The poor and the middle class work for money... the rich have money work for them.
So the beauty about Real Estate is that you learn to use debt to get rich. If you're going to be rich, you have to learn to use debt. It's called other's people money. And the world calls it Debt or Loan.
The six words that are basics of financial education, financial intelligence, income, expense, asset, liability and the two other words are cash flow.
So when you look at the average person, they have a job. Their earning is called Earned Income. Money comes in there, they pay for their house, and the money goes to a bank through mortgage. So your job it's not an asset because the cash is flowing out. So it's a liability. So the definition of liability is:
Liability:
It takes money out of your pocket.
Asset:
It puts money in your pocket.
So when I have a rental property here, it puts money in my pocket. So if I live in the house, it's a liability even if I have no debt on it. I still have taxes, depreciation, repairs and upkeep, insurance and all this. But when I rent a property, I've done a good job buying it and structuring it and every month it send me money.
So I started off when I was 25 I had a little bedroom condo and it puts 25 bucks in my pocket. So this was a good debt. The debt also went out and get paid but it also put 25$ in my pocket. So net net, I was making money from my little house.
So today, I and my wife have 6500 houses and every month cash is coming in. And it puts cash in my pocket. But all of this comes from debt. We have 100%finance here. It's all debt. So this is a good debt and what makes it good debt is the most important words: Cash Flow.
Quoted by Robert Kiyosaki
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