@Chauncy Gray
There is no secret or stealing. This is how finance works my man… Check out the game Rich dad poor dad 2. I bet that 20 years from now, after you’ve built your real estate empire, using all of the knowledge that you learned on BiggerPockets, and Rich dad Poor dad, that you too will be lending people money, and charging interest over a 30 year amortization.
Why? Because thats what people with capital do. It’s called “capitalism.” Those who have the capital, can lend to others, to help them buy houses and build businesses.
Here’s the thing that you must realize… This isn’t free money…The lender takes on a certain degree of risk in exchange for the possibility of a return on their investment..
Pretend you’re the lender… You lend a young man $200,000 cash to buy ahouse… In exchange, he has to pay you $1000 a month… (not a bad deal for the young man, considering the fact that without this loan he wouldn’t have the money to buy the house… For just $1000 a month, the seller handover the keys to a house… that’s A huge opportunity… That many countries in the world don’t get to enjoy this luxury of finance!)
So what’s the risk? Six months into the loan, the young man stops paying you your thousand dollars a month… (remember you are the lender). In some states, it can take two or three years before the lender/landlord can finally kick the person out of the house with the sheriff sale. At 36 missed payments and $1000 each… That means the bank lost $36,000 on taking a chance with that young buyer.. and that’s just the loan payments. I imagine the buyer was not paying the property taxes either. Property taxes are probably $15,000 for three years.. On top of that, since the buyer hit rough times, lost his job, and was short for cash… He decided to rip out all the cabinetry and appliances and toilet and sink and sell them on craigslist for a few thousand dollars.. let’s say approximately $20,000 of labor and materials to get the property in livable condition. I’m top of that let’s add another $5000 for court costs to serve into effect into foreclose.
Altogether the lender lost $76,000, by taking a risk, to offer this young Buyer $200,000 loan...
So the point is, there needs to be some element of reward in exchange for risk…
And again, the beauty of capitalism, which is the beauty of America, is that you can play both sides…. It’s just that when you’re young, and without money and education, it takes a few years of experience under your belt before you accumulated knowledge experience and capital..
Invest time on this website every day, invest time in your social networks, and invest time and bettering your skills every single day.... and you too will be in the position one day to be the lender.
