Mark Lemmons Group

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Robert Kiosaki's 4 Quadrants and Investing in Real Estate

Building wealth and leaving a legacy for your family can seem like a daunting task. Robert Kiosaki, author of best selling personal finance book, “Rich Dad, Poor Dad,” breaks it down for you with his four quadrants. Each quadrant represents how you earn income: Employee, Self-Employed, Business Owner, and Investor. People talk about side hustles and using that to get ahead in life, but the majority of people are still only working in the employee category and haven’t opened their options by moving into another quadrant. This post will provide a description for each of the quadrants along with how you can take steps to grow your wealth with real estate and begin to leave a legacy!

E – Employee

Most people earn their income working as an employee for a type of business. An employee might work for a single person or a large company. In exchange for a paycheck and usually some benefits, the employee gives their time, energy, skills, and service to their employer. Employee salaries can range from minimum wage to large sums of money. But as an employee, when you stop working your income stops as well. And, an employee’s financial security is dependent on the success of their employer, which is the main problem of this quadrant. 

S – Self-Employed

When you’re self-employed, you get the benefit of having the freedom to be your own boss and make big-picture decisions for the success of your business. With more freedom comes more flexibility, and a lot of times more income for you as a self-employed individual. This kind of freedom however brings more responsibilities. Self-employed individuals are responsible for much more than just regular employees are. This usually means long hours and long work weeks! Not to mention in this quadrant we still have the same problem as before in the “E” quadrant: when you stop working, your income stops too. 

B – Business Owner

Some of the wealthiest people in the world are business owners. They own a company and lead people, but the systems and employees work smoothly without much involvement from them. However, a business owner can work at the company he or she owns, therefore being in the “S” quadrant as well. The income of a business owner depends on the overall success of the business, which can add an extra level of stress for the owner. 

I – Investors

Investors live off of passive income from investments they’ve made. Passive income refers to money coming in automatically with very little labor contributed to earning it or maintaining it’s earnings. Investors make money off of the other three quadrants in some form, then put this money they made to work to produce more money for themselves through investments. Investors typically have the most financial freedom and earning potential out of the four quadrants. The goal is to move through the four quadrants to end up in the “B” or “I” quadrant. Based on the descriptions, we can see the “I” quadrant provides the most financial stability and freedom. 

Investing in Real Estate 

Now that you’ve gained an understanding of the four quadrants, and why investors are the most successful, let’s talk about how you can get started investing in real estate. Even if you feel like you don’t have a lot of money to start with, you might be surprised to learn how you can invest. Here are three different ways you can start investing in real estate today. 

1.Buy a REIT 

A REIT (real estate investment trust) provides a unique opportunity for individuals to invest in real estate without actually owning physical property. REITs are very similar to mutual funds, because of the way they are purchased in shares and pay high dividends. There are different types of REITs, and the kind you purchase plays a big factor into the amount of risk you take. Make sure to do your research!

2.Invest in a Rental Property 

There are many types of rental properties you can invest in! You might have the funding to dive head first into a multiunit property. Or, maybe a small house in a good area you know you’ll be able to rent for a nice profit. You could even “house hack” by buying a duplex and living on one side while you rent out the other to pay your mortgage. Especially with excellent property management, a good rental property can produce sustainable income.

3.House Flip

You’ve seen it done before on HGTV; a couple buys a dump and renovates it into the home of their dreams. With house flipping, you don’t always have to demo the entire house and rebuild from the ground up. Sometimes, there are a few small changes you can make that will add an incredible amount of value to a home and increase your return on investment. According to a recent survey, roughly 69% of buyers would pay more for a home if the kitchen had new appliances. Adding a few modern touches to match those new appliances could turn a shack into a buyer’s dream!

90% of millionaires have earned their wealth through investing in real estate. I love seeing my investors enjoy their passive income! I have over ten years of experience helping others in the real estate business. To see more of my content, check out my instagram page here!

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