Robert Kiyosaki says he’s $1.2 billion in debt

Robert Kiyosaki, author of the book Rich Dad Poor Dad, has disclosed that he is burdened with approximately $1.2 billion in debt, though this amount does not represent personal liabilities owed by Kiyosaki himself. The financial expert has often talked about this debt while explaining his method of utilizing debt to amass assets and generate wealth. A significant portion of this borrowing is linked to a substantial real-estate portfolio that Kiyosaki co-owns with business partners.

On the Get Rich Education podcast, Kiyosaki revealed his debt status, stating, "So, I'm a billion two in debt," as cited by the New York Post. It is crucial to note that this $1.2 billion figure should not be interpreted as Kiyosaki personally owing $1.2 billion. According to Kiyosaki's ex-wife and business partner, Kim Kiyosaki, the debt is tied to an estate comprising roughly 1,500 apartment units, owned jointly with partners.

Vanity Fair estimated Kiyosaki's personal exposure could range between $30 million and $60 million, depending on his reported earnings.

Kiyosaki's financial philosophy revolves around the strategic use of debt. He distinguishes between debt used to acquire income-generating assets and debt used for personal spending. Kiyosaki's real-estate approach involves borrowing against the increasing equity in properties. If property values increase, owners may access additional financing without selling their assets, thereby using the borrowed funds to acquire more investments or generate liquidity.

Kiyosaki has also employed limited liability companies (LLCs) to segregate investments and potentially mitigate the impact of problems in one business. He stated, "If it all comes to hell, you can talk to my attorney. Firewalls - that's the way the rich play the game."

Despite advocating debt as a wealth-building tool, Kiyosaki has cautioned that investors must comprehend the risks before attempting a similar strategy. Real-estate investor and tax expert David A. Perez deemed the approach "a great strategy," highlighting that substantial property-backed borrowing is prevalent among multifamily investors.

However, tax attorney John Poole of JPTD Partners warned that leverage can become perilous if property values decline or cash flow deteriorates, as leverage functions effectively during market upticks but can transform into a "chainsaw financially" when market conditions deteriorate.