Thinking Big Is the Best Plan by Robert Kiyosaki

Years ago, when I was just starting my real estate investing career,  I came across a property with a for-sale sign on it. I called the broker and asked,  “What can you tell me about the property, and how much does it cost?”

The broker politely and patiently said, “It’s a commercial building  with six tenants. There’s a chiropractor, a dentist, a hairstylist, an accountant,  and a bail bondsman. The price is two million dollars.”

Losing Big
I almost choked. “Two million dollars?! That’s way too expensive!”  Thirty years ago, $2 million was a lot of money. And instead of looking at the property,  I let the price frighten me off. I never looked at the deal, and just assumed that  the seller was
 crazy, greedy, and out of touch with the market. Today, there’s a  luxury hotel on the same site. It’s spectacular. I estimate the property to be worth  at least $150 million, and maybe more.

Cheap Lessons
Not seeing the potential of that deal taught me many lessons. Here  are two important ones:
  • Sometimes you learn more by being stupid and making mistakes.
  • The person with the better plan wins.

In the above example, my plan was just too small. In fact, the only  plan I had at the time was to collect the rent money from the tenants, cover my  mortgage and expenses, and put a little in my pocket. And 30 years ago, I knew that  the rent from six small tenants couldn’t possibly pay for a $2 million property.

I later learned that the property’s eventual owner bought it for  full price—with terms. He put $50,000 down as an option and asked for 180 days to  put the rest of his plan together. During those 180 days, he gathered his investors,  a builder, and his tenant, a major hotel chain.

If he hadn’t been able to put his plan together, he would’ve lost  his option money. Instead, before the 180 days were up, his investors paid the $2  million in cash, and he spent the next three years getting the project through the  city planning commission and finally began construction. He won because he had a  better plan.

Mind Expansion
  Donald Trump often says to “think big.” He definitely does so, but  by nature, I don’t. My excuse is that I come from a small town in Hawaii. My family wasn’t  rich, so when it comes to money, I tend to err on the side of caution. Over time,  my thinking has become medium-sized when it comes to spotting opportunities, but  I’d still like to think bigger.

One of the reasons I enjoy doing business in New York and having  Trump as a partner on different projects is that he makes me do just that—because  if you don’t think big in New York, you get kicked out. If I thought small, I wouldn’t  be on television, cutting book deals with major publishers, or talking in front  of tens of thousands of people in arenas like Madison Square   Garden.

Recently, I worked on a real estate project to present to Donald.  Consequently, I found myself pushing my thinking, expanding my context, and thinking  of luxury, not just price. Just preparing to present the project to him required  me to think bigger and come up with a better plan.

A Blast from the Past
About a year ago, someone called to say that there was a spectacular  condominium that had just come up for sale. She wanted to know if I was interested  in looking at it. Of course I said, “Yes.” I wanted to see what her definition of  spectacular was, and trust me—it was spectacular. She then said, “And the price  is only twenty-eight million dollars. But I believe you can pick it up for twenty-four  million. At that price, this condo is a steal.”

Once again, I heard myself saying what I said so long ago: “That’s  too expensive.” But, as I said, that lesson from 30 years back proved to be priceless:  After hearing the think-small person in me comment on the condo price, I took a  deep breath and asked myself, “What’s my plan?” Then I asked myself, “What’s wrong  with my plan?”

I didn’t buy the condo, but I did come up with a better plan. Over  the next few days, I realized that the reason I couldn’t afford the condo was because  my business was too small. If I wanted to afford such a luxury residence, I needed  to come up with a better plan for my business. Today, I’m working harder than ever  to improve it—not because I want the condo, but to be able afford such a condo if  I someday decide I want one.

Plan Ahead
I’ve often written about my concern over the devaluation of the U.S.  dollar. As the dollar drops in purchasing power, it often pushes up the prices of  real assets—quality real estate and equities. My fear is that many people may not  be able to afford tangible assets and become poorer as the dollar declines. This  drop in purchasing power also widens the gap between the rich and everyone else.

One method of staying ahead of rising asset prices and the declining  dollar is to think bigger and come up with better plans. As important as financial  and business planning is a plan for personal development and self-improvement. I’m  often asked to invest in people’s business plans, and one of the reasons I turn  many of them down is because a big plan requires a big person who’s spent time on  personal development. In a lot of cases, a business plan is far bigger than the  person with the plan—that is, the dream is bigger than the dreamer.

Today, I’m glad I missed out on that $2 million property all those  years ago. The best lesson I learned from it is that I can have a better life if  I have a better plan—and a plan to become a better person. So what’s your plan?