Page 163 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

Trends in housing. One of the reasons for the high price of commodities is
that the world needs and wants more housing. For example, demand for

concrete in China caused a shortage of concrete in the U.S., which caused
the price of concrete to skyrocket.
One of the reasons I love investing in apartment houses is that, rich or
poor, people will pay for a roof over their head. In America, the population

is expected to grow from 300 million to over 400 million in the next two
decades. So I believe the price of housing will continue to trend up.
As real estate becomes more expensive and difficult to afford, and as
wages come down, I believe these trends will cause more people to be

renters. One of the reasons Kim and I did not panic during the August 9,
2007, crash is because we rent out real estate for cash flow. We do not sell
real estate. People who invest for capital gains are people who buy to sell
real estate.

When the subprime mortgage market collapsed, sellers panicked. People
who invested for cash flow, those who rent property to others, didn’t panic.
In fact, they saw opportunity. In down markets, there are more renters than
buyers, so a crash is generally good for landlords but not sellers.

The old woman chewing on betel nuts and selling gold knew that panic
was going to make her rich. The trend was her friend. People who rent their
property know that the trend is their friend. For those who sell property, or
are counting on their property to appreciate in value, the short-term trends

may work against them. Instead of prices’ going up, they will probably
come down or remain flat. The boom is over for sellers and just beginning
for landlords.

Demography Is Destiny

A very valuable source of information is demographics. As the saying goes,
“Demography is destiny.” In other words, just watch people, as I did in
Vietnam, and you’ll know which way to invest. Once I knew that when
people panic they buy commodities with their currency, I had very valuable

information for basing my opinions on trends. As gold went below $400 an
ounce, I started to buy a little and began buying a lot when it hit $275 an
ounce. Then the price began to head back up. In other words, I followed the