All Forum Posts by: Sam Booth

 My goal was to replace my take home W2 income.  I buy in western Pennsylvania near Pittsburgh so my most expensive property all in is about 200K which is a benefit not many places have but on the other hand, we don't get the appreciation wealth making that everyone else does.  Once this last deal closes I'm going to be at 9 doors in less than a year.

I started a year ago.  Formulated my goal, used a combination of leverage and self funding so that I don't get into trouble if things start to go drastically sideways, and will be achieving my goal with this last closing I have scheduled for the end of May.  After that I will be slowly improving the properties and paying down the leverage.  It would have been easy for me to continue moving forward quickly with leverage but for the time being, this will be enough.

I can't think of anyone I know who falls into the millionaire category who has not used debt at some point in time. In their business and in real estate, leverage used responsibly will move you along much faster and open more opportunities than what you find if you don't. 

The key to this would be using debt responsibly, though. Plenty of people have gone a bit too far with leverage and had disasters when the market changed and they could no longer make payments. 

 Dave Ramsey is for simple people and people who are in debt. Not for people who want to be real estate investors or developers.

Debt is a powerful tool like a big chainsaw. Very useful if you have a forest to cut down, but can be dangerous to those who don't know what they are doing. Working with a hand saw is a lot safer..

I am financing 3 larger deals at 7.45% now with a 20 year amortization and a 3,2,1 pre-payment penalty, which is important, because we are going to pay down the principal a little faster and probably will refinance in a couple of years, depending on what rates we see.

You have to look at interest rates in the context of inflation, rents and home price appreciation. At currently 3.4% inflation (if you believe it) the real cost of money after inflation is about 4%. Milwaukee prices are steadily going up 7%-8% each year, rents about 5% (2nd hottest market after Miami, FL!!) and it does not look like this is about to change.

A few years ago all these numbers were lower, so in my book not that much of a difference. 

Being scared of debt is like being scared of a hammer. With debt or a hammer...you can build something with it or you can break something. Just use the debt wisely and you'll be fine. 7% is high but if you get the right property that still makes money (or that you enjoy living in), you can always refinance. 

Always have some cash reserves. One thing you can guarantee is there will be some kind of emergency in your life. Money solves that problem.

Dave Ramsey says some things that make sense, but it is rare. 

For me I owe about 75 times my 2022 taxable income (2023 taxable income has not yet been determine,  but I expect it to not be significantly higher than 2022 - San Diego receive tax extension due to flooding). 

Many Americans have zero financial  literacy and are irresponsible with debt.   Dave Ramsey’s preachings are appropriate for these people.

His preachings are limiting for those that are building generational wealth. 

I also find it hypocritical that anyone that has declared bankruptcy to get debt forgiven (screwing those that he owed money) is giving others financial advice..

 Well said. As humans we are all greedy. When you make a million, you want to make 2. At some point you don't need more than what you already have, and paying off debt is a great way to remove those invisible chains and give you more control.

Getting to the million without debt can take a lot of time. Debt allows you to increase the velocity of your money. 

Knowing when to stop taking risking positions is an important skill. When people make a lot, they also tend to risk a lot.

for the average person, 1 home every year for 10 years is a doable and strategy that can get you there - slow and steady but faster than the average person. 

For me I owe about 75 times my 2022 taxable income (2023 taxable income has not yet been determine,  but I expect it to not be significantly higher than 2022 - San Diego receive tax extension due to flooding). 

Many Americans have zero financial  literacy and are irresponsible with debt.   Dave Ramsey’s preachings are appropriate for these people.

His preachings are limiting for those that are building generational wealth. 

I also find it hypocritical that anyone that has declared bankruptcy to get debt forgiven (screwing those that he owed money) is giving others financial advice..

It's all at 3-4%.  I borrowed until the banks stopped me when rates were low.  

I think @Scott Trench brings up a great point when he says "Many investors who don't know what that inflection point is will continually leverage thirsting for more, and ultimately wish they’d listened to Dave", but I plan on borrowing until the grave if the numbers make sense for my children and grandchildren.