Thursday, June 16, 2005

Darth Prefabicus

Like Anikan Skywalker, this blog turned to the Dark Side--by putting up google ads.

And like Anikan, the transition to said Dark Side destroyed the blogs old body, and in order to save it, its Sith Master (me) has left it encased in this pre-packaged, mechanical husk of a body--a pre-made blogger template.

Nevertheless, like Luke Skywalker (also played by me), I will soon redeem this blog from its current state into nicely looking, nice working blog again.

Sunday, June 12, 2005

Kiyosaki's Killings in Real Estate

A Snapshot, and Vidication, of "Rich Dad's" Portfolio

Mr. Suleske sent me this link about a critique of Robert Kiyosaki's and his teachings, of whom he and I are big fans. Robert Kiyosaki, the famous author of the Rich Dad series of books, is both famous and infamous in the world of financial advice. His books opened up for me and others a whole new world of looking at finance, with his thesis that you get rich by working smart, being creative and courageous, not just by working hard for the man. But there've been alot of rumors and complaint that his entire portfolio and life story have been made up, and that he's gets rich only by talking about getting rich. People allege that he never owned property where and when he said that he did.

These rumors are false. Any search of online title records show that he was a very savvy investor with a very diverse portfolio, who made very profitable and unorthodox real estate investments.

A snapshot of his feats can be found in the Maricopa County online real estate indexes through the early to mid 1990s. This period represents a transional period in his life, the apogee of his investment career and the start of his writing career, the years he wrote and published his first book, 5-7 years before Rich Dad. Kiyosaki says that he lived in Phoenix for several years and made several profitable investments. And how!

First, Kiyosaki made several purchases in Veteran Association ("VA") properties, apparently foreclosure sales. During 1992-93, Robert and Kim Kiyosaki bought five of these properties: this one, this one, this one, this one, and this one.

The VA also provided financing for this properties, and judging by that financing, they were a steal--between $40,061.00 and $52,468.00. I suspect, but cannot confirm, that Kiyosaki had to pay $4,000.00 to $5,200.00 down for each.

Then Kiyosaki finds inhabitants for the properties, and transacted what is known as an Installment Sales Contract ("ISK")1. Kiyosaki agrees to have the tenant/purchaser pay for the house in monthly installments. At the end of those installments, the purchaser/tenant owns the house. But if he doesn't make the installments, Kiyosaki has the right to kick him out (which, on occasion, he did!). In reality, the arrangement is little more than a rental situation, but it does afford the inhabitant some financial options and additional debtor's rights under the law. Think of it as a rent-to-own situation. (Note that this is a rather big-hearted thing for Kiyosaki to do; he's giving his tenants the opportunity to own their own home, instead of just renting them out, as is standard.)

An good example of the ups-and-downs of his investments is what transpired is his Casitas Bonitas property. It happened as follows

  • 11/24/93--Kiyosaki buys and finances the property from the VA. It's safe to assume something like a 7.5%2, 30-year mortgage, payable in monthly installments of $368.00, plus taxes and other fees.

  • Between 11/92 and 5/15/95--He finds a tenant names Rose Benally. He makes an ISK with her to live in and purchase the house. The ISK provides for payments of $625.00/mo. Thus, Kiyosaki is earning about $257.00 a month on the deal. But Benally begins to default on the payments. Kiyosaki cancels the ISK and evicts her, and now has about $1,000.00 more in equity than 2.5 years ago.

  • Between 5/15/95 and 8/96--Kiyosaki licks his wounds and transfers the property to his holding company. He maybe went through another tenant or two, but finally makes another ISK with the Dennis and Elizabeth Lint. This time, Kiyosaki is getting $657.14/mo. Note however that now the house is pretty beat up: The pool pump isn't working, the air conditioning isn't working, and the kitchen stove is broken. Nevertheless, the payoff amount is $74,000.00. Much better than the initial cost. Kiyosaki has made anywhere from $15,000.00 to $20,000.00 from the deal, plus the spread his higher installment schedule compared to the mortgage he's paying down.

  • 8/96 to present--There no more about this property, so we can assume that the condition has stabilized. Kiyosaki is now getting about $290.00 a month cashflow from the investment, which maybe necessitated a down payment of only $6,000.00 or so.

    However, this deal was small potatoes for Kiyosaki by this time, much bigger was the office building/hotel he bought from the National Model Railroad Association for about $1,000,000.00 as the initial financing would indicate, then made $28,000.00 in a year when he cashed out the equity in a subsequent mortgage, not to mention whatever rental he was getting. (This may also have been his main offices at the time).

    So Kiyosaki's for real! He's done exactly the kinds of deals, with exactly the kinds of peaks and valleys, that he talks about in his books. I wish those people who say that Kiyosaki's full of BS would check their facts first. The internet give no excuse for lack of information.

    1 That's the standard legal abbreviation. Don't ask me why "kontract" is abbreviated with a "k">

    2 The going interest rates in 11/1993 were around 7.08 to 7.31%.


    UPDATE: Greetings, visitors, from The Carnival of the Capitalists

  • Friday, June 10, 2005

    The Second Most Dangerous Book Ever

    Another Evangelical Outpost article on the world's most dangerous book got me to thinking about more deep philosophical issues. Hat tip again to Joe Carter for keeping me blogging and keeping me from sleeping.

    The Bible is a little like Atlas Shrugged. the scenario of Atlas was that when energetic, intelligent and productive people are removed from society, the world becomes virtually hell-on-earth. The thesis of the Bible is that when an omnipotent, omniscient and benevolent God departs from earth, the world becomes literally hell-on-earth.

    Now Atlas and The Fountainhead are dangerous books! I've heard of people who've left careers, left spouses, left churches because of those books. But Atlas is the darkest and most negative, most dangerous if taken too literaly. In that sense, they're like the Meccan and Medinan verses of the Koran; the former extolling benevolence and human virtue, the latter wanted to see people destroyed who don't tow that line. People can make alot of mistakes when they fail to see the flaws behind her philosophy.

    The dirty little secret of Atlas is this: Rand doesn't care that everyone dies and society shuts down--even if it effects relatively innocent parties. She does not think that other people--simply for being people--have any value to an individual, so that she should save them. To her, I would posit that if her housecat were about to jump out of the window of her high-rise apartment, for the selfish reasons of preserving the aesthetic beauty of the cat, and preventing the aesthetic uglyness of seeing it die, she would intervene to save it. If so, would not the aesthetic beauty of a human soul be worth saving, and the uglyness of its death be worth preventing?

    Biblical agape love is appraising value to a human being because he is a human being, made in the image of God, and worth preserving. Such love is based just as much on rational self-interest as it is on God's commands.

    Thursday, June 09, 2005

    The Postman Fails to Deliver

    Over at The Evangelical Outpost, I criticize the worse "graduation speech" ever (not) given.

    Due to Bar Review and a work situation from hell, I've gotten 2.5 hours of sleep in the past 40 hours. But that didn't stop me from (and may have even aided me in) expressing my disgust over Prof. Postman's cerebral masturbation. I gave the following comment:

    Horsecrap! (If I may borrow a "visigoth" term)

    You must be an Athenian or a Visigoth. Some philosopher Postman is. His entire speech is based on a logical fallacy--false dilemma/excluded middle. Furthermore, it reeks of the unctiousness that I and many other former college students have come to hate about academia "I'm better than you because I'm smarter. It doesn't matter if you do more or have more."

    Oh the glorious Athenians! Never mind the ups and downs of their mob rule, regularly morphing into and out of tyranny. Never mind their popular persecution of the same great thinkers Postman lionizes. Never mind their chauvinistic and perpetual wars, their mass slavery, their sexual perversion, their thoughtless idol worship, and a host of other social ills.

    And all the social ills of Athens, and the Greco-Roman world, would eventually ossify into the decrepit, pyramidal, hundreds-years tyranny of the Roman Emperors. This was the most static period of human civilization; there's virtually no technological/artistic/scientific differences between 100BC and 400AD. The only thing that changed was how they prayed. It was this tyranny which was so easily brought down by the plucky Visigoth frontier dwellers who became the equal, then superior, of the Romans.

    More fundamental wrong with Postman's speech is his thinly-veiled hatred of success and false hope in nouomenal fulfillment.

    To contemplate, to reason, to experiment, to question-these are, to an Athenian, the most exalted activities a person can perform. To a Visigoth, the quest for knowledge is useless unless it can help you to earn money. Why shouldn't the quest for self-fulling theoretical knowledge be superior to materialistic utilitarian knowledge? Are the two mutually exclusive? In fact, can knowledge really be knowledge if it doesn't apply in the real world, or just a complex hallucination?

    And a good noble Athenian values social bonds while a mean ole' Visigoth only wants power over other people? What's the real difference? Both are seeking validation from the opinions of other people rather than a reasoned analysis and esteem of their own condition. At least the Visigoths were proactive in getting that opinion.

    The northern barbarians, with their materialistic view toward life, now enjoy unprecedented prosperity and knowledge. The Greco-Roman world, with its solipsistic view toward life, peaked with the cruxificion of Christ.

    UPDATE: Some people think I'm too tough on the old boy, to which I respond

    All you compliments of Postman are valid, but the speech is still B to B- work, not the speech of a great intellect of our time.

    He's simplistic. There is the false dilemma he presents, but more ineptly, there is the "package dealing" (to borrow an Objectivist phrase) of some key concepts.

    He equates seeking fame to seeking money; but one provides slavery to other people's whims while the other creates independence.

    He equates privacy with isolation and solipsism, and social activism to being virtuous and giving. I'd prefer a Communist who kepts to himself and is self-sufficient than to a Conservative Christian who thinks it his life's goal to make me as "conservative" and "Christian" as he is.

    In other words, he splits concepts which should be split, and combines concepts which should be combined. And he does so because its a popular archetype to do so, and he fails to think through the premises behind that archetype.

    Also, the entire speech reeks of the philosopher's will to power: Postman creates a worldview which puts someone like Postman on top. Yet the janitor who never finished high school, but now runs a multi-million dollar custodial enterprise, is on the bottom. That's not right.

    I've read Postman's work before and have not been impressed. Technopoly was a quasi-luddite screed filled with little more than worry to justify his broad conclusions--with a healthy dose of arrogance towards religion thrown in. In a book discussion we had about it back in college, a Chemistry professor said "Your will not find any anthropological evidence of a species--which we would recognize as human--that did not use tools," and thus blasted away the lion's share of what Postman had to say.

    Speaking of objectivists, if you want to read a really good graduation speech, check out what Ayn Rand said to the West Point Class of '74. She expressed, with much more thoughtfullness, the ideas which Postman was grasping for.

    A philosophic system is an integrated view of existence. As a human being, you have no choice about the fact that you need a philosophy. Your only choice is whether you define you philosophy by a conscious, rational, disciplined process of thought and scrupulously logical deliberation--or let your subconscious accumulate a junk heap of unwarranted conclusions, false generalizations, undefined contradictions, undigested slogans, unidentified whishes, doubts and fears, thrown together by chance, but integrated by your subconscious into a kind of mongrel philosophy and fused into a single, solid weight: self-doubt, like a ball and chain in the place where your mind’s wings should have grown.

    (Perhaps the silliest scenario for a graduation speech was this
    sixty-something icon of anti-authoritarism giving a speech, with a
    thick Russian accent, to hundreds of young American cadets.
    Nevertheless, probably one of the best ones ever given.)

    Saturday, June 04, 2005

    Rejoice! For the World Sucks!

    Meanwhile in bizarro-world, where born-Again Christians are flaming moonbat leftists.

    NCC General Secretary claims "these may be the darkest times in our history."

    You see, in bizarro world, people smile and are happy when you tell them the world is entering into the new dark ages.

    Hat tip to Daimnation!