A person holds a copy of Robert Kiyosaki's bestselling book "Rich Dad Poor Dad." [123rf]
A person holds a copy of Robert Kiyosaki's bestselling book "Rich Dad Poor Dad." [123rf]

Robert Kiyosaki, 79, the author of "Rich Dad Poor Dad," has revealed he is carrying $1.2 billion in debt.

Kiyosaki made the disclosure on the podcast "Get Rich Education" this summer, telling listeners, "I am $1.2 billion in debt," according to the New York Post, Vanity Fair and other outlets Tuesday (local time).

"Don't do what I do," he said, while adding, "I've been studying since 1974. You need some education to use debt."

His former wife and business partner, Kim Kiyosaki, told Vanity Fair the debt is not personal. "We have a lot of apartments with our partners," she said, explaining that the debt is tied to a real estate portfolio of 1,500 units.

Kiyosaki's approach involves taking out additional loans against the appreciated value of properties he already owns, then using that borrowed money as tax-free income. Each investment is held in a separate limited liability company so that if one fails, the damage does not spread to the others.

"If it all goes wrong, talk to my lawyers," Kiyosaki told Vanity Fair, describing the strategy as "the way the rich play the game."

John Pool, founder of JPTD Partners, a consulting firm in Scottsdale, Arizona, cautioned that the strategy carries serious risks. "There's good debt and bad debt, and with $1.2 billion in debt, you better know exactly what you're doing," he told the New York Post. "Leverage works beautifully on the way up, but if it doesn't keep going, it's like a financial chainsaw coming down."

Pool added that real estate appreciation does not last indefinitely. "Kiyosaki might call this 'rich dad debt,' but for the average investor it could become 'poor dad bankruptcy,'" he said.

The risks are not hypothetical: Rich Global LLC, one of Kiyosaki's companies that had been borrowing against rising property values, filed for bankruptcy in 2012 after a court ordered it to pay $24 million in damages.

Meanwhile, "Rich Dad Poor Dad," published in 1997, has sold more than 44 million copies worldwide.


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