Rich Dad Poor Dad is a cornerstone resource for the modern property investor and is synonymous with its author and financial businessman Robert Kiyosaki. Recently attending a free Rich Dad Poor Dad seminar, I was introduced to a three day course run by UK based Legacy Alliance Education.
I decided to attend this course. If you Google “Rich Dad Poor Dad courses” you’ll come across a number of positive and negative reviews. Here, I’ll share what I learned over three days and help you decide whether it’s worth your time and money.
Just a note: I am not nor claim to be a property or investment expert. What I share below is what I learnt over the 3 day course. It aims to give insight so that you are equipped to make your own decision on whether this course is right for you.
Highlights of the Rich Dad Poor Dad Course
July 21-July 23 2017, Melbourne
Mindset and Your ‘Why’
Property is all about people. Surviving the ups and downs of property requires the right mindset in order to overcome any trough of sorrow. For more on adopting a positive mindset, you can read my post here.
Introduced was Kiyosaki’s EBSI concept (see below) which explains that to be successful, we need to rid of the scarcity mindset and move towards abundance. That is, “you must unlearn what you have learned” to move from stages E, S or B towards I (Investor).
Employed throughout the three days was also discussion of the presenters ‘why’ – why they got into property investment. Their whys included family and giving back to the community.
Leverage other people’s resources; time, money, skills and location. Leveraging successfully involves adopting Kiyosaki’s 7 Rules of Buying which was carried throughout the course:
- Always make money in the Buy; that is, buy under market value and add value
- Add value
- Have multiple exit strategies (recommended to have at least 2)
- Be Legal
- Make Offers
- Have Integrity
- Trust in the Power of Your Team (Legacy’s Power Team – will be explained further)
Number Crunching Time!
Teaching some of the Rich Dad Poor Dad calculations was a crucial part of the training, in order to develop the ability spot a ‘good deal’. These formulas included:
Cashflow: Net rent – Mortgage Payment (note cashflow can be negative (-) or positive (+))
Determining cashflow includes management fees and MOE (Monthly Operating Expenses). For calculation purposes they were assumed at 10% of monthly rent. Examples include: insurance, body corporate, repair costs, legal fees etc..
ROI (Return on Investment):
Australian Market Conditions
Take note that although Legacy do explore Australian Market conditions, the premise of the Rich Dad Poor Dad training is to invest in the UK or New Zealand. This is due their familiarity of the market conditions and tax and lending conditions.
When considering this course in another country, be mindful that focus will be on that country or other related markets.
“Success does not come in the money you make, it’s the money you keep.”
Melbourne property yields are low, due to current stabilisation of the Australian market. There is an oversupply of property (high build rates) however slowing demand.
Tools Recommended for research:
Finding a 10% deposit locks out a lot of buyers in the Australian market, particularly millennials. Obtaining funds from institutional and private sources was briefly explored, with focus on creative or crazy financing.
Funding through an expansion of credit (credit cards) whilst reducing fees and interest rates via 0% balance transfer schemes was endorsed for investment. How to pay it back?
- Selling following value add
- Cash equity
“The quality of your network is the amount of your net worth”.
Towards the middle of the 3 days, exploration of investment strategy took place. Here passive or active approaches were examined:
Active: Is a flip strategy whereby property is purchased under market value, value is added (renovation) and then sold for profit. Buy and flips were recommended to have at least $30,000 within the deal as a minimum starting point.
Creating a pot of cash: Building a hybrid portfolio which includes a number of ongoing flip properties and a passive income property. (Ie. 3 flip properties on the go and 1 reserved just receiving rent)
Passive: based off different property types: buy to let (BLT), multi let, home of multiple occupants (HMO) or commercial property. Each property type has their own return, the higher the return the initial investment required.
“Buy average houses for everyday people”.
UK/ New Zealand
The last day included analysis of lending and tax laws and conditions in the UK and New Zealand. In summary, reasons for investment in the UK/New Zealand over Australia is due to:
- Australian lending is based on the person’s cashflow (income in relation to borrowings), where as in the UK lending is based on the person’s cashflow (income of at least £25,000) and of the property (100-125% positive cashflow (rent) in relation to borrowings)
- Australian taxation (stamp duty, company tax rates, capital gains tax). New Zealand only has income and GST taxes.
- Lower yields in Australia due to high supply
“(Be) Fearful when others are greedy and greedy when others are fearful.” – Warren Buffet
While the Rich Dad Poor Dad course was useful; sprinkled throughout the three days were remarks of a mentorship program. Interested mentees would pay $35,000-$62,500 AUD for a further 3 day intensive, 30 day mentorship and lifetime support within Legacy.
Each topic explored covered a level of detail but at a certain point would end with “this will be covered more in the mentorship”. Furthermore it was on Day 3 that the prices of the mentorship were given along with the recommended deposit of $50,000 AUD to start the program.
Is it Worth it?
Exploring some of the high level detail on the Rich Dad Poor Dad course above, is it worth your time and large financial investment?
- High level introduction to lending and property
- Calculating cash flow, yield and ROI
- Ability to bounce ideas or questions off experienced investors – who are the mentors and presenters
- Examples of ‘good deals’
- Some interactive activities
- Networking opportunities
- Discussion beyond property- people’s whys, mindset, negotiation
- Financial investment – Initial cost of 3 day course, followed by $35-$63K investment in mentorship
- Course was not clearly outlined on day 1 – no syllabus or agenda
- Unused course materials
- Very long days (9am – 7pm average) with improper breaks and insufficient interactive activities
- Mentorship cost and starting position of $50K was not mentioned until day 3
- Continually plugging of mentorship program – the 3 day course itself did not promote self investment Eg. sourcing property under market value is key to this model, however how to source under market value properties is not taught.
- Presenters spend too long talking about themselves and how marvellous their lives are
Unless you have a spare $90,000 lying around there is limited value in attending the 3 day Rich Dad Poor Dad course. This is the same for pursuit of the mentorship program.
Whilst there is value in obtaining investment knowledge in the 3 day course, the free 1 hour seminar produces plenty of wisdom nuggets and forms a good starting point.
I chose to not buy the mentorship program purely due to a different why – money is not my main determinant of my why. I’d definitely give credits to the Legacy team for seamlessly employing Oren Klaff’s ‘Pitch Anything‘ techniques such as scarcity and emotional levers to get people to buy.
In terms of value for money and time (16 hours over 3 days), reading Rich Dad Poor Dad and Cashflow Quadrant would be as equally as useful in conjunction to personal research if property investment is the next path in your reinvention.