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Robert Kiyosaki Why the Rich Get Richer

Robert Kiyosaki, Why the Rich Get Richer

Thinking Big is the Best Plan

by Robert Kiyosaki

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Good (350 Ratings)
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Posted on Monday, July 23, 2007, 12:00AM

Years ago, when I was just starting my real estate investing career, I came across a property with a for-sale sign on it. I called the broker and asked, "What can you tell me about the property, and how much does it cost?"

The broker politely and patiently said, "It's a commercial building with six tenants. There's a chiropractor, a dentist, a hairstylist, an accountant, and a bail bondsman. The price is two million dollars."

Losing Big

I almost choked. "Two million dollars?! That's way too expensive!"

Thirty years ago, $2 million was a lot of money. And instead of looking at the property, I let the price frighten me off. I never looked at the deal, and just assumed that the seller was crazy, greedy, and out of touch with the market.

Today, there's a luxury hotel on the same site. It's spectacular. I estimate the property to be worth at least $150 million, and maybe more.

Cheap Lessons

Not seeing the potential of that deal taught me many lessons. Here are two important ones:

• Sometimes you learn more by being stupid and making mistakes.

• The person with the better plan wins.

In the above example, my plan was just too small. In fact, the only plan I had at the time was to collect the rent money from the tenants, cover my mortgage and expenses, and put a little in my pocket. And 30 years ago, I knew that the rent from six small tenants couldn't possibly pay for a $2 million property.

I later learned that the property's eventual owner bought it for full price -- with terms. He put $50,000 down as an option and asked for 180 days to put the rest of his plan together. During those 180 days, he gathered his investors, a builder, and his tenant, a major hotel chain.

If he hadn't been able to put his plan together, he would've lost his option money. Instead, before the 180 days were up, his investors paid the $2 million in cash, and he spent the next three years getting the project through the city planning commission and finally began construction. He won because he had a better plan.

Mind Expansion

Donald Trump often says to "think big." He definitely does so, but by nature, I don't. My excuse is that I come from a small town in Hawaii. My family wasn't rich, so when it comes to money, I tend to think err on the side of caution. Over time, my thinking has become medium-sized when it comes to spotting opportunities, but I'd still like to think bigger.

One of the reasons I enjoy doing business in New York and having Trump as a partner on different projects is that he makes me do just that -- because if you don't think big in New York, you get kicked out. If I thought small, I wouldn't be on television, cutting book deals with major publishers, or talking in front of tens of thousands of people in arenas like Madison Square Garden.

Currently, I'm working on a real estate project to present to Donald. Consequently, I find myself pushing my thinking, expanding my context, and thinking of luxury, not just price. Even if Donald doesn't like the project and we don't partner on it, just preparing to present the project to him has required me to think bigger and come up with a better plan.

A Blast from the Past

About a year ago, someone called to say that there was a spectacular condominium that had just come up for sale. She wanted to know if I was interested in looking at it. Of course I said, "Yes." I wanted to see what her definition of spectacular was, and trust me -- it was spectacular. She then said, "And the price is only twenty-eight million dollars. But I believe you can pick it up for twenty-four million. At that price, this condo is a steal."

Once again, I heard myself saying what I said so long ago: "That's too expensive." But, as I said, that lesson from 30 years back proved to be priceless: After hearing the think-small person in me comment on the condo price, I took a deep breath and asked myself, "What's my plan?" Then I asked myself, "What's wrong with my plan?"

I didn't buy the condo, but I did come up with a better plan. Over the next few days, I realized that the reason I couldn't afford the condo was because my business was too small. If I wanted to afford such a luxury residence, I needed to come up with a better plan for my business. Today, I'm working harder than ever to improve it -- not because I want the condo, but to be able afford such a condo if I someday decide I want one.

Plan Ahead

In many of my Yahoo! Finance columns, I've written about my concern over the devaluation of the U.S. dollar. As the dollar drops in purchasing power, it often pushes up the prices of real assets -- quality real estate and equities. My fear is that many people may not be able to afford tangible assets and become poorer as the dollar declines. This drop in purchasing power also widens the gap between the rich and everyone else.

One method of staying ahead of rising asset prices and the declining dollar is to think bigger and come up with better plans. As important as financial and business planning is a plan for personal development and self-improvement. I'm often asked to invest in people's business plans, and one of the reasons I turn many of them down is because a big plan requires a big person who's spent time on personal development. In a lot of cases, a business plan is far bigger than the person with the plan -- that is, the dream is bigger than the dreamer.

Today, I'm glad I missed out on that $2 million property all those years ago. The best lesson I learned from it is that I can have a better life if I have a better plan -- and a plan to become better person. So what's your plan?

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110 Comments

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  • Kass - Wednesday, November 14, 2007, 2:43PM ET  Report Abuse

    • Overall: 5/5

    I enjoy reading your articles because I agree. I was actually arguing some of your points the other day to friends and I wanted more information to back it up. Also, your concepts on thinking big is what I needed to hear right now since I'm attempting to start my business. I look fwd to more- Thanks P.S. the guy w/ inappropriate language- can't you articulate yourself better and carry a more intelligent conversation?

  • George - Friday, October 26, 2007, 12:01PM ET  Report Abuse

    • Overall: 5/5

    You are very frank. I like that. And I am thinking very big. Help me with also being very big. George.

  • dompind - Wednesday, October 17, 2007, 3:13PM ET  Report Abuse

    • Overall: 1/5

    Con artist or idiot that is the question. ...i took in a stray dog that knows more about economics than kyosucki....Take a look at the stock market now,Jackass.

  • anjarsb - Saturday, October 6, 2007, 5:40AM ET  Report Abuse

    • Overall: 5/5

    Perfect conclusion

  • Steve - Thursday, September 27, 2007, 5:09PM ET  Report Abuse

    • Overall: 1/5

    For those people who think you have to be on the same mental level as Kiyosaki to understand him, you're really insulting yourself. This guy is a true con artist and idiot, and you'd have to be pretty stupid to buy his advice.

  • DAVID - Friday, September 21, 2007, 10:09PM ET  Report Abuse

    • Overall: 3/5

    All in all a good article. RK is ocaassionally given to being a bit on the superfluous side at times. However he does have his limited moments of humility.Disregard all the John T Reed rantings and just take RK's advice in moderation or balance. Just avoid any drastic actions and the measured actions he espouses might work for you. do your due diligence Nothing is ever as easy as any these guys make it seem at times. Thats all.

  • Yahoo! Finance User - Tuesday, September 18, 2007, 4:25PM ET  Report Abuse

    • Overall: 1/5

    Breathless in its idiocy. I hate to think it, but people can really get hurt listening to this guy.

  • Yahoo! Finance User - Tuesday, September 18, 2007, 8:54AM ET  Report Abuse

    • Overall: 5/5

    Ive done well listening to this man. He is a wizzard at investing and a pretty good writer.

  • Darrell - Tuesday, September 18, 2007, 1:31AM ET  Report Abuse

    • Overall: 3/5

    I think that Robert has a good overall message but you have to think of the fact that his business is all about selling you information. Most real estate millionaires or billionaires do not go to seminars, buy expensive programs or courses. Name one person who is worth 50-100 million dollars buy following these so call called financial gurus. The truly rich and wealthy follows nobody's elses lead but their own. They make their owm path instead of looking for someone to spell it out for them. RK make most of his money by selling you his books and seminars. None of his information gives you a step by step blueprint of getting wealthy. So if you want to think big, you should not be listening to RK in the first place. If you want to be rich you need to read the autobiography's of John D. Rockerfeller, Bill Gates, Paul Getty, Jeff Bezos and the list goes on. All of the books that I just mentioned tell you how they made billions from nothing all within a 10 year span. None of those billionaires ever say anything about getting there wealth by listening to a financial guru. You are what you think.

  • Alijo - Thursday, September 13, 2007, 10:50AM ET  Report Abuse

    • Overall: 5/5

    Always great advise from Robert, but must be in the same mental level to understand him.

  • PortsOCall - Wednesday, August 29, 2007, 12:54PM ET  Report Abuse

    • Overall: 5/5

    About 8 years ago I met my own "rich dad". He has become a very good friend and mentor. He owns about 3000 units of apartments and about as many hotel rooms. He has helped me make many real estate investments of my own. I enjoy reading Roberts articles, because they sound so much like my own "rich dad". Robert often makes things seem simple and they are, but the reality of putting them into practice is often scary and many people avoid it. But I can tell you, he's right! I've listened to Robert and my own "Rich Dad" and have done very well for myself with commercial real estate. And the time is right for Commercial Real Estate to take off!

  • RobM - Wednesday, August 22, 2007, 2:09AM ET  Report Abuse

    • Overall: 5/5

    It's like a train wreck you can t help but look. Fundamentally thinking big helps, I've done and have made lots of money in real estate. The $2 million dollar lesson RK is talking about is possible but the guy that put up the $50 k option and put together a team etc and put it through the city, that is not advice for the average RK book reader/RE "investor", that takes a professional real estate developer. To get a $28m condo seems stupid no matter how much you have. He says he has to build his "business" more to get it. I guess that means more books on KCET and Amway functions.... Go Bob

  • Insane Wayne - Tuesday, August 21, 2007, 4:19PM ET  Report Abuse

    • Overall: 1/5

    Robert Kiyosaki is preying on you fools! Preying!

  • Yahoo! Finance User - Monday, August 20, 2007, 1:00PM ET  Report Abuse

    • Overall: 1/5

    Does this goes guy really buy his own writings or is just trying to cash in on the ignorant?

  • Jessicas - Saturday, August 18, 2007, 9:21AM ET  Report Abuse

    • Overall: 5/5

    Its not surprising to read the comments and see just how many of you readers miss the point and keep missing the point! Thats ok, continue your ways with your middle class mentality and someday wonder where the middle class went. It just leaves more opportunities for investors like me.

  • Myles - Saturday, August 18, 2007, 2:15AM ET  Report Abuse

    • Overall: 5/5

    Robert's Columns' always expands my thinking. I may not always agree but I am challenged by his perspectives. I appreciate you having his columns.

  • Ralphy - Friday, August 17, 2007, 11:05PM ET  Report Abuse

    • Overall: 1/5

    I didn't realize they allowed the mildly retarded to write columns for yahoo finance.

  • Jeff - Friday, August 17, 2007, 5:59PM ET  Report Abuse

    • Overall: 1/5

    why hasn't this guy come out with a column in a while? I need a good laugh. Has yahoo finally kicked him off?

  • LanceM - Friday, August 17, 2007, 11:30AM ET  Report Abuse

    • Overall: 1/5

    This is a weak, insecure man. Why does Yahoo give him a forum to peddle his junk? Its entertaining to read the five stars, yet also sad in a way. Good luck all of you koolaide drinkers.

  • Yahoo! Finance User - Friday, August 17, 2007, 12:44AM ET  Report Abuse

    • Overall: 2/5

    good thought, but disgusting style by kissing Trump (he's not popular).

  • charlotteboy - Thursday, August 16, 2007, 3:23PM ET  Report Abuse

    • Overall: 1/5

    FOOL

  • Chris - Thursday, August 16, 2007, 1:09PM ET  Report Abuse

    • Overall: 1/5

    RKs big thinking strategies involve taking on huge leveraged debt in the hope of getting huge returns. Buying rental property for so much money that the rent barely covers the mortgage and then relying on appreciation is one such strategy. So is starting any business. So is margin trading in the stock market. So is playing blackjack! You can win at any of these strategies if you are an exceptional expert and work 100 hrs a week on it. But in the end, it is high stakes gambling and 1 out of 10 people become millionaires while 9 out of 10 go broke. If you are so desperate for material luxury that those odds are acceptable, then go for it. Work 100 hour weeks for the rest of your life just to improve your gambling odds. If financial flexibility and freedom are more important to you, build your professional career. Unfortunately most of RKs readers are financially desperate and RK encourages them to go for longshots instead of perhaps going to college! If they do not succeed then it is because they did not buy enough of his books!

  • Yahoo! Finance User - Wednesday, August 15, 2007, 1:41PM ET  Report Abuse

    • Overall: 5/5

    We all need a reminder now and then to think bigger. Thank you Robert. Keep up the excellent work.

  • Dan - Tuesday, August 14, 2007, 2:34PM ET  Report Abuse

    • Overall: 1/5

    Came here hoping for a new article from bobby. He's always good for a laugh. Did Yahoo finally can this guy?

  • sevenedge - Tuesday, August 14, 2007, 11:29AM ET  Report Abuse

    • Overall: 2/5

    Not one of the stronger articles I've read by this author. Overall, you can read his book and get the same info if you want it all at once. I still enjoy this column; I just think it is out of touch with the financial capacity of the average reader. the condo scenario is nice, but 99.9% of people lack the training or insight to duplicate that process. Who even has 50k to put down with such a high risk? Most Americans have trouble with the earnest money for their loan...much less a 20k down payment. I suppose, then, that we are to derive the meaning the author means to convey, but that has a limited overall effect on the average reader. I feel like this is catering to the financial elite, which I am certainly not. Nonetheless, I enjoy other's insight, even if the experiences are not anything I will ever be living.

  • Jonathan - Tuesday, August 14, 2007, 10:38AM ET  Report Abuse

    • Overall: 5/5

    This is a good column, and RK's columns dovetail very well with the rest of the writers on Yahoo Finance. Of course, it's not meant to be a concrete column with specifics. It's abstract and gets you to think. Sure it's a cliche, but you've gotta change the way you think if you want to really make money. RK, keep em coming!

  • Yahoo! Finance User - Tuesday, August 14, 2007, 10:29AM ET  Report Abuse

    • Overall: 2/5

    Hopefully RK has been permanently ousted like they do on The View. I put Rosie O' and Bobby in the same category. They consistently alternate between 'Hey, look at me!' and utter irrelevance.

  • Yahoo! Finance User - Monday, August 13, 2007, 3:39PM ET  Report Abuse

    • Overall: 5/5

    excellent article. i went thru the same process last week. The stories he told acutally happened to me and many members of my family.

  • Yahoo! Finance User - Monday, August 13, 2007, 12:25PM ET  Report Abuse

    • Overall: 1/5

    Is this guy's time done on Yahoo? We haven't seen a new article from RK in a while.

  • Yahoo! Finance User - Monday, August 13, 2007, 3:01AM ET  Report Abuse

    • Overall: 3/5

    This article seems a little basic. But I just think he's reminding people of the fundamentals of getting wealthy. Self made wealthy people get there by thinking big. The haters out there that complain that he never gives specific instructions just want to be spoon-fed instead of actually educating themselves so that they don't have to waste time pissin' & moanin'. They's be able to think for themselves!! Watta concept!!

Showing comments 6-35 of 110<< PreviousNext >>
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