Rich Dad / Robert Kiyosaki Blog

May 7, 2009

John T Reed Vrs / Vs Robert Kiyosak

Filed under: J T Reed — Tags: — ~ @ 1:13 pm

Here is an article looking a John T Reed’s investment success (he has become a “full time writer”)…..

I have to give Credit to Rusty on the richdad website for the following information on Reed.

According to John T. Reed’s own website —

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1. Reed currently owns no investment real estate. His last purchase was 21 years ago and he never owned more than 2 properties at a time.

quote:

I invested from 1969 to 1992. (His last purchase was in 1983, he lost it to the bank in 1992.) I cannot think of a single thing that I have written about since 1992 that I got wrong because I was no longer active. If there was anything, it would fall under the category of nuance. I believe I have been able to write about changes quite adequately by reading about them or hearing about them from my readers and friends. — John T. Reed

quote:

As a non-investor, I now have no inhibitions about writing about any aspect of real estate investment. That benefit to my readers exceeds by far any value of current experience. — John T. Reed

quote:

I prefer to spend my time writing. — John T. Reed

http://www.johntreed.com/cando.html

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2. Reed did invest in the 1970’s and lost money on almost every deal he ever did.

quote:

Buying real estate is scary. Anyone who has done it can tell you that. I was scared every time I ever bought a property, with good reason, it turned out. I lost $750,000 on my last two purchases. — John T. Reed

(here’s one he did make money on, several others he turned over to the bank in leiu of foreclosure)
quote:

my first duplex in April of 1969. I “seventupled” my money in that property in six years. Actually, I did little to make that happen. The whole market went up about the same. I was just lucky to have bought in the right place at the right time. — John T. Reed

http://www.johntreed.com/analysisparalysis.html

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3. Reed does not believe that real estate can have positive cashflow.

quote:

almost all normal rental properties have negative cash flow. — John T. Reed

quote:

the guru who told you that real estate investment was a way to pick up extra cash lied to you. He told you that because it was what you wanted to hear, not because it was true. In fact, owning rental property almost inavriably has the exact opposite effect on your cash flow. It takes your current annual cash flow and confiscates part of it to feed the rental property. — John T. Reed

quote:

In order for a single-family rental house to have positive cash flow, the tenant must pay more to rent the house than he would have to pay to own the same house. That is obviously a stupid thing to do. And that’s why you almost never see it. — John T. Reed

quote:

So how do you achieve positive cash flow ethically in the real world? You need to buy in the rare market where high cap rates are the norm. Such markets are usually severely depressed like Anchorage or Oklahoma City in the late 80’s. The reason tenants are willing to pay more to rent than they would have to pay to own in such markets is that they believe property values are falling or level, in which case not owning is a good idea in spite of the high rent.

Even then, the positive-cash-flow situation is typically a brief window that lasts only six months to a year. — John T. Reed

http://www.johntreed.com/positive.html

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4. Reed believes that owning real estate is a full-time and tedious JOB.

quote:

gurus only have 24 hours in their day, same as you and I. That’s too few to operate both a guru business and an active real-estate investing business. For example, it takes 4.6 hours per unit per month to do the resident manager and property manager duties on a residential property. The more units the guru has, the fewer hours are left for writing and such. The late Paul Thompson was a professional foreclosures buyer. He calculated that it took him 165 hours of work for each property he acquired. When a guru says or implies he has this many units or does that many deals a year, multiply his figure by the above numbers and see how much of his 24-hour day he is devoting to investment activities. Invariably, you’ll find there are not enough hours in the day for him to be doing all that he claims to be doing. — John T. Reed

(4.6 hours per unit per month? I should be working 36 hours a week!! LOL)

http://www.johntreed.com/cando.html

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5. Reed’s only source of income is writing and selling an investment real estate newsletter.

quote:

I am a full-time writer. — John T. Reed

http://216.239.41.104/search?q=cache…hl=en&ie=UTF-8

quote:

I try to get an actual case history in every issue…….If you have one, I would appreciate hearing about it. If you wish, I can disguise your identity and the location of the property in any article I write about it — John T. Reed .

http://www.johntreed.com/deals.html

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6. Reed also doesn’t believe “no money down” can work.

quote:

the only way a lender can loan 100% of value or any percentage above the prudent lending limit, is to get a guarantee from a borrower or co-signer or guarantor who is so strong financially that they would qualify for the loan in question on an unsecured basis — John T. Reed .

quote:

It is extremely difficult to do a nothing-down rental property deal which is ethical, legal, & profitable. — John T. Reed

http://www.johntreed.com/nothingdown.html

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