Quick, what does Rich Dad / Poor Dad, the Rat Race and Robert Kiyosaki have in common with Single Tenant Triple Net (NNN) Lease Investing?
Have you ever played the board game Cashflow? Robert Kiyosaki, who is the author of the bestselling book “Rich Dad, Poor Dad” created this popular investing game. The object of the game is to play your way out of the rat race by generating passive income through real estate, stocks, companies and more. It’s a very educational game for adults and for kids and highly recommended. To beat the game you need to understand what passive income is, how to get it and what the rat race really is. Passive income is described further below, but what about the rat race? Robert Kiyosaki defines the rat race as the following:
If you look at the life of the average-educated, hard-working person, there is a similar path. The child is born and goes to school. The proud parents are excited because the child excels, gets fair to good grades, and is accepted into a college. The child graduates, maybe goes on to graduate school and then does exactly as programmed: looks for a safe, secure job or career. The child finds that job, maybe as a doctor or a lawyer, or joins the Army or works for the government. Generally, the child begins to make money, credit cards start to arrive in mass, and the shopping begins, if it already hasn’t.
Having money to burn, the child goes to places where other young people just like them hang out, and they meet people, they date, and sometimes they get married. Life is wonderful now, because today, both men and women work. Two incomes are bliss. They feel successful, their future is bright, and they decide to buy a house, a car, a television, take vacations and have children. The happy bundle arrives. The demand for cash is enormous. The happy couple decides that their careers are vitally important and begin to work harder, seeking promotions and raises. The raises come, and so does another child and the need for a bigger house. They work harder, become better employees, even more dedicated. They go back to school to get more specialized skills so they can earn more money. Maybe they take a second job. Their incomes go up, but so does the tax bracket they’re in and the real estate taxes on their new large home, and their Social Security taxes, and all the other taxes. They get their large paycheck and wonder where all the money went. They buy some mutual funds and buy groceries with their credit card. The children reach 5 or 6 years of age, and the need to save for college increases as well as the need to save for their retirement.
That happy couple, born 35 years ago, is now trapped in the Rat Race for the rest of their working days. They work for the owners of their company, for the government paying taxes, and for the bank paying off a mortgage and credit cards.
Then, they advise their own children to ‘study hard, get good grades, and find a safe job or career.’ They learn nothing about money, except from those who profit from their naivete, and work hard all their lives. The process repeats into another hard-working generation. This is the ‘Rat Race’.
How do we get out of the rat race? We get out of the rat race by gaining true financial freedom. How do we gain true financial freedom? True financial freedom is obtained when passive income (i.e. income we don’t have to actively work for) exceeds expenses. Think of this concept, if your monthly expenses are $5,000 but you receive $5,000 or more per month in passive income then it doesn’t matter what you do that month with your time, your expenses will be covered. You are financially free.
Single tenant absolute triple net (NNN) lease investments, when purchased right, are the best real estate avenue I’m aware of for generating truly passive income. You have all of the benefits of real estate ownership, but you don’t have the management, leasing, risk, maintenance or collection issues that are often prevalent with other types of real estate investments.
For additional information about how single tenant net lease property can get you out of the rat race, please visit the NNN Resource Center.