Robert Kiyosaki Owns 15,000 Houses — Says 'I Would Rather Use Debt And Pay No Taxes'

Buying a house is a significant achievement these days, particularly with high interest rates and skyrocketing home prices. But in "Rich Dad, Poor Dad," author Robert Kiyosaki shares how he has built his wealth around buying homes. 

"I own 15,000 houses," Kiyosaki said in an interview with personal finance YouTuber Sharan Hegde.

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Hegde asked if he rented out those houses, to which Kiyosaki simply responded, "Yeah."

"There's nothing wrong with buying a house," Kiyosaki says. "The difference is I use debt to buy it. And I pay no taxes. It's not the house, it's not the stock, it's not the bond, it's not the ETF. It's your brains. So, I would rather use debt and pay no taxes."

To help his audience better understand the mechanics of Kiyosaki's tactic, Hegde asked him to explain how he purchases houses with debt. 

"In 1971, this became debt," Kiyosaki said as he held up a dollar bill. "The only way it's created is somebody has to borrow the money. And your credit card, there's no money in your credit card. There's no money anywhere. So the moment you use your credit card, money is created. And the U.S. dollar is debt … They need people to borrow money. So when I go to a bank and say I want to borrow $20 million, I get huge tax breaks because I'm creating money."

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What Kiyosaki does is common in real estate investing. Investors borrow money to purchase properties, which allows them to purchase more than they would be able to with just their own money. Any interest on the debt can be subtracted from the income the investment brings before calculating taxes, meaning they pay less in taxes because the taxable income is lower. 

Other costs like property taxes, insurance, and maintenance can also be subtracted from income when calculating taxes. As the property depreciates, property owners can account for that loss by subtracting a certain amount from their income each year, again lowering the taxable income. 

Using these strategies, real estate investors can buy more property and earn more money, adding to their profits when they don't have to pay as much in taxes. 

Kiyosaki adds that you can't just run out and buy property with this strategy, though. You have to be smart about it. You need to take time to understand the markets and utilize experts who can provide guidance along the way. 

"The first thing I would do is come here, hire an accountant and an attorney, and then evaluate your markets," he says. And then I would buy or not buy. I don't own any property in California because it's a communist state. I own nothing in New York City, communist. But I own in Arizona and Texas. The laws are different, so you have to know the laws. You can't be stupid."

Navigating the complexities of real estate investment, tax laws, and market conditions requires expertise and careful planning. A financial advisor can provide tailored advice, help you evaluate market opportunities, and ensure you are making informed decisions that align with your financial goals. Partnering with a skilled financial advisor not only enhances your investment strategy but also provides the peace of mind that you are leveraging every opportunity to grow your wealth wisely and sustainably.

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