‘Rich Dad Poor Dad’ author Robert Kiyosaki has $1.2 billion debt, says report

WASHINGTON: The author of ‘Rich Dad Poor Dad’, Robert Kiyosaki, has amassed about $1.2 billion in debt tied to his real estate investments, according to a report by the New York Post, but his ex-wife and business partner Kim Kiyosaki has clarified that the figure does not represent the amount he personally owes.

The 79-year-old author has repeatedly cited the $1.2 billion figure while presenting debt as a tool for acquiring income-producing assets. “So, I’m a billion two in debt”, he said on the ‘Get Rich Education’ podcast over the summer, as quoted by New York Post.

Kiyosaki also cautioned listeners against copying his approach without understanding the risks. “Should not do what I do, right?” he said, adding, “But I studied it since 1974… If you’re going to learn to use debt, you’d better take some education”.

How much debt Robert Kiyosaki owes. pic.twitter.com/BkwojylfUy

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Kim Kiyosaki said the couple’s real estate portfolio includes around 1,500 apartment units, held with partners, as per New York Post. “We have a lot of apartment houses with our partners”, she told in an interview.

“So technically, yes, we have all this debt,” she said, explaining that the borrowing is attached to the real estate and that Robert Kiyosaki’s personal share is considerably smaller.

As per New York Post, Vanity Fair estimated Kiyosaki’s portion of the debt at around $30 million to $60 million, based on his claim that he earns roughly USD 3 million a year. Kiyosaki’s strategy involves borrowing against rising equity in his properties and treating the loan proceeds as tax-free income, according to Vanity Fair.

He also places individual investments in separate limited liability companies, a structure intended to limit exposure between investments. “If it all comes to hell, you can talk to my attorney,” Kiyosaki told the magazine, adding, “Firewalls- that’s the way the rich play the game.”

Kim Kiyosaki said her former husband uses the billion-dollar figure partly to attract attention before explaining his position on investment debt. “He loves to say things that shock”, she told Vanity Fair, referring to his effort to explain “why investment debt is good.”

David A Perez, an enrolled agent and founder of Tax Maverick AI who said he uses a similar approach as a multifamily real estate investor, described it as “a great strategy”. He said large amounts of property-backed debt are “actually very normal”.

Perez also noted that borrowing against property equity generally produces a tax-free loan because the property has not been sold, while warning that additional borrowing can increase mortgage payments and interest costs and reduce cash flow.

John Poole, founder of Scottsdale, Arizona-based consultancy JPTD Partners, offered a more cautious assessment. “I think there’s good debt and there’s bad debt, and then there’s $1.2 billion of debt, which you better know exactly what in the world you’re doing”, he told The Post.

“Leverage works beautifully on the way up, and if it’s not continuing on that way up, then it’s like a chainsaw financially coming down,” he said.

Poole said borrowing against appreciated assets can make sense in limited situations, including estate planning, but warned that the strategy cannot continue indefinitely. “It doesn’t go on forever. There has to be a payday, and be prepared for that payday, irrespective of the size,” Poole said, adding, “he may call this the ‘Rich Dad debt,’ but for the average investor, it could turn out to be ‘Poor Dad bankruptcy’ really quickly.”

Kiyosaki built his financial education profile around ‘Rich Dad Poor Dad,’ which was first self-published in 1997 and has sold more than 44 million copies, according to a report by the New York Post citing Vanity Fair.

The book contrasts lessons attributed to his biological father, whom Kiyosaki calls the ‘Poor Dad’, with those he says he learned from the father of his childhood best friend, the ‘Rich Dad’.

Kiyosaki has long advocated investing in cash-producing assets such as real estate, minimising taxes and distinguishing between debt used to acquire investments and borrowing used to fund expenses. (ANI)