I want to thank you all for your participation in this discussion. I hold your opinions high and based on that and several discussions with my wife, we have made the decision to borrow our way into success. I can hear Dave right now, “No! No! No! You said you followed my teachings? You need to go back through the class because you failed. It’s a lifetime membership. Go back!” Yes Patrick G. I too have listened to Dave so much I can answer these questions for him.
After reading RDPD, I realized that both of these Authors are capitalizing on our failures and ambitions. It’s brilliant really. Determine what is completely wrong in America today and fix it. When Dave started it was credit card debt. Invent-plan-to-get-people-out-of-debt. Check. Build on it.
Today, student loans beat credit cards in overall debt. Invent-college-guide. Check. Build on it. (Sorry to bring that up because college debt doesn’t belong in this thread, but I needed to make my point that) Dave is selling to the masses. Robert is selling to the masses. I AM NOT THE MASSES.
Allow me to address individually those who contributed:
Brian Mathews I love how you apply this to your HVAC business. I have always subconsciously done what you said: “I won't take a job I can't buy my way out of in case something goes wrong or the customer turns into a nut job.” A form of self insuring you could say. Thanks!
Derek M. Your comparison is very similar to my findings. It seems as if you must treat this in a linear fashion. Start with Dave to clean up any mess. Educate yourself. Progress to Robert and (many) more Authors. Continue to educate yourself. My next book will be a Frank Gallinelli one.
Bill Gulley I totally appreciate your point of view and I understand that you are unfamiliar with these authors. I can tell you why people don’t read financial textbooks. They don’t fix “MY” problem. It’s funny you should mention finance textbooks because one of Dave’s vertical markets is educating High School students with basic finance principals. Textbooks are dry and to the point. In any financial (or math) class I ever took in school, there was only one thing that determined my success in that class; the teacher. These authors tell “their story” very well. They each capitalized on their own personal history. I actually inherited two finance textbooks that I immediately put up on Amazon for sale. I just might have to take them down and re-familiarize myself with the basics.
Kelly N. Thank you for sharing your story with us, it did help. I aspire to be exactly in your situation in my near future.
Mark Ferguson I agree with you that the vagueness of RDPD left me longing for more info. I can also see that you do have a very aggressive strategy. I look forward to learning more about your successes as this is the first I have heard of that philosophy. Thanks!
Joel Owens I too am a believer in taking informed risks. I also agree that compounding, savings and credit should be better taught in schools (hence Dave's high school curriculum). I had to seek outside education as I was never taught practical finances in school. We live below our means, but that doesn't mean we don't enjoy ourselves. For those who fear loss and avoid the unpredictable, the FDIC insures your deposits. My emergency fund is making me nothing! It's insurance. I could never put my emergency fund it anything that wasn't 100% secure. My life insurance costs me money (different topic); my car insurance costs me money; therefore my emergency fund costs me money. I shall take calculated risks on with my new RE aspirations. Thanks!
ANISH TOLIA Thank you for that perspective. I am starting to better understand the concept of borrowing for appreciating assets. I too would not play craps, but I do play the stock market via mutual funds. I’ll start another thread on that topic as I made 13% on some of my mutual funds this last year. With experience, I am sure to be able see risk differently.
David Krulac I really like your method. I do think that it will also bring me great success. Borrow just enough for no debt investing then go from there. You are very correct when you say, “Hey debt is debt, you owe it and somebody wants it repaid, does it really matter if it’s an individual or an institution?” Thank you.
Chris McNeal I currently work a 9-10 hour day. I totally get your point. Leverage will allow me to go above and beyond my capacity. The funniest thing I ever heard when I used your same can’t-pay-for-car-repairs scenario: “…and the best thing about my new BMW M5 lease, I don’t have to pay for repairs for four years, and by then, I probably will have a new car already.” That just makes me cringe.
Thanks George Paiva. Borrowing wisely looks like where I am going.
Tamara R. Your timing was really good. I hope I am not behind the curve as I can already see the markets hardening in our area. That will not deter me though, I’ll just have to work a little harder for it.
Annette Hibbler I was given RDPD when I was 21 (and the book was current). It sat on my shelf for 12 years before I picked it up. I was also taught compound interest and Roth IRAs then too, but did I do anything with that knowledge? Nope. It took me a long time to figure out what I thought was right, wasn’t. But, I am better because of it. I look forward to using debt wisely.
@Patrick G. My wife and I are both nerds and free spirits at the same time. We both pick and choose our battles. As I mentioned before, our only debt is our home and I will never go into “consumer” debt. We are both conservative, and will remain that way. Starting small in Orange County, CA means $200,000. I just saw an 883 sq ft, 2BR 1BA condo on Redfin for that price just down the street from us. I am interested to see what they actually get, but even if they get 75% of asking, that’s still $150,000. I have no intentions to landlord a place over 10+ miles away from me. My parents do that and I see their pain. I will have to borrow to succeed. I hope you enjoy RDPD. I found many parts of the book humorous and captivating.
Kyle J. Thanks for mentioning “could easily make my mortgage payments if something were to happen”. That is one of my fears, not being able to make the mortgage, in terms of vacancy or inhabitability. I’ll have to calculate out a good 3-6 month reserve as a part of my risk strategy. I would hate to lose a property due to lack of income.
Charles Morgan Thanks for that perspective. It is interesting to see your use of debt. I could see your method taking longer, but when it’s all said and done, you have an income property that you wouldn’t have if you didn’t keep the debt originally.
Beth Declercq Cheers to starting so early! Referencing Dave’s teaching of Ben and Arthur, two people investing at 12%: Ben invested $2,000 a year between age 19 and 26 and Arthur invested $2,000 a year at age 27 to 65. When they both went to pull out their money at 65 years old, Arthur was still behind Ben $700,000. All that to say, “I wish I knew at 19 about compound interest what I know now.” I do appreciate your comment: “whatever category you decide to be in, surround yourself with people who line up with your thoughts and stay true to what your comfort level is.” I take that to heart and will live that way. Thank you.
Mike H. Thank you for your math. I am a numbers guys and I totally understand what you are saying. Why pay off my sub-4% loan when I can use that money to make much more? Until recently, that wasn’t really my mindset. Your graphical explanation really helped. Unfortunately, I need to work with prices double those you are working with.
Sean Kremer Thanks for your post. I soon hope to have enough passive income to enjoy my baby daughter at the pool during the work week. Smart use of debt. Got it.
John Thedford Great quote: “I am not fond of debt, but it helps to make my goals a reality.” With your permission, I’d like to use that again. Thanks!
Brandon Turner Thanks for posting on my thread. I hope to provide more stimulating topics. I tell my wife all the time that this is all a game. It really is how you draw the cards and roll the dice. Sometimes I land on "chance" but I rather skip my turn if I can predict the future. I am excited to play the REI game now. I don't know either of them, but I did have an opportunity to stop by Dave's office in Brentwood, TN earlier this year. He wasn't there but I was taken on a "back stage" tour of his office. I was truly honored. While there I saw a picture of Dave, Robert and Kim and I asked if I can take a photo. I got permission. Even polar opposites can smile for a photo.
Matt Devincenzo I can see what you are saying. I am really asking about borrowing money and I am incorrectly comparing the two. RDPD does go into much more than Dave’s teachings. As I mentioned before, I have learned that it is linear, Dave before Robert. Thanks!
Shari Posey Did Dave answer? I have an idea of what it would be. I too would probably be 90% Dave when it comes to his teachings.
Greg B. Thanks for chiming in. When reading RDPD, I actually stopped to check a couple of times when the book was actually written. I realized that I had to apply what he was saying a bit differently to today’s market. I am looking forward to making grown up choices.
Mike M Thanks for your post. I am starting to see more from your perspective. I agree completely that neither one of them is balanced. I really appreciate the statement, “the house I just bought is buying my truck for me.” It is my goal in life to have my properties buy everything for me.
Thank you all again for helping my decision making and my education. I hope that in the future, I will be able to share my experiences and help others on BP. Happy Memorial Day!
