Saturday, March 04, 2006

Free Robert Kiyosaki Advice: Saga Continues

Bottom Line: I put into perspective the Kiyosaki message conveyed in the two PBS specials as I prefer to interpret and apply them.

It is important to put into perspective the STRATEGY that Robert Kiyosaki preaches in these two PBS specials. His underlying strategy involves the creation of passive streams of income and cash flow management. For this, I respect his STRATEGY. Too few Americans focus on creating passive income streams that can last at or near perpetuity. Instead, many focus on six figure incomes and the expenditure of those hard earned dollars on material objects (I prefer to live frugally).

Kiyosaki also provides invaluable insight on the fact that many traditional investment options are not insurable.

I do recognize that his underlying theme is Real Estate, Real Etate, Real Estate. I respect his ability to market himself. He has picked a good "hook" in that everybody needs a place to live. I do own three houses and believe in his strategy. However, I do not believe in applying the real estate theme to all areas of the country. I also do not believe in applying the passive income strategy to a portfolio limited to houses alone.

I actually look at the value of the underlying commodities involved in addition to land (lumber, cement, roofing materials, etc). I also look at ratios of projected annual rental income to purchase price to ensure yields fall within a range of seven to eleven percent. I also prefer to act as a contrarian. I have managed to stay out of the 50-100% real estate appreciation rate areas (California, D.C., etc.).

While my returns are closer to half of those in the hot areas, i'm not as worried these days about the housing bubble. In my opinion, the underlying commodity prices and rental income yields help set a valuation floor for my properties in the southeast.

My hat is off to those that have banked above average real estate returns from the west coast, northeast and South Florida properties.


Anonymous said...

I see your point...but don't you own property in the Las Vagas area?

Finance Junkie said...

I own two houses in Alabama. One house in Tennessee. None elsewhere.