Robert Kiyosaki's Courthouse 2-Step

[Jon Passow]

I've been working on ways to start the ball rolling for my real estate business (money-wise) and I came across what I think is the perfect fit for me to get funds quickly to start BRRR-ing. In Robert Kiyosaki's "Rich Dad Poor Dad", he writes:

“I began shopping at the bankruptcy attorney’s office or the courthouse steps. In these shopping places, a $75,000 house could sometimes be bought for $20,000 or less. For $2,000 which was loaned to me from a friend for 90 days for $200, I gave an attorney a cashier's check as a down payment. While the acquisition was being processed, I ran an ad advertising a $75,000 home for $60,000 and no money down. The phone rang hard and heavy. Prospective buyers were screened and once the property was legally mine, all the prospective buyers were allowed to look at the house. It was a feeding frenzy. The house sold in a few minutes. I asked for a $2,500 processing fee, which was gladly handed over, and the escrow and title company took over from there. I returned the $2,000 to my friend with an additional $200. He was happy, the attorney was happy, and I was happy. I had sold a house for $60,000 that cost $20,000. The $40,000 was created from money in my asset column in the form of a promissory note from the buyer. Total working time: five hours.”

I'll call this the Kiyosaki Courthouse 2-Step for ease of reference. Does anyone have experience or advice with this sort of thing? Does this still work or have there been changes in the law around this?

I am a little confused on a few things. Robert put $2,000 down then says “when the house was legally his...”, wouldn't he have to pay the attorney the additional $18,000 to actually own the house before selling it, or did he secure a payment plan or loan for the rest, then sold the house and payed off all monies owed? Also, he talks about a promissory note. How does he create the money to pay off the $20k to the attorney/bank during the time of holding the note (30 years in his words)?