number of oil-drilling operations and oil wells in Texas , Louisiana , and Oklahoma . In 2013 , Kiyosaki invested in three new oil wells with a 10 percent stake . In late 2015 , Kiyosaki amassed a portfolio of 400 privately-controlled oil wells .
Kiyosaki ’ s Real estate investments Kiyosaki is involved in the commercial real estate sector , investing in warehouses , triple net lease and real estate development ventures around the United States . One of his real estate businesses is an apartment business , where he owns over 1400 units of apartment houses . During the subprime mortgage crisis , Kiyosaki invested heavily - having acquired nearly 40 % of his 2015 portfolio of distressed properties during the downturn .
In 2008 , Kiyosaki purchased a 300 unit , $ 17 million apartment complex in Tulsa , Oklahoma . Many of his commercial real estate holdings include luxury and boutique hotels , golf courses , and large apartment complexes . Kiyosaki acquired a $ 46 million Arizona landmark resort with five golf courses that was in foreclosure at a bankruptcy court . In 2011 , he invested in a 2000 unit apartment construction project and earned approximately $ 250,000 in monthly cash flow . In May 2015 , he invested in a 1600 unit apartment complex for $ 80 million USD . In December 2015 , Kiyosaki refinanced a $ 300 million mortgage at 2.5 percent on one of his apartment complex investments . Kiyosaki controls over 10,000 apartment units , producing over one million dollars in cash flow every month .
WHY REAL ESTATE IS THE BEST INVESTMENT
Kiyosaki says in his book ‘ The real book of real estate ’ that real estate is very important at this time for four main reasons :
1 There will always be a real estate market in any economy 2 There are many different ways a person can participate and prosper 3 Real estate gives you control over your investments 4 You must learn investing from real , real estate investors and advisors not financial experts who don ’ t invest themselves
Millenials and money A lot has been written about millennials ’ inability to save and secure their financial future . Millenials are those born roughly between the 1980s and mid- 1990s , and are now entering the world as young professionals and – potentially - as investors . Many are criticising this generation for not being financially stable enough .
Kiyosaki claims that the millennial generation has the opportunity “ to turn their love for experiences into opportunities to grow their financial intelligence and assets . This is not about owning more stuff . It ’ s about securing your financial future to do things you love .” We ’ ve looked at some of his tips for the upcoming generation , and found the following to be relevant to the real estate market .
• Turn your trips into opportunities to get to know the local real estate market and identify potential cash-flowing properties
• Take advantage of sharing economy services like Airbnb and Uber to create income opportunities
When we look at the real estate world , the mindset of abundance or scarcity is equally important and relevant . You either accept your fate , or think proactively . When looking at investment opportunities , there is no shortage of challenges and restrictions and the fact that our economy is weak , properties are expensive , and the market is difficult to get into . Kiyosaki ’ s solution is to use Other People ’ s Money ( OPM ).
Using Other People ’ s Money ( OPM ) Other people ’ s money ( aka OPM ) is a favourite of Kiyosaki . The idea is to find suitable investors for your property venture , thus enabling you to not have to invest much ( or any ) of your own money . While it may seem extreme , the idea of investor-backed ventures is nothing new .
Kiyosaki explains that the secret to getting OPM is choosing properties that are in good areas with solid room for growth . In the South African context , there is no shortage of new upcoming areas . As we ’ ve seen , it ’ s important to buy property that will continue to make you money in the future – Kiyosaki highlights this by emphasising the importance of passive income from property . His formula for making money from property is summarised as follows :
1 Acquire undervalued property 2 Improve the property
3 Raise rents 4 Increase NOI ( Net Operating Income ) 5 Refinance — take out cash , tax-free 6 Reduce taxes by using fundamental accounting principles , of amortization , appreciation , depreciation , and component depreciation .
This is a formula we can see at work in the rapidly developing upcoming areas in South Africa . It ’ s been a contested topic , with some firmly against the redevelopment and refurbishment of neighbourhoods . As Kiyosaki points out , however , it holds great potential – if you can get in on the game early enough .
10 JULY 2017 SA Real Estate Investor www . reimag . co . za