he does in the Meet the Street interview? What happened to the lawsuit threat? There were a number of points in that Meet the Street interview that deserve a response Kiyosaki said Reed comment avoid mutual funds and 401(k)s because they are too risky Mutual funds vary in their risk. Some are very low risk. 401(k)s have tax benefits that are hard to ignore. Also, you can invest them in almost anything you want in many cases. Bogus gurus like to give extremely simple rules. Ignorant readers love them. That' fine when the subject permits. But this is an extremely simple rule that is not valid because of the complexity of the subject. says his net worth is "$50 million to $100 million depending on the day" I don"t believe that. He was bankrupt and homeless in 1985 by his own admission. Although a lawyer who searched the federal case management system on line says he could find no bankruptcy filing for Kiyosaki. He claims to have sold 13 million books. I don"t know if I believe that either. The highly successful book What Color is Your Parachute? has only sold seven million copies since it first came out in 1970. But even if you accept the 11 million figure, Kiyosaki' co-author royalty would appear to be about 72¢"”not enough to get you anywhere near $50 million even if you had no living expenses. He claims to make money in other businesses, but will not disclose enough detail that anyone can check that. Also, what' this "depending on the day" nonsense? I presume that' a shameless effort to impress people who are really ignorant about the world of finance. What he is saying is that his net worth doubles or halves within 24 hours. He implies that causes him not the least bit concern. Gimme a break! If my net worth dropped in half in one day, I would be pretty upset about it. What must he be invested in to enable his net worth to double or halve in 24 hours? Pork belly futures? No one in his right mind would invest his entire net worth in an investment vehicle that could double or halve in 24 hours. In the 2/03 Smart Money magazine article, he said his net worth was $35 million. Must have been a really bad day in pork belly futures. Actually, his book selling success notwithstanding, I would guess his net worth is more like $3 million, virtually all of it from book and related sales. the investments of the wealthy are managed well Laymen think that. I don"t. The main thing in managing an investment is stock picking. That is impossible to do well on purpose. It' a crap shoot. If anybody ever figured it out, he would not need to work"”for the wealthy or anyone else. There have been numerous studies proving this, most notably the classic book, a Random Walk Down Wall Street by Burton G. Malkiel. The wealthy do get good advice on legal implications of their portfolios, but not on how to earn a high return. The notion that anyone gets good advice on how to earn a high return in securities is a laymen' myth. says he was able to retire at 47 So why didn"t he? He hustling his butt off to sell stuff. there are three different types of income: earned, portfolio, and passive This is primarily an income-tax-rate distinction as Kiyosaki explains it. He says these types of income are taxed at 50%, 20%, and 0% respectively. The phrases "passive income" and "portfolio income" do appear in the Internal Revenue Code. I have used "earned income" to describe money you make from your salary or business. In fact, Kiyosaki is spouting nonsense. The federal income tax rates on earned income, passive income, and portfolio income are the same"”not 50%"”but your overall rate can get to that level when you add state income taxes. The distinction between the different types of income involves whether the losses from one category can be deducted from income of another category. The 20% tax rate of which Kiyosaki speaks only applies to long-term capital gains. Those come from selling assets at a profit after holding them for a specified number of months. You can have such 20% -tax-rate gains in both the passive and portfolio categories. The only income that is taxed at a 0% rate are special things like municipal bonds and gains of less than $250,000 per person from the sale of certain personal residences. It is possible to do transactions where there is no tax due at present, like IRC §1031 exchanges, but the tax-free nature of such transactions stems from the fact that you received no income. Rather you put the proceeds from the sale of one property into the purchase of another. If and when you eventually take out your profit, you will be taxed on the gain that you had when you exchanged. I own 10 rental buildings in Miami, Austin, and Phoenix. Most investors use more specific terminology like "apartment complex" or "office building" or "shopping center." Investors usually use the phrase "rental building" to hide the fact that their properties are mere rental houses. You should not own rental property in three states unless you have a specific reason for doing so. Why not own all ten rental properties in Phoenix, where he lives? With Kiyosaki, I suspect he think having property in three states makes him sound like more of a tycoon. To experienced investors, it makes him sound like more of a dilettante. You want the property in the same region"”preferably where you live"”so you can use the same people to work on all the properties and save on air fares, hotels, and so forth. One reader said investing in three different regions gives you diversification benefits. Only against regional economic downturns and possibly rent control if the buildings are bigger than one family. But rent control risk is better dealt with by staying out of multifamily and states that do not have a rent-control pre-emption. The risk of regional economic downturns is not great enough to overcome the disadvantages of spreading yourself that thin in terms of travel, personnel, need to learn different laws and markets, etc. If the advice of "Rich Dad" back in 1955 was so great, how come Kiyosaki was homeless and bankrupt 30 years later? What kind of financial genius does it take to be homeless and bankrupt when you are a college graduate who had no student loans and were trained as a helicopter pilot by the military. (Actually, I got his military records. They show no flight school and no pilot' wings. See below.) With all those advantages, and "Rich Dad'" brilliant financial advice, the guy still ends up homeless at age 38? And if "Rich Dad'" advice wasn"t good enough to keep Kiyosaki from becoming homeless in 1985, how did it suddenly become something the rest of us should be following in 1997? I suspect Kiyosaki has done well from his books with the help of Oprah and Amway et al. A reader who refused to let me use his name said he attended an Amway meeting where Kiyosaki spoke and that Kiyosaki said his book was unknown until an Amway "Diamond Distributor" started buying it in quantity. He further staid that Kiyosaki urged the audience to focus on their Amway distribution business, not on buying duplexes and such. If anyone who will let me quote them can confirm this, I would like to hear from them. I further suspect that his secrecy has nothing to do with avoiding attracting lawsuits and everything to do with preventing the public from finding out how much he really made and how he made it. Clever life plan? Kiyosaki would have us believe that he followed a coherent life plan laid out with the help of "rich dad." He says he went to the U.S. Merchant Marine Academy because he wanted to learn international business. People who want to learn international business while in college should go overseas to school, like to the London School of Economics or to a U.S. college with a strong international business or international relations department. The U.S. Merchant Marine Academy is a grueling ordeal that prepares its students to operate oceangoing ships. Going there to study international business is like studying construction and building maintenance to become a school teacher because teachers work in buildings. Upon reading that Kiyosaki went to the Merchant Marine Academy, I figured his real reason was probably the same as many other Merchant Marine Academy graduates"”he applied to a major service academy and got rejected. After all, the major service academies are more prestigious and students pay no tuition and actually receive a salary to attend. You have to pay for a small percentage of your expenses at the Merchant Marine Academy. A 1986 Merchant Marine Academy graduate tells me that about half of the students there were rejected by Annapolis or another major service academy. He said the other half wanted careers on oceangoing ships.

Log in to comment
­