Flipper/Rehabber · Greeley, CO · Member since 2013 · 2k+ posts · 1k+ votes
My thoughts on good versus bad debt. Personally I don't think there is a difference if you are using the money to invest in an asset that brings a better return than the debt cost. http://investfourmore.com/2014/12/24/good-versus-b...
Capistrano Beach, CA · Member since 2013 · 283 posts · 169 votes
11y
@Mark Ferguson , thanks for the article. I'm interested to learn how to carry all this debt safely. How much reserves as a percentage of the total debt do you keep in a bank account for an emergency?
Do you have any tips besides having a reserve and being cash flow positive, to ensure that the debt can be carried safely?
@Mark Ferguson , thanks for the article. I'm interested to learn how to carry all this debt safely. How much reserves as a percentage of the total debt do you keep in a bank account for an emergency?
Do you have any tips besides having a reserve and being cash flow positive, to ensure that the debt can be carried safely?
Thank you.
Great question. I always have 6 months reserves for all my mortgages, but usally more. I also buy below market value and put 20% down which creates equity of over 40% in most cases even with that debt.
Specialist · Long Beach, CA · Member since 2011 · 873 posts · 393 votes
11y
Good debt is considered a mortgage. Bad debt is considered charging your credit cards for rehab costs, in hopes that you will flip a property. No matter what Dave Ramsey says, mortgage debt is not bad, in my opinion.
Good debt is considered a mortgage. Bad debt is considered charging your credit cards for rehab costs, in hopes that you will flip a property. No matter what Dave Ramsey says, mortgage debt is not bad, in my opinion.
I don't agree with Ramsey at all! I think a mortgage can be bad debt if the property it is against loses money. Credit cards could be good if they allow you to make $30k on a flip