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