Richdads-CASHFLOW-Quadrant-

CASHFLOW Quadrant
With $10,000 in real estate and a 90 percent loan, I could buy a
$100,000 property.
If both markets went up 10 percent, I would have made $1,000
in stocks, but $10,000 in real estate.
3. Taxes
If I made $1 million in profit from stocks, I’d have to pay nearly
30 percent in capital-gains tax on my profit. But in real estate,
the $1 million profit could be rolled tax-free into the next
real estate transaction. On top of that, I could depreciate the
property for even greater tax advantages.
Important note: An investment must make economic sense outside of
the tax benefit for me to invest in it. Any tax benefit only makes the
investment more attractive.
4. Cash flow
Rents had not declined, even though real estate prices had
declined. This put a lot of money in my pocket, paid for the
mortgages and, most importantly, bought me time to wait until
real estate prices went up again. When they did, I was able to
sell. Although I carried large debt, it never hurt me because the
rents were far greater than the cost of carrying the loan.
5. An opportunity to become a bank
Real estate allowed me to become a bank, something I had
wanted to do since 1974.
The Rich Create Money
In Rich Dad Poor Dad, I wrote about how the rich create money
and often play the role of banker. The following is a simple example that
almost anyone can follow.
Let’s say I find a house worth $100,000 and I get a heck of a deal
and only pay $80,000 for it. I pay a $10,000 down payment and get a
$70,000 mortgage I’m responsible for.
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