Page 305 - Why We Want You To Be Rich - Donald Trump, Robert Kiyosaki.pdf

WHYDo You INVEST IN REAL ESTATE? I 299

One reason I recommend people play our games CASHFLOW 101 and
CASHFLOW 202 isso that people will become better investors by training
their brains to see what their eyes cannot. In other words, to see the real
value or lack ofvalue in any investment, regardless ofwhether it is a stock,
bond, mutual fund, business or real estate. I also recommend you play it at
least 10 times because the more you play it, the more your mind will be able
to see - see what most investors miss.
In this simple schematic diagram, you may better understand what I
mean by allowing the brain to see what the eyesoften miss. The following is
a diagram ofa financial statement:

INCOME
Positive cash flow
(net income)

ExPENSES
Depreciation
(phantom cab flow)

AssETS LIABILITIES
Appreciation Amort ization
(intb.rion) (my tenant p<tys
down my loan)

(

This is an overly simplified example ofwhat a real estate investor looks
i for. They are looking for the intrinsic value most amateur investors miss.
~ When Warren Buffett mentions intrinsic value of a company, he is
:' referring to many of the same things. The vocabulary he uses is sometimes
different, but I believe you may have a better idea from this real estate
r. example ofintrinsic value.
The average stock investor often refers to PIE ratios; the average real
restate investor speaks ofcap rates. While these are important indicators to
l Two MEN • ONE MESSAG_E _