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Comment by satyajit | Hacker News Reader

Whatever you read, just don't read Robert Kiyasaki ("Rich Dad, Poor Dad") series - stay away from the Amway MLM overtones.

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Well, it depends what you are after. Do you actually want to get rich, or do you just want to get a warm fuzzy feeling reading about getting rich? Because if the latter then Rich Dad is exactly what you need.

Why? What advice does he give that isn't genuine?

From what I remember, the book's premise is about using money to make more money and that true wealth is a derivative of investing wisely. Sure, maybe for you this is a no-brainer, but for the average American and perhaps the average hacker this concept can be life-changing.

The guy has never made a cent from anything but MLM and this series of books. The "rich dad" is not a real person, though he still markets it as autobiographical. Much of the specific business advice he gives is 1) provably dumb, 2) unethical, 3) sometimes illegal.

He's built a whole cottage industry around one basic premise- you get rich if you have lots of residual income that doesn't require you to put in proportional hours. If you need a series of 7 books (or even the first one) to teach you that (though I admit the board game is fun on its own merits)... perhaps your not entrepreneur material?

My key takeaway from RDPD was a confidence that getting rich is not as hard as the typical middle class person is often led to believe. His entire attitude towards money is infectious. That alone makes the book worth the read.

Also that fact that it's a very small book, which means the time investment required to read it is very low. I love little books for this reason.

"Rich Dad, Poor Dad" is quite a good book; at any rate, I got useful information about it.

Don't bother with any of the sequels, they're content-free crap.

RDPR isn't really as much about getting rich as it is about being rich. Getting rich requires skill, luck, etc. Being rich requires a different mindset in order to continue being rich. Rich people don't buy fancy cars. They buy things that turn a profit so that they can get fancy cars. That's what RDPD is about. I don't know about the rest of the series of the MLM stuff.

Good advice. Can't believe how many people purport these books as gospel...

I think reality has catched up with a lot of what RDPD is about, namely buying real estate properties and then letting others rent them, when the housing and credit markets crashed. The one good lesson from the book now seems to be that you cannot expect high returns without high risks.

Yeah, real estate is no longer a good investment...people still need a place to live, and rents aren't really down much, and values are WAY down, which would seem to imply that this is a once-in-a-lifetime market opportunity for buyers, but it just seems so risky when you watch the news. Oh, and the overall population of the US continues to grow rapidly, plus the increasing urbanization means that more and more people are living in cities, but that whole real estate things is a house of cards, right? Hmm...and real estate has been making people rich for hundreds of years, but everything has changed now. Right?

Stuff like this is why I'm a contrarian investor.

I just looked into this here out of curiosity. I'm in Vancouver, and for a $300k apt downtown (~550sqft), it's rentable for ~$1300/month minus $200 in strata fees.

So, even if I don't pay anything to a bank for mortgage (i.e. I've just got 300k cash sitting around), I'm looking at ((1300-200)*12)/300000 = 4.4%. With a mortgage, or other incidental expenses, it looks pretty unattractive.

Am I missing something, or are the property values/rental market here just not suitable for rental income?

(Genuinely interested, 'cuz hey, I want passive income as much as the next guy)

1. Real estate is generally more attractive once you add the concept of leverage.

2. Buying single family homes retail and renting them out is typically difficult from a cashflow perspective, especially in desirable urban areas. You might be better to try multifamilies.

3. Many would argue that a wide disparity between the sale price of a property and the ROI for that property if rented has historically been an indication that the price is unsustainably high.

4. In general, investors also look for returns through appreciation, amortization, cashflow, and tax advantages.

5. In spite of all of this, the situation is worse than you imagine. The industry-wide operating expense ratio for real estate is close to 50%, something new investors often have trouble believing. Taxes, insurance, vacancies, management, maintenance, etc. all adds up. A good rule of thumb is to take your gross scheduled rent and divide it in half. This is what you'll have left to pay the mortgage.

There are tons of great books on real estate investing, by people who have built fortunes of millions actually doing it. It's definitely possible, but not easy.

Thanks!

So it does seem unreasonable here because there's not a lot of leverage possibility right now when the mortgage rate >= cap rate? (learned that term today ;) Or at least I'd be depending on other things (like appreciation) for value.

50% operating does sound crazy high, I was thinking strata + tax + a few % for maintenance, but I guess it all adds up.

Any books you specifically recommend?

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