Page 300 - Why We Want You To Be Rich - Donald Trump, Robert Kiyosaki.pdf

294 I CHAPTER TWENTy-SIX

Investing for cash flow is better than investing for capital gains in
real estate because the tax laws favor the cash-flow investor.

Why Appreciation Is Last

There is a reason I put appreciation last, yet for most people,
appreciation is first. Many people buy a house to flip it, which means they
buy it to sellit for the money. People who flipproperties have to work harder
and pay a significantly higher tax rate. While I do occasionally flip
properties, I prefer the first five reasons for investing in real estate. My
favorite strategy is to buy a property, then buy another and another. In the
long run, I work less,make much more money and pay less in taxes.
I put appreciation last because itisthe last reason. I don't reallycount on
appreciation. In my opinion, to buy a piece ofproperty or a stock and hope
it goes up in value is speculation (or gambling), not investing. While I do
like appreciation, I do not count on it. Investing for appreciation isespecially
tragic when the real estate market crashes, which it does on a regular basis.

The Secret Reason

There is another reason why I like real estate. And that reason is because
real estate is slow; it does not change rapidly. As I stated earlier, the baby-
boom generation is the last generation of the Industrial Age and the first
generation ofthe Information Age. My problem with the Information Age
is that I am obsolete - I am an old guy.I do not have an e-mail address, and
I do not want one. I do not know how to use the Web or the gadgets that
come along with using the Web.
My companies do have Web sites, and I earn millions of dollars from
the Web. I have a computer, but I use it like a typewriter - it makes me
millions ofdollars as a word ptocessor, but not as a computer.
Not only am I obsolete, I am becoming rapidly more obsolete with each
new technological change that comes along. I once bought an iPod but
could not figure out how to put information into it or how to get anything
out ofit. In fact, I know exactly when I became obsolete. It was when I tried
to program my VCR in the 1980s. That's when I realized I was not a rechie.

WHY WE WANT You To BE RICH