All Forum Posts by: Raymond McGill

Ok, so "crawling" has a high negative context. I am a newish RE investor, so maybe not seeing all the advantages of leverage. I see that life and business is ups and downs. Isn't our job as REI is to minimize the downs while maximizing the ups? Kudos for your example. My point is that debt, while useful, increases the down side. Yes, the project is good. The effort is good. The original discussion was good debt vs bad debt and if all debt is bad. I am saying that incurring additional risk is not a good thing, even though deals like the one you show are impossible without it. The opportunity to make lots of money is good, surely, but there is risk associated with it. The 1000:1 horse at the track has an awesome upside, but you have to accept and be ready for the downside too. Risk is baked into pricing of RE assets, so your skill as a REI is what makes the difference. Debt is bad, but its part of the risk we take if we want to use others money.

@David Dachtera I think we are in agreement.  We realize that you have to take chances sometimes. less risk, less profit.  My preference is to not build with max leverage, even though some call it 'good debt'. I have two homes paid for cash. Life has ups and downs, and the downs won't rock my world as bad, hopefully.  

Debt = risk. Sure, we can add risk to the balance sheet to help us leverage into a property. It can be OK to do that, but it incurs risk. Good debt/ bad debt? I agree its all bad debt. I would love to own what I have, but I have debt and the associated risk.  @David Dachtera , people liked what you said, but the example of net worth paying for groceries is a logical fallacy because if you have no debt (and that high net worth),  you could buy the whole grocery store, without crawling to anybody to ask to borrow.  

Is it worth it (i.e. Good) to take on risk for a reward? Yes, its absolutely what the free enterprise system is about.  Take on lots of risk? Not a long term success strategy, or is it..... 

Great Event. I really enjoyed our informative discussion and meeting everyone.  Look forward to introducing you to my wife, who couldn't attend this meeting.

I'll be there