Kim and Robert Kiyosaki having a blast showing their personalities

Why The Rich Are Waiting for the Next Crash

Hint: It’s actually the best time to buy real estate

Have you ever noticed how people are constantly worried about the next real estate bubble? It’s a frequent news headline and a topic Robert and I are often asked about. Yet, our response when someone asks if one is imminent almost always catches the person off guard: “We sure hope so!” Seriously, their looks of bewilderment never get old. Yeah, you heard me right. We love market crashes. Why?

First, I’d like to suggest you familiarize yourself with the seven stages of a financial bubble, which will help set the stage for what I’m about to discuss. As you can see, booms, busts, and bubbles are very familiar and natural cycles in our economy.

Ok, now here’s the answer you’ve been waiting for: Market crashes can be the best time to buy, because people are so panicked and focused on selling that they’re far more likely to make you a better deal. Robert and I witnessed this first-hand in 1991, when we moved to Phoenix, Ariz., and began buying up properties left and right. Amateur investors wanted out of their financial commitments so badly, that they were actually calling us and offering to pay us to take their properties off their hands. We happily agreed and definitely got the last laugh: We made so much money during this period of time, that we were able to retire by 1994.

Dealing With the Haters

Although a crash is my favorite time to buy, the market’s immense pessimism also makes it a tough time to do so. Your family and friends, possibly even your financial advisor, will think you’re absolutely crazy and try to prevent you from “making a big mistake.” I remember when we bought gold at $275 an ounce in the late 1990s. The so-called experts were eschewing gold in favor of high-tech and dot-com stocks back then. But we knew we were getting an incredible value. Today, with gold above $1,300 an ounce, I’d say we certainly made the right call. Thankfully we trusted our instincts and followed the strategy that has worked for us time and time again.

People will also be lined up warning that “investing is risky.” However, the important detail to note is that not everyone defines “investing” the same way. Many amateur investors bought into the real estate market when it was hot, prices were soaring, and they invested on the hope that home values would keep going up and up. They probably had plans to flip the property and make a quick $50k. Investing for the purpose of capital gains instead of cash flow is the very definition of risky.

Experienced investors, like Robert and I, understand the fundamentals of real estate investing. Investing doesn’t have to be a gamble. Good cash-flow investments are based on having a solid financial education. Knowing and following the fundamentals takes much of the risk out of investing. Sure, there’s always some element of risk, but by sticking to sound investment strategies and planning for ways to cover the downside, the risk can be greatly reduced.

Robert and I continue to invest even though the threat of another bubble keeps looming. But we’re more like hibernating bears, waiting for the party to end. What are you going to do to increase your financial education today? Will you be ready—and more importantly, willing—to jump on investment opportunities when the next crash happens? You can start the process by learning other secrets the rich use to get richer at a free, upcoming workshop.

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