Real estate mogul Robert Kiyosaki has built an empire of over 7,000 apartment units alongside his wife, Kim. Their success stems from adhering to two key principles: letting employment drive real estate investing decisions and avoiding high-end properties.
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In a recent interview, Kiyosaki revealed how he and Kim have navigated the COVID-19 crisis by sticking to these tried and true guidelines. “Where is the opportunity in real estate today? What is the bright side, if there is a bright side? Where is the opportunity?” he asked.
Here are Kiyosaki’s two real estate investing principles to build wealth.
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Principle #1: Employment Drives Real Estate
“One of the key principles we’ve always followed is that employment drives real estate,” said Kiyosaki. “If you can find a place that is crisis-proof in regards to their jobs and employment, then you need to investigate that area’s real estate opportunities.”
With mass layoffs and many small businesses shuttering due to the pandemic, Kiyosaki warned against investing in locales dependent on hard-hit industries like tourism and oil.
“For example, take Orlando, Florida. Disney World was shut down. Thousands of jobs were gone. Las Vegas, same thing. It was a ghost town,” he explained. “Look at Houston. Oil prices dropped. That’s a problem as they are going to have even higher unemployment than the rest of the nation.”
Instead, Kiyosaki advised scoping out areas resilient to economic shocks. “You take your investment dollars and you go where people are working. If people are moving, then you better move too.”
Principle #2: Avoid High-End Properties
“The second principle is do not go after the high-end properties,” Kiyosaki stated.
He elaborated that luxury properties are most vulnerable during financial crises. “When a crash happens, when a correction happens, the first people that are going to downsize are those in the high-end units and high-end houses. These high-end renters are now going to move into what we call the ‘B class’ properties, middle of the road properties.”
Kiyosaki credited this strategy with retaining tenants. “Where many landlords are concerned about their tenants paying rent, and worse yet, abandoning their apartment, Robert and Kim are in a very good situation. Following this principle has saved them from losing many renters.”
By targeting mid-priced units, the Kiyosakis court renters who still need a place to live if forced to downsize. “People will be forced to downsize but these people still have to have a place to live,” said Kiyosaki.
The Bottom Line
Robert Kiyosaki built his real estate empire by letting employment trends dictate investing decisions and avoiding luxury properties. With the economy in turmoil, these principles offer investors stability through shifting tides.
“If you don’t have the financial education first, then please do not part with your hard-earned money by putting it into something because you just read this ‘hot tip’ or it sounded like a good idea,” Kiyosaki advised. “Get your financial education first.”
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This article originally appeared on GOBankingRates.com: Robert Kiyosaki Says These 2 Real Estate Investing Principles Build Wealth
