If you’re just starting out, a great way to learn RE investing is by playing a game-- Cashflow 101. I wasn’t crazy about the idea of a board game being a good way to learn (I mean, sure-- we’ve all played Monopoly-- the formula for wealth is the same in life: Four green houses, into a red ‘hotel’. But it’s a little simplistic.). Cashflow101 is different, and I’ve been a fan of using it as a means to get the “light to come on” so to speak in other people. I’m not a full-time “guru” type by any stretch of anyone’s imagination. I have no books, no tapes, no speaking engagements (yet?) but I do enjoy seeing others learn, grow, and prosper. That’s why I chose to dedicate the First Saturday of each month to using CF 101 ( & 202) to teach.
(If you’re looking in the PRINT edition, it’s on the FRONT PAGE, not the business section.)
Making a game of leaving rat race
Players say Cashflow provides an edge in seeking their fortunes
By Mary Umberger
Tribune staff reporter
Published January 17, 2006
The lesson in real estate investing was about to begin.
“OK, everybody, grab a rat,” announced an organizer who had brought a dozen aspiring property magnates together.
The group, crowded around tables in a Naperville sandwich shop on a recent Saturday morning, reached for their game markers–little plastic rats–to play Cashflow 101, a board game some devotees credit with changing their lives.
The brainchild of investment guru Robert Kiyosaki, author of the extraordinarily popular “Rich Dad, Poor Dad” books, Cashflow 101 has spawned clubs around the world.
Members play regularly, learning the accounting principles Kiyosaki insists are key to shrewd investing, while honing their get-rich-quick fantasies.
This group had come to a meeting of the Naperville branch of Windy City Round Table (www.wcrt.org) , which organizes Cashflow gatherings throughout Chicago. Kiyosaki’s Web site lists about two dozen Cashflow-playing clubs in Illinois and 1,400 globally, though many more play the game on their own.
“I thought it was the stupidest thing I had ever heard of until I sat down to play it,” said Paul Strauss of Naperville (hey, it’s true-- a long time ago, 1999 or so I thought-- you’ve got to be kidding. I’m not thinking that anymore, though), a full-time real estate investor and a founder of the WCRT, which isn’t affiliated with Kiyosaki but whose Web site links to Kiyosaki’s. “But the game teaches you how to get out of the rat race, and I did.”
The prospect of learning the secret to wealth has unlimited appeal in a culture that has embraced real estate investing as sort of a fiscal sport. Some economists tied novice speculators to as many as one-fourth of real estate transactions in 2004.
This has led to boom times for pitchmen of books, videos, seminars, DVDs and trade shows. Among those at the top of that big heap is Kiyosaki, who preaches that schools fail to teach financial literacy.
His solution was to create Cashflow 101.
Though it has dice, markers and a colorful board, it’s not a typical game–it’s more Monopoly on steroids. For one thing, it costs $195, as opposed to the industry average of $15 to $39.
Kiyosaki said that when he was developing the game, a consultant told him it was too complex for the public.
“He said, Raise your price. Make it ridiculous,'" Kiyosaki recalled. "That would make people perceive it as a value.'”
Cashflow also departs from routine games through the detailed accounting each player must do. The object of the game, like Monopoly, is to make money through investments. But players must keep meticulous financial statements, updating them constantly as they flip apartment buildings, negotiate complicated partnerships and juggle debt.
Players move around the “rat race” track, a seemingly endless circle of earning a paycheck to cover day-to-day expenses.
When investment cash flow exceeds expenses, players can move to another track, where the winner is the first to land on his or her dream–a cabin in Montana, a chain of beauty salons, funding AIDS research, etc.
Or they could be wiped out by a tax audit or divorce.
“The game teaches you how to control your finances,” said Carlos Gutierrez of Aurora, who was playing it for the fifth time at the Naperville meeting. He also plays online.
Gutierrez, echoing the words of every other player at the Naperville gathering , said he aims for financial independence. He owns a commercial-cleaning franchise, and he has bought a condo as an investment.
But playing Cashflow has convinced him that some of his decisions haven’t been good ones. The condo, he said, “was a bad deal. Now I know that.”
Kiyosaki, who lives in Phoenix, said that one of the attractions of the game is that it’s a safe way to make mistakes. He said he invented it in 1996, after several failed businesses, because he believes financial illiteracy is the downfall of fledgling entrepreneurs.
When the game at first failed to sell, he sketched out his book, “Rich Dad, Poor Dad: What the Rich Teach Their Kids about Money that the Poor and Middle Class Do Not,” as a supplemental pamphlet. Then he expanded it with collaborator Sharon Lechter and self-published it.
Warner Books eventually picked it up, and it was noticed by Oprah Winfrey, who had Kiyosaki on her show in 2000. Since then, the book has been a fixture on The New York Times best-seller list.
A dozen other books followed, plus infomercials, motivational speaking appearances and public television programs. Sales of Cashflow 101 skyrocketed, he said. It is published in six languages.
Kiyosaki’s privately held company, Cashflow Technologies, claims to have sold 500,000 copies of the game, though the numbers are hard to verify because nearly all are sold through Kiyosaki’s Web site and investment seminars.
Anthony Gallela, executive director of the Game Manufacturers Association in Columbus, Ohio, said that a board game selling 500,000 copies would be “phenomenal.”
“If you had a really good game, I would expect 50,000 to sell,” Gallela said. Kiyosaki’s series of “Rich Dad” books has an estimated 24 million copies in print. He also has some detractors.
Financial planners complain that he scorns 401(k) plans, mutual funds and other traditional forms of saving in favor of more risky real estate and franchise endeavors.
Critics say his books are long on platitudes and short on specific investment strategies, beyond developing passive income from real estate and stocks.
Probably his most vocal critic is fellow real estate investment writer John Reed of Alamo, Calif., who wrote on his Web site that “what Kiyosaki is really doing is operating a cult of personality.”
Kiyosaki tersely dismissed Reed. “He criticizes everybody in our industry.”
He is terse, in general, in response to criticism, including a 2003 Smart Money magazine profile that cast doubt on the depth of his investing success and questioned whether there is a “Rich Dad,” the unnamed wealthy man in his first book who taught him about money.
“There were a lot of mistakes there,” he said of the article. “And there really was a `Rich Dad.’ When I wrote [the book], I went to his family. I had his name in it, and they asked me to take it out. He had passed away at that time.”
As far as his own wealth, he said he earns $300,000 a month in passive investments, mostly commercial real estate.
“That’s not big money, that’s just my investments,” he said. “I earn about $4 million a year [from that], plus I own companies and I own stocks.”
Julie Canoura, a Naperville real estate agent, is a believer in the game. She said she’s using her individual retirement account to invest in property in Belize and has learned investment strategies from other players.
“I’m going to throw a Cashflow party,” she said.
Copyright © 2006, Chicago Tribune