Page 299 - Why We Want You To Be Rich - Donald Trump, Robert Kiyosaki.pdf

WHYDo You INVEST IN REAL ESTATE? I 293

The key to good real estate is great management. As stated earlier,
the reason many stock, bond and mutual fund investors do not do
well in real estate is because they are either poor managers or do not
want to be managers.

In our investment plan, Kim and I worked hard to begin investing
in apartment buildings with more than 100 units simply because
with more than 100 units, we could afford better managers.

Since management of real estate is the key to success, some of the
best investment opportunities are buying properties that were
owned by poor managers.

8. Tax-deferred money: One ofthe great advantages of real estate is
tax-deferred money. There are many ways a real estate investor can
avoid paying taxes ever - legally. One way is known as the 1031
tax-deferred exchange. Last year, Kim and I sold a small apartment
house and made over a million dollars in capital gains. Byfollowing
the rules ofthe 1031 exchange, we were able to reinvest that money
without having to pay taxes.

This tax-deferred treatment is not available for people who invest
in stocks, bonds and mutual funds. You'd be surprised how fast you
can get rich ifyou don't have to pay taxes.

9. Appreciation: Because the dollar isgoing down in value, real estate
tends to increase in value. Also, asour population increases, demand
increases, which also drives up prices.

Most investors invest for appreciation (capital gains). In the stock
market, most people invest low hoping to sell high. This is investing
for capital gains. In real estate, these investors are known asflippers.
Flippers also buylow and hope to sell high. The problem with a
capital gains strategy is that the strategy generally only works in an
up-trending market. If the market trends down (a.k.a. a bear
market), many paper-asset investors and flippers are toast.

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