Robert Kiyosaki, the author of the personal finance book "Rich Dad Poor Dad," has stated he is $1.2 billion in debt, a figure he often highlights as a demonstration of his wealth-building strategies. The 79-year-old financial guru has consistently argued that borrowing money to acquire income-producing assets is a practice employed by the wealthy.
"So, I’m a billion two in debt," Kiyosaki said on the "Get Rich Education" podcast. He has also cautioned that "[s]hould not do what I do, right?" but emphasized the importance of education in understanding how to utilize debt, noting his own study of the subject since 1974.
However, his ex-wife and former business partner, Kim Kiyosaki, recently clarified to Vanity Fair that the $1.2 billion figure is often misunderstood and does not represent a personal debt owed by the author. She explained that the debt is associated with a large portfolio of apartment buildings, estimated at approximately 1,500 units, held in partnership with others.
"So technically, yes, we have all this debt," Kim Kiyosaki stated, adding that the borrowing is directly linked to the real estate holdings and that Kiyosaki's personal stake in the debt is relatively small.
Kiyosaki's investment approach involves borrowing against the appreciated equity of his properties, treating the loan proceeds as tax-free income. To mitigate risk, individual investments are often placed into separate limited liability companies, creating financial firewalls.
Vanity Fair estimated Kiyosaki's personal portion of the debt could range between $30 million and $60 million, based on his reported annual income of roughly $3 million. Kim Kiyosaki suggested that her ex-husband uses the large debt figure to attract attention before explaining the benefits of investment debt.
Experts offer varied perspectives on Kiyosaki's strategy. David A. Perez, founder of Tax Maverick AI, described it as "a great strategy" and noted that carrying significant property-backed debt is common for multifamily real estate investors. Perez explained that loans against property equity are typically tax-free as the property has not been sold, though this can increase mortgage payments and reduce cash flow.
John Poole, founder of JPTD Partners, expressed a more cautious view. He distinguished between good and bad debt, stating that managing $1.2 billion in debt requires a deep understanding. Poole warned that while leverage can be beneficial during market upturns, it can be financially detrimental if market conditions change. He advised that borrowing against appreciated assets can serve purposes like estate planning but should not be a long-term, indefinite strategy, emphasizing the need for a "payday" plan regardless of the debt's size.
"Rich Dad Poor Dad," first published in 1997, has achieved significant success, selling over 44 million copies, according to Vanity Fair. The book contrasts the financial philosophies of Kiyosaki's biological father, whom he labels the "Poor Dad," with those of his best friend's father, the "Rich Dad." His biological father was a former Hawaii state superintendent of education, while his "Rich Dad" was identified as Richard Kimi, a Hawaii businessman and hotel owner. Kiyosaki's core teachings advocate for investing in income-generating assets like real estate while minimizing tax obligations.