Real Estate Articles

2020-10-02 BUYING WITHOUT DEBT | By: Jeff Taylor

BUYING WITHOUT DEBT

by Jeff Taylor
An informative and thought-provoking discussion is taking place today on our website. The topic is all about the advantages and disadvantageous of getting loans to buy property. The discussion also revealed some of the strategies landlords use to buy properties without debt. For example, one landlord shared one of several ways to buy with no debt:

"Right now I am using investing partners. With interest rates persisting at record lows for a decade, there are many old-time, conservative investors who are no longer in the stock market due to age, volatility, etc., but who have their money tied up in 1% CDs.

Enter 
S i d, the entrepreneur/investor!

I have a proven track record from 15 years that included surviving (and thriving!) through the Great Recession profitably. It's a track record any bank would love....For themselves. But would they show me the love in return? Brad is spot on saying that the bank is your friend in good times, but they quickly retreat during lean times. Loans get called. Interest rates go up. Lines of credit shrink or disappear.

So I did what Dave (Ramsey) would do: I thought long and hard...."How can I invest in rental properties without debt, but with all the benefits of debt and none of the risks?" Enter, investing partners!

Those people who have money sitting around doing next to nothing want decent returns, which I can provide. Equity partners take a stake of ownership, not a lien. What does that mean? It means we are on the SAME TEAM, regardless of whether the economy is good or bad. My success is their success. My failure is their failure. They are not going to pull the rug out from under me because they have a huge stake to lose if they do. Sure, if I continually screw up badly enough, that partnership could dissolve, but that is unlikely to happen because they don't get to repossess a house and walk away leaving me in a mess by myself.

Tap into that under-utilized private investor capital waiting to be deployed. It will make you sharper and help you to evaluate deals more carefully. And if you have very wise investing partners (like I do), they also offer second opinions and thoughts about how good or poor an investment might be. They will come out to the property and walk around it with you...Maybe even peek into the nooks and crannies too! They will look for resources that suggest where growth trends are and where locations are failing. What banker will do that for you?

In conclusion: Debt is not the only way (to buy). I'm living proof. It is how I started, but as I demonstrate above, you do not have to keep touching the hot stove simply to avoid being called a hypocrite. Learn to do better and work smarter. There is nothing wrong with learning from your past and teaching others to do better!"

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