Rich Dad Poor Dad Seminar Review

LC — Fri, 04 Jan 2008 09:01:48 +0000

This was pitch night for the Rich Dad Poor Dad three day seminar, and I decided to take my 17 year old daughter to the free “basic training class.”

Of all the wealth building schemes, I think Robert Kiyosaki’s Rich Dad Poor Dad makes the most sense. Speaking as one who has done several “no money down” deals, one of which has yielded me value of over $20,000,000 in less than 10 years, I believe his simple principles are generally valid.

I counted 100 attendees. The pitchman was friendly, and the presentation was relatively low key. I believe he had at least two shills that I could identify but that’s expected for the Get Rich Quick business. The overriding principles of achieving cash flow in Kiyosaki’s world are:

Opportunity
Knowledge
Action

The seminar, known as the “Rich Dad Poor Dad Academy” is a 3-day affair, and the price (discounted 50% of course for tonight) was $495. He compared it to Robert Allen’s $1,500 and Trump’s $3000. The Academy is purported to 1) present methods of discovering opportunity with reference books and guides, and 2) teach some procedures for buying properties for no money down. Nothing unique here. Carleton Sheets is yawning.

He showed a video example of a young couple who bought a house for no money down, and re-sold it 6 weeks later for a gross profit of about $26,800. Here are the numbers, by memory:

Asking Price $240,000
Purchase Price $210,00
Flip Sales Price $258,000
Gross Profit $48,000

The couple reportedly obtained a hard money loan (individual investor loan) for $210,000. Now, let’s look at the cost of goods sold beyond the purchase price:

-$ 4,200 loan fees (2 pts)

-$9,800Upgrades/remodel

-$1,200 closing costs

Reported net profit $26,800

So, this previously pennyless, young couple living off the husband’s pizza delivery income put $26,800 in their pocket in 6 weeks?

I don’t think so

The fallacy is the hard money loan. NO ONE is going to loan her essentially 95%-100% market value for 2 pts, and I guess that was an interest free loan for 6 weeks? I am always in the private loan business for good circumstances, and for that deal I probably would have nailed her for 5-10 pts. and half the deal. She had to have a partner, being inexperienced and with no cash or collateral. My guess is they got thrown $5,000, maybe even $10,000, which is fine for them, but not $26,000 to them.

I had a little problem with the Rich Dad pitchman’s next topic, himself. Probably LDS like so many of the no money down guru crowd, he said he worked for Robert G. Allen in college, then started flipping houses. That makes sense. But then, he told of us his latest “coup,” an area development agreement for “the ENTIRE states of Maine, New Hampshire, and Vermont” for a Mexican QSR franchise! His reasoning was that the cost was $450,000 per store, and that Qboda and Chipotle both do about $1,450,000 in volume, and that at 1xgross he would be making$1,000,000 per store and that was a “no brainer.”

My ass it’s a no-brainer! I have been a strip mall developer for 30 years and trust me, NO restaurant is a NO BRAINER! 1x gross valuation is accurate, but only on stabilized volumes and it’s highly unlikely that those stores will do those volumes in those areas, even if they are run perfectly. So, the limited credibility he had went out the casa with that one!

Finally, I was watching for conversions. I would guess it was pretty strong, possibly 25%. Do the math. 25 x $500 = $12,500 x 4 seminars = $50,000 gross for our area and that’s a very generous estimate.

For the past three days, you could not turn on the radio or TV without hearing a spot for these seminars, nor could you find a local website without RICH DAD plastered all over it. They used affiliate marketing on the net, and I’m speculating that the deal with Kiyosaki was licensing, not a vertically owned enterprise. It looks like Russ Whitney is involved as well, and he’s got quite a history. If interested in this no money down, get rich quick real estate seminar topic, here’s some recommended reading. I’m guessing there was an easy $25,000 in promotion. That leaves $25,000 left to pay the bills.

$25,000 less

License fees
Pitchman’s cut
Support staff
Hotel meeting room; 4 seminars, 2 hours each, plus a 3 day meeting (includes a lunch)
Materials

My guess is that if the promoters netted $10,000 from this deal they’d be lucky. As repetition is the engine of creating an annuity, one could argue that repeated twenty times a year there’s $200,000 in profit, and that’s probably the case, BUT….wouldn’t it be less risky and much less work to flip eight or ten houses, at $25,000 profit each??

You make the call. Is the Rich Dad Poor Dad 3 day seminar worth $500? Maybe, for some, it could be. I’m a huge proponent of education and training, and have spent that sum and more many times for legitimate seminars and conferences and have never felt like I was ripped. As a frequent speaker at regional and national shopping center seminars and conventions, I want to offer supreme value for the attendees’ time and money and I think we do. If you have no background whatsoever in real estate dealings, it’s probably not a bad deal, and at least Kiyosaki hasn’t gone bankrupt (to my knowledge) like so many of the “mega successful” gurus.

In reality, the “secret” to making money in real estate is no secret at all.

It’s exactly what Kiyosaki says in his original book, Rich Dad, Poor Dad: Opportunity, Knowledge, and Action. Where most people fail is not implementing the 3rd step–not taking action.

Subscribe to LocalCenters.com ,consider attending quality real estate seminars and conferences, and you’ll learn everything you need to know, and then some. Read the articles, ask your questions, even request articles on specific topics, and soon your ability to move forward with your retail or development goals will become greater than 95% of those who don’t invest their time as you are. While we don’t address residential properties to a great degree, the principles are the same as in commercial real estate.

SCAM: Prepaid Rent for Unspecified Use

LC — Thu, 15 Nov 2007 05:45:18 +0000

This was just reported by a victim who had a vacancy problem in an older building. This one can cost you thousands. Here’s the scam:

A prospective tenant offers to lease a low rent building for even lower rent, but offers to prepay for a year. They are firm on an broad use clause that may only stipulate “sales and storage of retail merchandise.” In this case it was a freestanding building, the landlord was desperate for a tenant, and the prepaid rent was attractive. He agreed to the deal for a 1 year lease with a 1 year option to renew. When asked for financials, the tenant agreed to provide them if the option was exercised, but not upon lease execution as the rent would be prepaid for one year. The landlord made his second error by waiving the financials and credit information.

The tenant’s actual business is disposing of items that cannot be easily or legally disposed of elsewhere, such as tires, paint, refrigerators, batteries, computers, and even asbestos. They approach storage yards, small businesses and residences and offer to haul the items away for a very reasonable price, much less than what a hauler licensed to transfer these items to approved disposal sites would charge. The customer, who in many cases does not realize that the liability of improper disposal is attached to them as well, agrees.

The scammer tenant dumps the items in the leased premises. If the landlord inspects the space, he maintains that the items are sold and will be picked up shortly. After the lease year is up the scammer disappears, but the toxic and problematic items remain with the space and the building owner must find a disposal site for them which can be egregiously expensive.

Although any tenant can disappear, pre-qualifying procedures should always include a credit check and financial statement review and verification, regardless of the lease term. A specific use clause should always be included in the lease. Here’s the simple clause we’ve used for years without problems:

ARTICLE 3
USE

Tenant shall use the Premises solely for _______________________

and shall not use or permit the Premises to be used for any other purpose.

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Rich Dad Poor Dad Seminar Review

SCAM: Prepaid Rent for Unspecified Use