Can Rich Dad Poor Dad beat up Dave Ramsey?
Residential Real Estate Agent · Rochester, MI · Member since 2012 · 152 posts · 52 votes
Can Rich Dad Poor Dad beat up Dave Ramsey?
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Real Estate Agent · Tampa, FL · Member since 2009 · 456 posts · 123 votes
11yTo me this whole 'debt' concept of a mortgage on rental property is utter nonsense. If you are paying 500 for a mortgage, 400 for taxes insurance water etc, and renting it for 2000, you are not in some risky position to suddenly get f-ed. Lost your job? Uhhh who cares, you aren't paying the mortgage - the tenant is! You're still clearing 1100/month. Even after operational expenses you are cash flowing. You will actually be BETTER OFF than if you did not have the income property and lost your job because guess what - then you have 1100/month coming in vs zero.
I don't even care about appreciation I care about cash flow. Oh God, what happens if I buy a house for 300k and it drops to 200k? What am I going to do? How about not even give a damn because the rents don't drop in sync with the sales prices! In fact rents continued to rise strongly through this whole recession! If you are buying and holding then price fluctuations after you buy are largely irrelevant.
Most people don't have hundreds of thousands of dollars lying around to just scoop up a few properties without financing. And even if you do, you're leaving a big chunk of profit on the table. I'll make a simple example based on a property I am considering buying.
List price 100k, 2 family, rents for 1800, expenses 1200/month including ~400 for a 30 yr fixed mortgage in the low 4s. That's 600 profit a month.
Now, to finance, you'd need 25% down. That's 25k. Plus 4k closing costs. (I don't have to escrow and can count IRA funds for the 'reserve' they want to see. If your bank doesn't give you those options, get a better bank.)
So, you'll make 600 x 12 = 7200 profit yearly. That's a 25% return on your money. And that's before we even look at the mortgage interest deduction and depreciation! Please show me a better investment!
But if you bought it with cash, it becomes 1000 profit a month (since you're no longer paying the 400 mortgage payment) so it becomes 12000 profit yearly. That's only a 12% return on your 104k of cash. LESS THAN HALF COMPARED TO USING FINANCING, FOLKS. If you want to make less than half as much profit, be my guest I suppose... And you don't get the mortgage interest deduction...
If you had 100k cash, you could buy 3 of these properties with loans (29k for DP + CC each) and still have 13k left over to stick in your rainy day / sudden repairs fund. Then you would be making 600x3 = 1800 a month profit, which is 21,600/month, from 87k cash invested, which is again 25% return annually, before we even look at the mortgage interest and depreciation factors.
So do you want to make 12% or 25% for doing the exact same amount of work...
I'm not a financial advisor, use your own best judgment.
151 Replies
- Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes11y
Originally posted by @Jason Giomboni:
I don't understand the logic on having tenants pay it down:
If I pay for a 100k house with cash the cost of the house is 100k (for example)
If I get a 30 yr fixed rate 4% on 100k house and have the tenants pay it down I would pay 172k for that same house.
Am I missing something cuz I would rather keep the 72k.
What's your cash flow on that house with or without the Loan? In my case it would be $900 without and $450 with. 72k is 200 a month over 30 years. Assuming no inflation. It takes 100k to get 900 a month or 20k to get 450 a month. I can buy 3 (conservative) to get 1350 a month or one with 900. Plus I am paying 200 per house in equity pay down. Getting three times depreciation and appreciation.
The 72k extra interest cost is really irrelevant. I Dont care what I pay banks. I care what my profit is.
- Summit, MS · Member since 2014 · 63 posts · 40 votes11yHere is my opinion on the debt issue. I believe in leverage. Here is my reasoning. First you have to have cash to weather hard times. Minimum 3 months of payments on each property or loan. This is on buy and hold only. I know how long it would take me to save 50k on a 100k annual salary. With a family and life in general. I'm not willing to wait that long. I want to retire young. First no 30 yr loans for me. Only 15. My interest rates are 5.2. Here is why. 100k on a 15 year loan at 5.4. Is $46,122 in interest paid. 100k on a 30 year at 3.8% is $ 67,745 paid. So for the bean counters the higher interest rate is better for less time and usually easier lending rules. If you can pay a 15 yr note and expenses and cash flow 200 a month you got a good deal. Personally hope the market slows down a lot. That mean fewer people are buying more are renting. At the end of the day. Why gamble with your money? When you can gamble with someone else's?
- Rental Property Investor · Columbus, OH · Member since 2014 · 148 posts · 177 votes11y
Jason, if you're new to real estate I suggest that you really study the concepts of using debt as a tool and of tenants paying your mortgage. Do what you feel comfortable with, but make sure that you at least understand these concepts. They will help you build a more complete strategy, which ever way you decide to take it.
- Accountant · Lumberton, NC · Member since 2015 · 58 posts · 22 votes11y
Great topic! Once an acceptable emergency fund is in place, would anyone begin paying down on the loans? I guess everything depends on personal situation .. Risk tolerance, etc. I am hoping to have 5 units renting by the end of the year. I will have the same decision to make down the road... Buy the next one or pay down. Also depends who much you're making at your day job.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes11y
The people that lost it all in the meltdown were leveraged 120%. That was a house of cards built by Fiscal Insanity, Inc. Today...things are MUCH different. Whether you choose to pay cash or take on some debt will make a difference. Using leverage carefully is a good thing. That can allow you to acquire more properties. As you acquire more, it is important to put back most of your income for emergencies (new roof, new A/C, evictions..whatever). As an example, in the last 8 months I had to put in three new A/C units and a roof. Those totaled about 14K. That is where being cautious and saving came in. I simply wrote a check! On the other end of the spectrum, I am in the process of acquiring another rental. I am borrowing 66% of the purchase price and put down 1/3. That doesn't give you a clear picture though. With this new acquisition my LTV will be less that 20%. There are those that would argue I am not using enough leverage....but I would argue I sleep well at night. What is right for you? What you feel comfortable with...with the stipulation you PLAN carefully, set aside reserves, and don't lose sleep.
- Specialist · Atlantic City, NJ · Member since 2013 · 431 posts · 170 votes11y
Originally posted by @Carl C.:
having seen Dave ramsey's home and office buildings in Franklin Tn. The guy is a hypocrite. Does anyone know his back story ? You don't become a Deca-millionaire without borrowing money. So either
He was already rich or he used Leverage ?
As far as Robert Kiyosaki regardless if he didn't have a childhood at all, he outlines the plan every wealthy family in american uses to acquire and retain wealth.
This is classic, Dave Ramsey is a liar and Kiyosaki is honorable.
I carry debt and recommend anyone exploit the 10 conforming mortgages.
When rates go up and sub2 deals get called people will go broke the same way Dave Ramsey did.
- 11ySharad M.Pro MemberCarlsbad, CA · Member since 2010 · 1k+ posts · 1k+ votes
Is anyone on here a buy and hold investor using all cash?
I am currently buying all cash.
If so why and what have you found to be the result?
I do it mainly because of peace of mind. I am involved in lots of other things and I am okay with having peace of mind to focus on other things.
The result has been that I make money. I have an accounting degree so I understand the math that I will make more money if I leverage, but I am okay with lower ROI (still double digit ROI) to have higher peace of mind.
Was it always that way or did you start with leverage?
I do have some properties (less than 15%) of my portfolio that is leveraged and a big majority of that is getting paid off this year, so after this year, the leverage number will be a lot lower.
I have been fortunate to have had other real estate income sources outside of buy and hold that I have invested in buy and holds to grow my free and clear portfolio.
If I could go back and change anything, I would be more aggressive to build up my other sources of income to grown my portfolio of free and clear properties faster.
The strategy that I use won't work for majority of the people and I completely understand that, but it works for me and my situation and that's all that matters.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I understand what your saying about a 300k property renting for 2400... but I think you saying that from your current perspective which is that of investors that have basically gotten into the game post crash.. these were very acceptable numbers in 2000 to 2005.
1% rule was the norm.. and in many turn key buy and hold scenerios like those were in the day still the norm.
regardless if you bought those at 170k the 2% rule the properties still crashed and the owners would have still lost them...
Its a fact that landlords got killed because of leverage in the melt down ,, In addition you have a whole new crop of investors that basically started 8 to 10 years ago at all time low's in values and have only been working on the rebound.. And form buying at all times lows. did not make you some super smart investor who could find the great buys the market came to you. .what your to be applauded for is realizing this and taking action and buying.
- Investor · lansing, MI · Member since 2015 · 29 posts · 18 votes11y
well some simple criteria can determine if they are honorable ?
1. Are they first generation millionaires ?
2. Did they use their own techniques to become wealthy ?
3. Or are they both simply salesman who became wealthy by selling BS to people like us ?
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
actually most of my wealthiest friends and business associates by and large have no debt or very little. .I did have one business associate who liked to leverage a lot.. and in 07 to 2011 he made it through but it was total stress and it was not only RE he owned wineries and food companies that got hammered as well. Were my other friends and associates who owned all their cash flow real estate free and clear had no issues what so ever. and these were substantial holdings of course... One Investor I knew here in Portland rolled up his 100 million in apartments in 06 he had 50% equity.. 1031 into Vegas into 200 million of apartments at 25% down.. by 09 to 2010 vacancies were better than 40% and he could not hold on and lost the whole thing.. if he would have kept his position in Portland this would not have happened but he rolled up leveraged up then lost the family fortune. So it happened to very big players as well..
There is a balance and there are some very short memories in RE.. and by and large those that started around 07 or 08 after price correction did well no doubt.
And again is a regional thing... someplace's your thought process is fine others in a down you could lose it all very quickly unless you had significant cash reserves.. ( which most people and investors do not have) I look at a lot of balance sheets from investors I have lent money to over the past 30 years... Real estate by its leveraged nature brings out those that want to leverage and run dangerously short on cash.. 2 million in assets and 50k in liquidty is not uncommon.
- Investor · El Dorado Hills, CA · Member since 2012 · 1k+ posts · 1k+ votes11yI apply both theories in my life but separate them among personal and business. I don't think either philosophy is perfect. I have very little personal debt. Cars are paid for, house will be paid off by my 40th birthday, no revolving credit card debt, etc. My monthly nut is very manageable if/when things go south and I have a 6 month safety net. There is a significant opportunity cost to having that cash and equity sitting around but the piece of mind it gives my family is worth it. I use leverage in my business life and property investing. I like Dave Ramsey and think his advice is great for 90% of the population, but real estate is a different animal in CA. Leverage is needed to take advantage when there is a deal to be had.
- Investor · Newark, DE · Member since 2014 · 245 posts · 198 votes11y
@Lee G. You can get the best of both worlds once you have some equity. Get a HELOC; you can pay it down when you have extra cash, and draw on it in a heartbeat when a new deal comes your way.
HELOCs on investment properties are not easy to find, but they are there - small local banks and credit unions are more likely to have them than the big banks.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
I don't care if you fail. Makes no difference to me apart from makes me (and others like me) lots of money. My strategy is all about banking cash - not paying interest on loans.
You leverage yourself to death. Seriously, what do I care? I like you. You'll make me money in 5-10-15 years in the next crash.
We did all this in the 2000s, everyone bought and leveraged themselves "what's the worse that could happen?" and by the late 2000s lots and lots of real estate investors were in trouble. I know lots of investors who lost nearly everything.
They didn't just lose their rentals, they lost their personal homes as well. They did this because they got carried away.
I have nothing against debt, but the key is to reduce debt at every opportunity, and if it slows you down, so be it.
I do actually wish all the best in the world. But should you fail, then I thank you from the bottom of my bank account when I clean up on your heavily discounted properties that a bank is trying to shift for cents on the dollar.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Jane A.:
Thank you, James. So, if I will be paying off my mortgages quicker, I will have lower cash flow in middle term, but higher in long term perspective. And if I will have higher leverage I will have higher cash flow in short term perspective but higher risk and lower equity in long term perspective.
Yes.
We've done a few owner finance deals, but they are all 4 year mortgages where 100% is paid off (apart from one). In the short term we are making no money on them. But after 4 years, BOOM, full cash flow and a paid off asset. I'm free of managing mortgage payments, I'm free of ensuring that it stays fully rented to make sure I'm not having to pay the mortgage myself, all that hassle gone.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
it does not matter the market really,, some of the best foreclosing buying years for me were in 03 to 05... simple fact is some people cannot manage debt, regardless of what the economy was or is doing...
I personally do not see another crash like we had ( and especially violent in your area ) in a long time if ever for the following reasons.
1. to many investor regardless of this thread are paying cash ( close to 50% of them)
2. Lenders are much tighter so they don't let investors get over their ski tips like they did.
3. Many investor who do have leverage have it at all time lows in interest.
4. reset in values so many properties were bought for far less than replacement value
Just take for instance Ft. Meyers I looked at a bank portfolio there in 07 ish the first round of devaluations... houses that were brand new specs selling in 05 for 225k to 250k we could buy for 110k... great deal right ... well we did not pull the trigger.. By 09 ish those same houses were down to 30 to 50k.. and that is were they bottomed out and we bought some then... Not enough but got in the game. now they are back up to 100k or more ...
Will they ever fall to 30 to 50k again.. Well maybe but probably not... as so many were sold for cash... cash investors do not lose properties they ride out down turns.. its leveraged owners that lose properties or get forced into selling. It just depended on where you were in the country... properties in TExas did not free fall... and they are appreciated some today. But what was a better investment in 09 100k home in Texas that did not fall because of the strong job market.. or a 30k home in flordia that lost 80% of its value..
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Jay Hinrichs:
it does not matter the market really,, some of the best foreclosing buying years for me were in 03 to 05... simple fact is some people cannot manage debt, regardless of what the economy was or is doing...
I personally do not see another crash like we had ( and especially violent in your area ) in a long time if ever for the following reasons.
1. to many investor regardless of this thread are paying cash ( close to 50% of them)
2. Lenders are much tighter so they don't let investors get over their ski tips like they did.
3. Many investor who do have leverage have it at all time lows in interest.
4. reset in values so many properties were bought for far less than replacement value
In my opinion, and this is a personal opinion, no one has learned any lessons from the Noughties (2000-2009).
As the economy is struggling back, we seem to be slipping back into debt again, and it didn't play out very well last time. It's like no one has learned anything. Full steam ahead to leveraging again!
And it's only a matter of time before the underwriters start weakening their stances about lending. That's inevitable.
The amatuer cash investors will be driven out sooner than later. Being a landlord is more than owning a house and unsavvy investors are just prey to contractors. You watch people flee the business as your investment home is destroyed by a tenant.
I'm already seeing cash investors that came in with us, selling up, and buying a beach condo "to keep the wife happy". Never underestimate the power of a wife to change someone's investment plans.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
that's a completely different subject IE the class of rental property to buy.
and our 100% correct long distance land lording has its ups and downs like any investing.. and or choosing the cheap properties with the bottom of the barrel tenant pool... those are not investments those are business's... and if you don't attack that asset class as a business and have business that is of scale and just think your going to buy 1 or 2 of these.. then I agree with you.. most of those landlords fail and sell for a loss.
Majority of rentals at the really high cash flow numbers have those numbers for one reason only... Risk = reward... this is one asset class I am an expert at I owned 350 of them.
So like I said this is not an investment in cash flow.. its an investment in a business that just happens to make it profits by running rental properties.
Agree on the wife... when I bought my Cirrus and was in the ready room there was a bunch of guys trading in their Bonanza's they all to a man said.. My wife will let me buy this plane because it has a parachute.. without the Shoot she won't fly with me.. and if would eventually have to sell it.
Same with being an RE broker or Agent you learn very early on to show a husband a home without the wife is a total WASTE of time.. no matter what the tough hubby says.. Wife makes the final call in 95% of these cases.. Lord help the hubby who talked wife into buy a C class rental and when it goes south... yup maritial discord.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Mark Ferguson:
Originally posted by @Jason Giomboni:
I think this is exactly the opposite of my plan and long term will have similar results with more risk. Your years 2 thru 4 have more risk than mine but more properties. If any issues DeRoest mentioned come true than my plan works better if you come out unscathed than your plan works better.
I think the Ramsey vs Kiyosaki debate comes down to risk vs risk aversion and how comfortable the investor is with the associated risk.
Not really true. There are many factors to consider. The reserves, the equity build up from buying below market, tax advantsges, etc. I have 13 props in 4 and a half years versus three with all cash. Paying 80k to 135k with financing. I gain as least 20k a property buying below market. Plus a save a couple thousand a year on depreciation from taxes on each property and a couple thousand on equity pay down for each property. I have plenty of reserves andcsn weather storms.
I would live to know how long it took to save the cash for your first one.
The problem is, and you and so many others fail to talk about this is - tenants.
These houses do not come with guarantees about income. If that income should drop, eg tenant decides not to pay, that mortgage payment is coming out of your pocket.
People sniff at the idea of say 3 properties in a portfolio becoming empty at once, but if you get a trashed house (or two), then it's incredibly easy to have a house down for a month or three. And the double whammy is getting the house ready again as that's more $$$.
And that's when you are now forced to underwrite the payments yourself.
I've seen this happen to landlords.
I remember a several years ago, we had 5 units rented, and whilst I was away working for 3 months the wife evicted every single tenant for non payment (or they just did a runner). Dont ask me why, they just stopped paying for different reasons. We had one hell of a September/October getting everything rented again! But as they are all paid for assets it didn't hurt us.
So these apocalypse moments can and do happen.
- Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes11y
Originally posted by @James DeRoest:
Originally posted by @Mark Ferguson:
Originally posted by @Jason Giomboni:
I think this is exactly the opposite of my plan and long term will have similar results with more risk. Your years 2 thru 4 have more risk than mine but more properties. If any issues DeRoest mentioned come true than my plan works better if you come out unscathed than your plan works better.
I think the Ramsey vs Kiyosaki debate comes down to risk vs risk aversion and how comfortable the investor is with the associated risk.
Not really true. There are many factors to consider. The reserves, the equity build up from buying below market, tax advantsges, etc. I have 13 props in 4 and a half years versus three with all cash. Paying 80k to 135k with financing. I gain as least 20k a property buying below market. Plus a save a couple thousand a year on depreciation from taxes on each property and a couple thousand on equity pay down for each property. I have plenty of reserves andcsn weather storms.
I would live to know how long it took to save the cash for your first one.
The problem is, and you and so many others fail to talk about this is - tenants.
These houses do not come with guarantees about income. If that income should drop, eg tenant decides not to pay, that mortgage payment is coming out of your pocket.
People sniff at the idea of say 3 properties in a portfolio becoming empty at once, but if you get a trashed house (or two), then it's incredibly easy to have a house down for a month or three. And the double whammy is getting the house ready again as that's more $$$.
And that's when you are now forced to underwrite the payments yourself.
I've seen this happen to landlords.
I remember a several years ago, we had 5 units rented, and whilst I was away working for 3 months the wife evicted every single tenant for non payment (or they just did a runner). Dont ask me why, they just stopped paying for different reasons. We had one hell of a September/October getting everything rented again! But as they are all paid for assets it didn't hurt us.
So these apocalypse moments can and do happen.
That is why you keep plenty of cash reserves. I have had issues on my rentals and it has not been a big deal because I had cash to take care of them and my other rentals continued to perform.
- Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes11y
- Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes11y
Originally posted by @Jay Hinrichs:
I understand what your saying about a 300k property renting for 2400... but I think you saying that from your current perspective which is that of investors that have basically gotten into the game post crash.. these were very acceptable numbers in 2000 to 2005.
1% rule was the norm.. and in many turn key buy and hold scenerios like those were in the day still the norm.
regardless if you bought those at 170k the 2% rule the properties still crashed and the owners would have still lost them...
Its a fact that landlords got killed because of leverage in the melt down ,, In addition you have a whole new crop of investors that basically started 8 to 10 years ago at all time low's in values and have only been working on the rebound.. And form buying at all times lows. did not make you some super smart investor who could find the great buys the market came to you. .what your to be applauded for is realizing this and taking action and buying.
I think buying at 300k with 2400 rent and buying at 170 with 2400 rent is a huge difference! Plus many investors in the 2000's could get 95% or higher financing on their properties making their payments much higher than the 20% down investor of today. Once you add in PMI and higher loan to values we are talking about over $1,000 a month more in mortgage expenses on buying a 300k property at 95% loan to value and a 170k property with 20 % down.
Even with high vacancies you can lower rents a lot to get them occupied.
I think the scenario where investors lose it all is not due to buying with leverage, but the investing criteria they buy with.
1. Are you buying in a crazy market where prices have increased 50% in two years?
2. Are you sacrificing cash flow because prices have gone up so much and are hoping rents will catch up or banking on appreciation?
3. Are you stretching yourself too thin with low cash reserves?
4. Are you managing properties yourself to save money, but don't have the time and are doing a poor job of it?
Couple the above factors with leverage and you are asking for disaster. But if you are able to invest in steadier markets, with cash flow, plenty of reserves and either a PM or time to manage yourself you can use leverage to build up the business.
On a second note, did the high net worth guys you know build their wealth using all cash techniques or did they use debt to build their business and then switch to cash investing once they made it?
- Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes11y
Equity partners are the way to move forward without taking on debt. With this structure - when there's no income, there should be no mortgage payment.
You can sleep easy with this set up.
- Investor · Century, FL · Member since 2015 · 950 posts · 603 votes11y
Originally posted by @Mark Ferguson:
And it's exactly that that is not being drummed into new investors (and many seasoned investors).
There are too many gurus out there preaching to noobs that this is easy money, run the numbers and you can't lose, leverage leverage leverage, never use your own money*, debt is good because it's in an asset and not a car.
But none of it revolves around the real world issues of actually being a landlord and what it entails.
And it doesn't matter how good your cash reserves are when the market turns (which it will one day) if you are massively leveraged, which you will be. Cash will be eaten in a heart beat.
* I especially despise the mantra "never use your own money". - Broomfield, CO · Member since 2012 · 47 posts · 43 votes11y
Originally posted by @Mark Ferguson:
Originally posted by @Jay Hinrichs:
I understand what your saying about a 300k property renting for 2400... but I think you saying that from your current perspective which is that of investors that have basically gotten into the game post crash.. these were very acceptable numbers in 2000 to 2005.
1% rule was the norm.. and in many turn key buy and hold scenerios like those were in the day still the norm.
regardless if you bought those at 170k the 2% rule the properties still crashed and the owners would have still lost them...
Its a fact that landlords got killed because of leverage in the melt down ,, In addition you have a whole new crop of investors that basically started 8 to 10 years ago at all time low's in values and have only been working on the rebound.. And form buying at all times lows. did not make you some super smart investor who could find the great buys the market came to you. .what your to be applauded for is realizing this and taking action and buying.
I think buying at 300k with 2400 rent and buying at 170 with 2400 rent is a huge difference! Plus many investors in the 2000's could get 95% or higher financing on their properties making their payments much higher than the 20% down investor of today. Once you add in PMI and higher loan to values we are talking about over $1,000 a month more in mortgage expenses on buying a 300k property at 95% loan to value and a 170k property with 20 % down.
Even with high vacancies you can lower rents a lot to get them occupied.
I think the scenario where investors lose it all is not due to buying with leverage, but the investing criteria they buy with.
1. Are you buying in a crazy market where prices have increased 50% in two years?
2. Are you sacrificing cash flow because prices have gone up so much and are hoping rents will catch up or banking on appreciation?
3. Are you stretching yourself too thin with low cash reserves?
4. Are you managing properties yourself to save money, but don't have the time and are doing a poor job of it?
Couple the above factors with leverage and you are asking for disaster. But if you are able to invest in steadier markets, with cash flow, plenty of reserves and either a PM or time to manage yourself you can use leverage to build up the business.
On a second note, did the high net worth guys you know build their wealth using all cash techniques or did they use debt to build their business and then switch to cash investing once they made it?
Curious how much cash reserves you use... 6 months piti, something else?
Might this be a good blog/article topic?
- Contractor · Las Vegas, NV · Member since 2014 · 3 posts · 0 votes11y
Hello. There's is a great book I'd like to recommend , "The Wealthy Code" by George Antone. It will explain how to gauge the downside of any potential passive income investment. Explaining the details of risk protection in great depth.
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