Robert Kiyosaki (79), author of the world-renowned financial advice book ‘Rich Dad Poor Dad’, is trapped under a massive debt of nearly 1.2 billion USD against his extensive real estate investments. However, he does not view this huge debt as a failure; instead, he frequently promotes his debt, claiming that using leverage (debt) is an effective strategy to build income-generating assets just like the rich do.
Recently, on a podcast titled ‘Get Rich Education’, Kiyosaki himself mentioned his debt, stating, “I am in about $1.2 billion in debt.” However, advising ordinary people not to follow his path blindly without proper financial education, he said, “I have studied this extensively since 1974. So if you want to use debt as a tool, it is crucial to get the right education first.”
Meanwhile, in an interview with the magazine ‘Vanity Fair’, Kiyosaki’s ex-wife and business partner, Kim Kiyosaki, stated that there is a widespread misunderstanding among the general public regarding this $1.2 billion debt. This massive debt is not Kiyosaki’s single or personal liability; rather, it exists against nearly 1,500 apartments and housing projects held under joint ownership with partners. Kim shared that Kiyosaki often mentions this large figure to grab people’s attention with shocking information and then goes on to explain why investment-based debt is good.
According to the Vanity Fair report, Kiyosaki’s debt is essentially a part of his specific investment strategy. When the value of his purchased real estate properties increases, he takes out additional bank loans against that increased equity and uses that money as tax-free income for subsequent investments. Furthermore, to safeguard against potential financial disasters, he places each investment under a separate Limited Liability Company (LLC) so that even if one entity suffers damage, the others remain protected. In Kiyosaki’s words, “If things go bad, you can talk to my lawyer. This is how the rich operate businesses by creating firewalls or protection systems.” According to the magazine’s estimates, for Kiyosaki, who earns around $3 million annually, his personal share of the debt could be approximately between $30 million and $60 million.
Real estate and financial experts have expressed mixed reactions regarding Kiyosaki’s strategy. David A. Perez, founder of the tax advisory firm ‘Tax Maverick AI’, supported this strategy, saying that having large amounts of debt in real estate assets is very normal and is a fantastic way to save on taxes. However, as a result, the burden of mortgage installments and interest increases, carrying the risk of reduced cash flow.
On the other hand, John Poole, founder of the financial advisory firm ‘JPTD Partners’, sounded a warning note. He said that while debt can be good, it can also become a cause for danger. However, in the case of a $1.2 billion debt, the individual concerned needs to be extremely skilled and cautious. He commented, “Debt yields excellent results when property values are rising. But when the market flips in the opposite direction, it brings serious financial disaster. Kiyosaki may call it ‘rich debt,’ but if an ordinary investor isn’t careful, they can go bankrupt very quickly.”
It is worth noting that Robert Kiyosaki first self-published the book ‘Rich Dad Poor Dad’ in 1997, which later created a massive sensation worldwide and sold over 44 million copies. In the book, he draws a comparative picture between the conventional mindset of his biological father and educator, Ralph Kiyosaki (‘Poor Dad’), and the practical wealth-building strategies of his friend’s father and established hotel businessman, Richard Kimi (‘Rich Dad’). Kiyosaki, who built a successful corporate empire based on financial education, also co-authored two books with Donald Trump in 2006, including ‘Why We Want You to Be Rich’.
