All Forum Posts by: Marc Rose

Interesting point, but let's keep it in perspective. Less than 10% of people who respond to BP threads actually have experience doing what they suggest. Everyone is an expert in the world today.

Personally, I have multiple loans that were taken out for real estate over ten years ago. I guess you could say I survived having debt, but I never considered another option. To be fair, I also know many investors who got out of real estate in under ten years. I wouldn't say the loans destroyed them, but more the business itself. There is a low survival rate in this business. Keep in mind those who fail or get out are not on BP telling their story. There is survivor bias big time here. Everyone here is either an investor or wants to be an investor (or they want to make money off investors).

 Sorry Travis you're dead wrong. Profits from flipping are just like a W-2 job. Not working on a flip = not employed and 0 income.

I'm a buy and hold investor. Have 4 LLC's and 120 doors. 90 SFR's mortgage free. I don't have to get out of the bed in the morning and still net 6 figures a month. Part time property manager and handyman handle it all. Probably not wasting my time.

Gary

Okay, so you recommend that I go to a bank and get loans on the 13 SFRs I currently own free and clear?  What would I do with the money? Buy more houses? Why? Perhaps to replace the income that I will now be paying the bank instead of putting in my pocket?

We aren't interested in adding more than 1 or 2 more houses to our portfolio, which we can do with cash. So why should we complicate our lives with loans? Our investments have averaged a 14.2% return over the last 8 years, and I'm quite happy with that.

I'm sure you're right, there are "other investments with less headaches," but we actually like what we do. That's one reason we don't want to grow too big. We want to enjoy ourselves.

Don't get me wrong - I'm not against the wise use of other people's money. There is a time and place for everything. But it is a bit annoying when people start saying that leverage is the only way to go, or at least, the only smart way, as if I'm doing something wrong by actually owning all the houses with my name on the deed.

@Alexandre Marques dos Santos, thank you for posting.  One theme that I noticed while reading this thread is that the words "never", "restricted", "limited",and "forever" come up often in arguments for leveraged real estate.   The idea being that only people who inherit cash can pay cash for real estate.   Dave Ramsey would probably argue that if you haven't been able to save cash, you likely have wrong thinking about money that will be amplified if you borrow money to buy a real estate investment.   Archimedes said "give me a long enough lever and I can move the world".   Leverage is powerful but it works both ways -- I still remember getting cracked on the jaw by the handle of a bumper jack....

  I think I listened to about 150 biggerpockets podcasts before I heard one guy say that all his real estate investments were bought with cash and 100% owned.  If I remember correctly, he wasn't opposed to debt, just found it faster and less hassle to pay with cash -- and he didn't have to worry about having reserves.   Also he self-managed his properties and he argued that, although he could get a theoretically higher rate of return with leverage (and buy $4M worth of property with his $1M), it was much less work to manage 10 properties than to manage 40.  He said it was remarkable how quickly his fund built up combining rental income with his job earnings (so it took a while to buy the first 2, but each one came more quickly)  

So I think Dave Ramsey's philosophy might have more merit than this discussion represents (and I'm straying so don't think I'm defending him as a rabid loyalist.)   Keep in mind that the vast majority of biggerpockets members seem to embrace debt as a way to build wealth with real estate.  (I have been heavily influenced by biggerpockets to relinquish my hatred of debt --  @Brandon Turner, I'm blaming you if I go bankrupt)  BiggerPockets is like one form of religion and Dave Ramsey is another form.   BiggerPockets would be more ecumenical (inclusive of diverse viewpoints or "seeker-friendly")  Dave Ramsey is more "fundamentalist" (adhering to a narrow interpretation of the text and strongly opposed to any deviant views)   BiggerPockets and Dave Ramsey, just like different churches, attract different types of people.   And each group has rich and poor, old and young, effective and marginal, faithful and nominal, succeeding or failing.  Dave Ramsey's method has built wealth for his family and many thousands of adherents.   If you are reading this thread to find the truth, consider the sources.   Even Dave Ramsey's advice may be skewed by his sources of money.  Know that it is possible to build wealth without debt.  It may not be the fastest way, but it is possible.  I've met people who did it.   And they are usually quiet -- not shouting or posting on social media about their success.   

@Marc Rose just to be clear Dave Ramsey made his money by selling books, seminars, and YouTube. He didn't make his money by saving money to be rich.  So watch what you put out there, it is misleading. 

@Chinmay J. really? An egghead? The man has hundreds of milllions in his real estate empire using no debt. Unless you have the same amount or more, I don’t think you can call him an egghead because clearly what he’s doing works.