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Originally Posted by DementedReality
i am wondering, honestly, why you would want to have debt?
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Think of it this way. I have my personal finances, which have never changed from day one. I try to pay off my mortgage, student loans, and monthly bills.
Now I have access almost free money that the banks want to give me. If I keep that money completely separate from my personal finances, and use it to make me more money than I borrowed, I will be able to pay back the loan, and pocket the change for myself. If I only did this once, I could take that bit of money that I made and put it up against my mortgage, and probably pay that mortgage off 6 months or so quicker. My mortgage is smaller, the debt I accrued to make the money is gone, and I'm just a little further ahead in life. All without touching my personal finances.
Of course, I could lose on my investment, and then my personal finances would probably be affected, but that's all part of the risk/reward matrix. Find what you're comfortable with and go with it.
At 80K per year, it's going to take a long time for me to pay off that mortgage and start living the debt-free life. I don't think I like my job enough to wait that long.
I should tell you about my buddy at work here. Probably a pretty rare case, but he used the REIN network and purchased 18 properties within 2 years about 4 years ago. He's had a small positive cash flow from each property, so he makes a little bit there. Just imagine how much house prices have gone up in the last 4 years. Take the low end of the spectrum and assume each house has gone up 150K since he bought them. As soon as he sells his properties, he'll have to pay back the loans he used to purchase the houses plus interest, and walk away with at least 125K from each house. With 18 properties that works out to a total of 2.25 million. Sure, he has to pay taxes on that, and I'll be interested just how he does everything to avoid as much tax as possible, but the guy just made over 2 mil gross
without a single dime of his own personal finances! He might have been in debt up to his eyeballs for a while, but the reward sure payed off there.
To tell you the truth, I'm not sure why the guy still works here. I'd sell off at least half the properties right now, retire, and use my new-found time to manage the remaining properties and live off the interest. Of course, since he's made all this money he's developed more expensive tastes, and I think that's what's keeping him here.