Need some debt words of encouragement

[Keith Sehi]

My wife and I are very serious about starting our rei business. We don't currently have a property although we have narrowed down the market and have been looking at a lot just haven't found the right deal. Only thing concerning me is as we scale larger in the years to come the large amount of debt we will incur. I understand tenants will be paying it down but being totally debt free for 2 years now it just concerns me getting into a large amount of debt. Just thinking if we focus on $100k homes and over the next 5 years buying 2 a year we could be at a million in debt.  Just needing some different ways of thinking about this to put my mind at ease. Thank!

[Carini Rochester]

I think there should be two different words. Debt means you take out a loan and go on a cruise. The value is gone. There is no asset. You still have to pay it back. Find another word. I don't care what it is. This other word means you take out a loan. You buy an asset with that money that is worth more than the loan. Try to start looking at the situation more like an accountant or bookkeeper would look at. You have assets and you have liabilities. Make sure your assets grow faster than your liabilities and make sure your assets throw off enough cash to easily pay down the loan. This is why the spreadsheets that analyze real estate investments include lines for vacancy, all expenses, taxes, capital expenditures, etc. so that you can be very certain that the asset can pay the loan payment each month and you don't lose sleep. I've read many books on real estate investing and every one explains the advantages and the risk management of buying using mortgages. To the best of my knowledge not a single book has been written explaining the advantages of real estate investing without loans. For me personally, if you want to invest without borrowing, the best address to invest on is Wall Street.