Controversy and Mortgages

August 25, 2006 Posted by Tyler Cruz

Good news folks. I’ve had so many things to talk about lately, and some of the topics have taken up so much length such as today’s post, that I’ve had to split them up into sections. So, expect a new blog update every couple days for a while :)

  • Kiyosaki Controversy
  • BannerAgora
  • Mortgage

Kiyosaki Controversy

I few days ago I woke up early from some noise outside and for some reason decided that it was a good time to start reading Rich Dad, Poor Dad.

I had been eagerly awaiting to start reading the book that everyone’s been talking about. The only reason I didn’t start sooner was that I had been too busy (lazy) with work (games).

I read the introduction by the co-author before taking a nap. The introduction was definitely interesting and I couldn’t wait to continue on.

The next day I was up at 2 a.m. and couldn’t sleep, so I went back to RDPD. I kept reading straight until 5:30 in the morning. I would have kept reading but I was pretty tired at that point and didn’t want to read and then forget what I had learned. When I read, I read very slowly, partly because I have to – I need full attention and often have to re-read sentences multiple times before I fully understand it, and so I really engage whatever I read with full attention and an open mind and didn’t want to lose any of the focus.

As I write this, I still haven’t read since yesterday. I’m still only half-way done the book so I can’t give a real review of the book yet. However, from what I’ve read so far I can say that I love it. Kiyosaki’s ideas go against traditional thinking: studying hard, finding a good job, and working hard for a promotion is what the poor and middle class do according to the Hawaiian-born retiree.

His main idea of getting rich is to simply understand the real difference between an asset and a liability, and to only acquire assets. Sounds overly simplistic right? Well, that’s exactly what he advocates and says it really is that simple and that the older educated generation has a hard time beliving it because they were educated under a much older and different schoolastic schema.

I won’t go on summarizing his book, partly so you’ll buy it and read it for yourselves, and partly because I need to get on with this story.

After reading half of the book, getting to the part where he explains how your home is actually a liability and not an asset, unlike most people (including accountants, bankers, etc.) state. And it makes sense. JohnChow explains this in his latest post. I think it’s an asset only if you make money on it and sell it for a good profit (a profit which superceeds the interest you paid out). And you’re not renting it out because that’d be a property and not the home you live in (unless you are renting out a suite).

Anyhow, I was pondering on that and just generally thinking about the ideas in the book. It’s accompanied by a story of Kiyosaki as he grows up and learns from his “Rich Dad” which flows along with the lessons he teaches. I decided, last night, to do a Google on him and learn a bit more about him. I was just curious in seeing his website and finding out abit more personal stuff about him. Unfortunately, I came across a site which totally flames him.

The site is written by John T Reed who apparantly is a fairy big name in the real estate and investment world. He has also written a number of books. On his site he completely and relentlessly attacks Kiyosaki.

This made me very sad. I was really enjoying Kiyosaki and wanted to believe his teachings. I felt like I wasted my time reading his book. However, as I read an insanely long page that Reed wrote on Kiyosaki, Reed’s criticism had less and less importance to me. He started making really lame claims and critiques; I could spot a bunch that he was incorrect on or nitpicking, and I’m by no means a scholar or literary master.

As the site goes on, he also gets less and less professional and more and starts to sound more like a whiney kid. Nevertheless, he does have a ton of information there and I hate to believe it but I wouldn’t be surprised if some of it were true.

One of the main things Reed accuses Kiyosaki of is that the “Rich Dad” wasn’t real at all, but used as a literary device to help sell the book. I hope he’s wrong, but now I can’t stop but wonder. He also claims Kiyosaki knows absolutely nothing and doesn’t believe he has the 50-100 million dollar empire that Kiyosaki stated in an interview.

This sucks, because I was enjoying the book, and now I bet I’ll read the other half with a bit of skepticim and not be as motivated.

However, I then did more investigating. This time, on John T Reed. I found another site, this time accusing John T Reed of being the fraud! Aptly named RipOff Report, the site goes on to accuse John Reed himself of being sued for libel and often writing untrue and unverified claims of others.

It mentions how Reed writes all of these (there are indeed a lot of them, I could count dozens) mainly as a marketing ploy to drive links and attention to his site (“great tactic” I’m sure Aaron Wall would say). I can believe that.

Although, I believe a lot of it is also for Reed simply being very biased when writing his analyses, if you could call them that… they’re more like rants. I think he just lets his emotions get ahead of him and doesn’t look for both sides of the story like a real reporter.

So, I kept investigating, and found Kiyosaki’s reponse to Reed, which was a bit difficult to find. You can find at the bottom of this post. To be honest, I wasn’t entirely satisfied with his response, but it did provide a bit of comfort.

Finally, I went to see what the Rich Dad fan base thought about Reed’s commentary. I believe most felt two things:

1. The book isn’t meant to be an all-inclusive step-by-step guide on how to become rich. It’s targetted to the general public and is written simply.

2. Most seem not to really care if “Rich Dad” was indeed just a literary device. They believe the main point of the book is to get people to start to really think about money and finances, as well as being a major motivational and inpsirational tool.

I plan on reading the second half of the book soon. However, I will unfortunately return to it with a bit of skepticism. Which is good usually – to read such books with a grain of salt. However I really want to believe Kiyosaki… he is so motivational and really does make me think. So far, I still agree with his ideas. There will always be naysayers – especially the bigger you are. And I believe that since he has receive so much fame recently and thus covered by all the major media outlets (#1 bestseller on New York Times, on Oprah, PBS, and countless others) that if he really was a fraud, that there’d be more public outspeak on him. So far John T Reed seems to be the only one who hates him so much.

There are other reviews of him which aren’t favourable, but the vast majority of people, including professional book reviewers, investors, and rich people, seem to love his book. So I think it’s safe.

What are your comments? I would love to hear your thoughts on this, especially from those who have read the book. Instead of commenting on it here, I’d like a real discussion to take place on this, so please post on this thread on PublisherForums which will cover it.

Relevant URL’s:

Kiyosaki’s Wiki Bio
John T Reed’s Kiyosaki Attack

RipOff Report’s John T Reed Attack
Kiyosaki’s Response
Rich Dad’s Forum Discussion on the Matter

BannerAgora

The following is a paid plug, written by me, but paid to do so :) However, I’m earest in what I say here:

Since I’ve posted the last 20 banners out of the 40 I had commissioned, I’ve received numerous IM’s and e-mails from people asking who made them. Well, his name is Robbie and his site is BannerAgora.com. His prices are cheap for what he gives you, around $20 a banner, and his turnaround times are decent (might have taken slightly longer for me since I ordered so many).

Anyhow, that’s his URL. If you use him, please tell him you found him from this blog. It will help him know how his advertising here does.

Mortgage

Man, I could write 10-pages on this section. But I won’t, in an effort not to plug the internet up with my crap.

As I stated in my previous blog post, I’m buying a place. I’m buying a place! Haha, it’s so much fun. I know extremely little about real estate, the market, mortgages, and the process involved in purchasing a home, but I’ve learned a lot the past few days.

Luckily I used to work for a realtor as the web developer for their company for several years and thus have access to them as contacts. Thus I can get a lot of information and such from them without being worried about being ripped off or getting bad service.

I’ve set up a meeting with a mortgage broker tomorrow morning. Well, actually, in about 10 hours or so from now. I can’t sleep because I’m too excited, which is why I’m writing this blog in an attempt to get sleepy. I talked to her briefly over the phone and she seems to think that they should be able to work out getting me approved for a mortgage.

I talked to my dad and he said he’d be fine with co-signing for me. Obviously I want to try to get the mortgage on my own, but it’s good to know I’ll have a backup if I can’t. You see, the obvious problem of me getting a mortgage stems from a multitude of factors. For one, I’m 22 (23 in a few days, what are you guys getting me for my birthday?), and there is a bit of age discrimination there.

“What’s this punk kid doing in my office?”

Then, to insult them more, I’m self-employed!

“Oh boy. Another loser kid with a lame home business.”

I’ll have to answer that by saying that I’m a “web entrepreneur” and basically build and develop sites and sell advertising on them.

“Get out of my office, punk.”

Heh, and it gets worse. Mye mortgage broker told me to bring the last 2 years of my income tax reports (I’m bringing printouts of my current 2006 earnings and prospective future earnings as well). I’ll tell you now that 2005 was very low and 2004 was even lower. These were extremely low years. This is for a few reasons. For one, I simply wasn’t making nearly as much as I am now. But also because I had a LOT of stuff to write off, which I could write off for 100% thanks to having a good tax accountant. So the numbers are misleading.

However, I have three good things going for me:

1. Great credit. I have great credit. I’ve never been late on a payment in my life. Not anywhere near it.

2. My 2006 earnings and prospective earnings look favourable.

3. I’ll be putting a decent downpayment down. $20,000 if I buy a place in a month or so. $25,000 if I wait 2+ months. And the more the longer I wait or search for a place.

So it’ll be interested what they do.

I have a good idea of the costs insofar as property purchase taxes, strata fees, municipal property taxes, etc. yet I still have a lot of questions. I wrote them down and will bring them up tomorrow at the meeting.

Here’s a recent post by John Chow explaining some real estate tips and engages in the topic of Renting vs Buying.

Anyhow, market values here are pretty decent. It may surprise you what you can get here for those of you who live in New York or the UK. There’s been a recent influx of market appreciation in houses and property values over the past several years, but places are still affordable to get into now.

Below are some places that I’ve started to look at. Nothing serious yet, just quick browses online, but these are some that interest me so far and show you the type of style and place I’m looking for. Keep in mind that these are in CDN prices (USD would be about 90% lower):

$145,000

The following ones show you what you could get for just a little bit more…

$305,000
$324,900

This one may take me a few years to save up for, but I’ll be blogging from it one day, dressed in my houserobe and smoking my pipe!

$750,000

This one comes with your own private beach!

$959,900

Ahem.. okay, I may be getting a little ahead of myself here, but it’s crazy. There are so many young webmasters out there right now who could afford these!

Anyhow, I best not write and longer. Please wish me luck on my mortgage pre-approval meeting tomorrow! I’d love to be able to get a place over $145,000 as they start to get noticably better at around that range. WISH ME LUCK!

Good luck, and good earnings!

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Posted: August 25th, 2006 under Articles  

10 Responses to “Controversy and Mortgages”

  1. khalidslife says:

    Good luck Tyler, happy birthday mate.

  2. Good Luck and Happy Birthday!

    I have been reading your blog for some time, and hope by the time I turn 23, I am making MORE money than you are making now. You are definantly an inspiration! keep up the good work!

  3. brandon says:

    Happy Birthday Tyler! Get yourself a swinging pad! =)

  4. AndrewR says:

    Happy Birthday..

    Great lengthy blog post. Good luck with your mortgage.

  5. Dave says:

    Good luck and Happy Birthday!

  6. tke71709 says:

    I didn’t think you could even find a shack for under half a million on Vancouver Island.

    Shows how much I know eh?

    I’ll be in Vancouver for a week in September, make sure it doesn’t rain for me.

  7. scoby says:

    Best of luck with the mortgage Tyler,
    great to see you come so far.
    Do you want to invest in property other than buying a home? Or is internet real estate where it’s at?

  8. Tyler says:

    I’d love to, scoby. However, I can’t see that happening anytime soon. But the whole business is really interesting, and really fun to boot!

    Although, I wouldn’t be interested in doing a real flip – I’m no handyman, and I would never want to oversee renovations or any of that stuff. Then it becomes a major workload and you’re working more than you know..

  9. tylerweaver says:

    Robert would suggest you invest in a property that you can rent out and make money. I would suggest this as well. There are very real lessons to be learned from Rich Dad Poor Dad.

    I bought a building which I rent out the majority of it, and there are advantages of doing this. One of them, is you can list part of the projected income on your mortgage application towards your income. The second is, it makes you money and you will be able to hold onto it and make money for your whole life. Plus if your website business does not stay as strong as you hoped there will still be income coming in.

    Good luck with your purchase experience!

  10. Mike says:

    “The site is written by John T Reed who apparantly is a fairy”

    lol!

PeerFly

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