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My background: A few things in my childhood and my dad job loss(es) shaped me into hating debt. I am approx 23 payments away from having the last piece of debt (my house) paid off (approx $140k value). Some soul searching recently has made me analyze why I hate debt and led me to look at my fears and try to approach them differently. I have thus starting looking into creating an additional income stream from real estate as being a better alternative. I can go into more detail on that if you want, but don want to loose too many people on a long post.
I am looking into getting into real estate investing. My cousin who is very successful is coming over this week to talk to me about it and help me get started.
I will try to make this short and sweet and to the point. I not into spilling my guts on the internet, but here goes.
However, I do not have a problem getting a loan for a rental as long as I am cash flow positive, and I consider it a business loan (although you will likely be asked to personally back that loan).
So my question is this. I have been thinking about taking some of the equity out of my home to use for fix and flips or rental property. If you were in my position what would you do? Debt free at age 38 is a dream of many people. but I do feel exposed since the job market is a little shaky and my wife stays at home with the kids.
without having to re mortgage your primary residence.
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Overall I do think you should explore investments though. I initially was like you and wanted to just buy a condo and pay it off. However while you might be debt free in that scenario, there are still taxes, insurance, maintenance costs and your personal expenses. If you could create an income stream in addition, you could have your properties pay for you and in some ways that can Red Air Max Womens be a more conservative route. I am a handy guy, and used to do Air Max 2016 Black Price
myself, and have almost payed off my home.
You can normally borrow money from your 401k at competitive rates and pay yourself back or you could take a traditional IRA and roll it into a Self Directed IRA and invest your cash in real estate.
Have you saved any money in an IRA or A 401K that is accessible for use in your investments?
My 02 cents, being extreme one way or the other is a negative. Being anti debt is much less dangerous than being highly leveraged, but it will also cause you to miss out on some great opportunities. Like anything else, moderation is the key. For me. Being moderately leveraged (50 60%) and having a comfortable cash reserve (6+ months) makes me more comfortable than having zero debt. That being said, I have not lived your life so maybe the security you get from being debt free is worth the opportunity costs. If you stick to your plan and are debt free at 38, you will have plenty of excess cash to pour into RE at that time assuming your employment situation remains stable.
Do you have any knowledge in renovations? People on this site discount the need to know how to renovate, but even if you paying someone else you still have to have enough basic knowledge to know what needs to be done and how much it is likely to cost. Generally that comes with hands on experience, but it could come with your cousin if he going to be generous with his time and guidance. If he lives far away and can only come once a month, then you have to figure out another way to educate yourself first or I be wary of a fix and flip strategy.
This question comes up from time to time around the forums and it seems that personal comfort level for each person situation is what reigns. By and large, no two people have the exact same views about debt and leverage.
Debt free or go for it
I ask this because these funds are ear marked for use in retirement, a long term investments and can be effectively used to leverage your return
I try to keep everyone posted if you are interested as things progress. I meet with my cousin tomorrow to talk about what he is doing. He is a very young guy (approx 33) and has quite a few rent house debt free and does quite a few fix and flips. Hopefully he will be willing to help me along.
some exterior construction (fences, irrigation, arbors etc) but nothing interior short of repairing stuff at my house. My cousin has done quite a bit and I ASSume he does. I am hoping he let me tag along on some of his projects.
Has anyone on here had to make that decision? Any advice on what I should think about before taking the plunge? Am I being dramatic?
I made the decision to get my first rental property (I do not have one yet) after having a bit of a cushion so I am not hurt by negative events like a non paying tenant. I do not take any risky financial decision if it will effect my family home, but it is an individual preference.
Congratulations on becoming debt free and paying off your mortgage on your primary residence.
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I personally hate debt Nike Air Max Kids Girls
I in the same camp as the original poster and really dislike debt. I respect your decision to stay debt free. Sure, the growth is much slower, but if there were a job loss tomorrow or some other catastrophe, I really have nothing to worry about since I have a decent portfolio free and clear. Granted it no where near the size of many others who leveraged and bought up a ton of REOs in the past couple of years, but I feel safer and more secure by using my model.
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I do think I have been a little on the extreme side of being debt free. I think there may be some room for balance. I do think I will always gravitate towards being more conservative in my debt ratios. for me I think that helps me sleep at night. and that is important.
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