So, about that $1.2 billion in debt. Kim, who remains a partner in Kiyosaki’s businesses despite their divorce, confirms the number but says it was widely misunderstood. Kiyosaki doesn’t personally owe that amount; $1.2 billion is the total debt held by a group of real estate investors. “We have a lot of apartment houses with our partners,” she explains, some 1,500 units. “So technically, yes, we have all this debt,” but it’s attached to real assets. And Kiyosaki’s personal share of the debt is small. If his income is, as he tells me, about $3 million a year, that implies his portion could be $30 million to $60 million.
“He loves to say things that shock,” Kim says. In this case, he knew the number would get people’s attention—cue me, running over the fields—“and then he can explain it in more detail, why investment debt is good.” The Rich Dad, Poor Dad philosophy has always described a particular way of being wealthy, one familiar to real estate investors but different from, say, owning a lot of stock: It doesn’t matter how much debt you have as long as banks are still willing to lend to you. And banks, it turns out, are almost always willing. “Bankers never asked for a report card yet,” Kiyosaki says. It could be called the Donald Trump method.
The trick is to always stay one step ahead of your creditors. When the value of a property rises, Kiyosaki borrows more money against that equity, then treats that loan like tax-free income. Each investment is cordoned off from the others inside an LLC. If one fails, the bank may be in trouble—but he is protected. “If it all comes to hell, you can talk to my attorney,” he says. “Firewalls—that’s the way the rich play the game.” You can lament that the system works this way, or you can figure out how to join the winning side.
The night before our meeting in Phoenix, Kiyosaki went to dinner with some of his financial advisers. “It’s a very healthy team—accountants, attorneys, real estate, oil guys,” he says. They talked about Nostradamus and the Iran war, the price of a steak and the price of crude. That’s Kiyosaki’s chosen family, and it’s the one the world knows best.
It would be a mistake, though, to think that his real family doesn’t still have a hold on him. I heard Tenzin’s influence in his declaration to me that “the gap between rich and poor is too wide, and that’s why I do what I do. It’s not about me getting richer. It’s, ‘How do we close this gap?’” In Rich Brother, Rich Sister, he occasionally sounds more like Bernie Sanders than Bernie Marcus: “America is a great country if you have money. If you are poor, America can be a tough place to live.”
