All Forum Posts by: Wilson Churchill
Wilson Churchill has started 8 posts and replied 461 times.
Post: How do YOU view debt???
- Madison Heights, MI
- Posts 471
- Votes 132
Originally posted by @David Roberts:
Debt scares the hell out of me. I was raised by a very conservative mother who drilled it into my thick head that credit cards are evil and should never be avoided, although having 1 in case of true emergencies is important. My mother is happy with her paid off home and paying everything in cash. She lives a simple life, and that is good for her.
But because of her I never have carried a balance on a credit card, and the only debt that I have is student loan debt at 2.75% (not too bad). This student loan debt was a necessity and I have done well from it, but it still bothers me to have balances that I owe future money with.
What I recently discovered and was missing in that knowledge was the POSITIVE side of debt, specifically debt that you can qualify for, that you don't pay back (someone else pays it for you), as in real estate.
It still scares the crap out of me though, and while I go back in forth in my mind all the time about debt, I just try to make sure I don't overextend myself, and I'm always thinking down the road.
I think it's important for me to use that fear of debt to keep my mind razor sharp.
I have a pending purchase on my 2nd rental right now, and sometimes I get into very negative mindsets where I am wondering what the hell I'm doing, and then other times I get into the mindset that millions of people do this, and I will be fine because I've tried to think through it and be prepared for anything. It's only money... ;)
So long as your leveraged rental generates positive cash flow, you can use it to pay other debt down more quickly.. A fear of debt is healthy, imo. It should temper your mind to make sure that all of your investments produce cash flow.
Post: How do YOU view debt???
- Madison Heights, MI
- Posts 471
- Votes 132
Originally posted by @Cal C.:
Originally posted by @Wilson Churchill:
Isn't Ramsey the same guy that says to pay the smallest debt rather than the one with the highest interest rate? I recommend embracing math as a good thing and ignoring anything to the contrary.
Paying for the first property with cash is good, in that it allows you to refinance to get your money back, however.
He does that for psychological reasons, he is a math geek and understands the math very well. However he also understands the power of small victories and feels those victories outweighs the interest difference. He must be doing something right since he has helped millions get out of debt.
This isn't Dr. Phil, this is bigger pockets! I would hope that visitors to this site are more sophisticated and can appreciate saving and making as much money as possible. Speaking only for myself, I "feel" better when I am making a mathematically correct decision regarding my finances rather than by making token payments on debts.
Post: How do YOU view debt???
- Madison Heights, MI
- Posts 471
- Votes 132
Isn't Ramsey the same guy that says to pay the smallest debt rather than the one with the highest interest rate? I recommend embracing math as a good thing and ignoring anything to the contrary.
Paying for the first property with cash is good, in that it allows you to refinance to get your money back, however.
Post: What to do when called a "bottom feeder" at landlord/tenant court?
- Madison Heights, MI
- Posts 471
- Votes 132
I can think of a response, but I can't post it here and it would get you into a fight with her husband. :-)
Post: Getting credit
- Madison Heights, MI
- Posts 471
- Votes 132
Check out the "credit pursuit" method in Carleton Sheets book.
Post: Michigan Noob
- Madison Heights, MI
- Posts 471
- Votes 132
Try to pay cash for your first property, if possible. This will allow for more financing options going forward. You can supplement your starting funds with CC balance transfers or a personal loan.
Post: Newbie - Hold or Sell
- Madison Heights, MI
- Posts 471
- Votes 132
In my opinion, take whatever option leads to the highest amount of monthly cash flow. For example, you may be able to sell the property and use the proceeds to buy additional properties. Alternatively, if you can access your equity via a refinance or line of credit, you may be able to buy additional properties but also keep the existing property. Which option will leave you with the greatest number of units and most cash flow?
Post: Negative $150 per door cashflow to positive $200 per door. Too optimistic?
- Madison Heights, MI
- Posts 471
- Votes 132
You might be able to get more income in the mean time by renting any rooms that you don't occupy on your side. Is there a garage that can be rented?
Post: What would be the best entity to hold a real estate SFH?
- Madison Heights, MI
- Posts 471
- Votes 132
For tax purposes, holding them in your personal name is fine. You only pay ordinary income tax on the net rental income, after depreciation and expenses. Holding the properties in an S-Corporation, Partnership, or C-Corporation would not change the nature of the income. Holding them in a C-Corp would subject you to an additional tax, as the corporation must pay a tax, and then the individuals receiving dividends are again taxed on the same income that the corp was taxed on. Rental real estate has tax advantages that make holding it in your own name favorable. For liability, I would get liability insurance.
Post: Section 8 Yay or Nay?
- Madison Heights, MI
- Posts 471
- Votes 132
Section 8 is good for low income areas. This house looks too nice for Section 8..