The Rich Dad, Poor Dad real estate investing book series (written by Robert Kiyosaki) focuses on getting people to consider whether they aught to be spending money on a particular investment property or not. A successful deal, as expressed by Kiyosaki, is one that will give the investor a return on the investment in a reasonable amount of time. A quality investment is one that isn't a ton of capital outlay, like as repairs, to cut into the money coming in from the rent.
Many people think their house is an asset, but that’s not necessarily the case. Because there is little or no money to be made from most dwellings, most residences are liabilities. It’s for that reason, the loan people get to purchase a house is considered what Robert Kiyosaki calls “bad debt”. There is no cash flow. There is only expense.
“Bad debt” (otherwise known as a liability) is considered undesirable to investors, in particularly because the ownership of your house is an illusion. The homeowner believes that he/she owns a house, simply because he/she is paying for the claim to live in it. On the other hand, if he/she were to neglect payment for that right, the bank would foreclose and he/she would be evicted immediately.
What she actually owns is equity, and home equity is just a bunch of numbers. However, build up sufficient equity and it will become a property deed. Better yet, it will dissolve your “bad debt”.
When you build equity, you decrease “bad” debt. “Bad debt” costs you money. Decreasing your bad debt is good.
The homeowner can decrease this type of “bad debt” in two ways. The most apparent way, of course, is to increase the amount paid on the principal each year, or even monthly, by making more or larger payments. It’s wise to research a head of time, however, that your mortgage doesn't stipulate a penalty for paying early. It’s even smarter for the individual considering a loan, to be sure it doesn't contain such a stipulation prior to signing it in the first place.
Another way to increase equity through decreasing bad debt is by changing a thirty-year mortgage into a 15-year loan through refinancing. This can mean that the homeowner is shelling out less interest in the long run, but forking out more per month. If she can swing it, it’s a great way to increase your equity. Making extra payments will take only 1/2 as much time off the total time to pay the loan as refinancing can.
Reading the Rich Dad, Poor Dad books explains to the reader that it is a good idea to learn as much as possible about the transaction of buying and paying for real estate, because those who can to profit from the buyer's ignorance will typically not reveal information. There are approaches to avoid spending your entire life paying for a single investment property. Considering at the act of buying a home, not as a renter, but as a real estate investor, will demonstrate to you that most people fork out far more money than they have to, simply because they do not know not too. Knowledge is the home owner’s best defense.
![[Valid RSS feed]](http://freearticlepublishing.com/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Category Rss Feed
Print
This Article
Add To Favorites