New replays top searched debt Relief Tips, Credit Card Debt Statistics, and Are You Debt Free With a Mortgage, How I Borrow FREE Money.
Here is exactly how, and why, I borrow money for free – and how I use this to Invest in Real Estate. Enjoy! Add me on Instagram: GPStephan
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Now, first, I think it’s REALLY important to understand the nuances of “debt” and borrowing money – and make the distinction that not ALL debt should be placed in the category of automatically being “BAD.”
If having debt doesn’t MAKE YOU MORE MONEY – then, I think it’s safe to say – it’s automatically BAD. But, on there other hand, if you DO use debt CORRECTLY, you’ll go on to one of the main reasons I like to borrow as much money as I can…
Leverage. This is when you borrow money in order to invest…and that investment, ideally, makes you MORE money than what you owe in interest on that loan.
Now, here’s why borrowing money just makes WAY more sense for me…and exactly why I do it:
In Real Estate, you have two options for buying a property – one, is owning it outright and paying for it in cash – and the other, which is what MOST people do – is borrowing money and taking out a “mortgage.” And taking out a loan like this means you could make WAY more money than you could, otherwise.
In addition to that, the INTEREST I pay on those 30 year, fixed rate mortgages also becomes a tax write off against that rental income – which means, it helps lower my tax bill.
But, it doesn’t stop quite there…because when taking out a long term loan, we also have consider the power of INFLATION.
This is what happens when more money is printed into our economy, and the more money that gets printed, the less value our money is worth.
This is also how I’m, EFFECTIVELY, able to borrow money COMPLETELY FOR FREE – meaning, it’s CHEAPER for me to BORROW money, than it is for me to PAY for it, outright…if that sounds like science fiction, here’s how I’m able to do it:
First, I’m getting a low interest, 30-year, fixed rate loan. My AVERAGE interest rate, throughout the 3 mortgages I already have, on about $1.7 million dollars, is 3.52%.
When you consider that the interest rate is a tax write off against the rental income I make, in a 50% tax bracket, it’s essentially like I’m only paying HALF that, after taxes – or, 1.76% “out of pocket” in actual interest.
Then, that amount is also lowered by inflation – because, every year, my outstanding loan balance becomes “easier” to pay off with future money that’s worth less.
If we see that, this year – inflation was 1.76% – that means, when you factor in inflation and tax write offs – I’m getting loaned money, for 30 years, for completely FREE – adjusted for inflation. Not to mention, there may be some years where inflation is HIGHER than 1.76% – which means, in a weird way, banks will be paying ME to take out loans, to buy properties…so, in this case, it makes ABSOLUTELY no sense for me to pay this loan off early.
First, if I paid for any of my properties outright, or I paid off any of my current mortgages – I would be tying up a LOT of money in one place, meaning I couldn’t use it towards any OTHER investments – and that has what’s known as an “opportunity cost.”
Second, by borrowing money – as odd as this is to say – I’m able to diversify my investments much more, allowing me a much safer spread on my money.
Now, I will say – there ARE some advantages when it comes to paying in cash, and not having a mortgage, so I do think these are worth mentioning – just so I can give a well balanced argument to this video:
First, when you pay cash for something – you have a LOT less risk:.
Second, when you own something outright – you’ll have a LOT more peace of mind
And third, paying for something outright in cash is really, really easy.
BUT…overall, having done BOTH…I’ve bought properties outright, and I’ve bought them with a mortgage…I have to say, I’d take the mortgage route every single time.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.
Are You Debt Free With a Mortgage, How I Borrow FREE Money.
How To Get Out Of Debt – Part 4
You have to comprehend that settlement is an art. What do you require to understand in order to increase your rating? There are two forms of financial obligation, and some really effective methods to remove them.
How I Borrow FREE Money, Play trending updated videos relevant with Are You Debt Free With a Mortgage.
How To Get Out Of The Financial Obligation Trap
The plan reveals that all your unSecured Secured Debt will be paid off in 36 months. Addressing this truly relies on each private situation. You have actually got to put a freeze on your spending.
When maturing we never really trouble about financial resources. Monetary issues are the last thing that would be on our mind. We are basically debt totally free, clearly because our expenses are looked after by family. Its just when we venture out, we get accustomed to many a things and get accountable. We are accountable for our own bills. Being newbies chances are that majority fail, just to long for the blissfulness of being financial obligation complimentary me. If you are at this area here is what you must do.
The very first thing you require to do is look at your financial obligation. There are 2 type of debt. Secured Debt is the very first kind. Protected financial obligation is debt that is connected to collateral. This might be the loan on your house or cars and truck. The second kind of financial obligation is unsecured financial obligation. This kind of debt does not have actually security connected to it. This could be a credit card financial obligation or a trainee loan. When you look over your financial obligation, what kind do you have? Do you have protected or unsecured. There is a fantastic service to your issue if you have unsecured financial obligation.
Now that you understand the how you entered debt, why you desire to go out and what you will do when you are out. Here are nine-steps for getting out of consumer financial obligation and remaining out forever.
Settlement and management both work by getting the principle amounts owed minimized. Working through financial obligation relief companies rather than consolidators, a consumer can be Debt Free in 12 to 36 months, and still have the one monthly payment strategy that consolidation uses. They both make sense. The consumer manages to remove his/her debt, however doesn’t take fifteen or twenty years to pay back a big loan. A couple of years can make a big distinction.
Devote an area of your spending plan for settling financial obligations. All of your credit cards, auto loan, school loans, cash you obtained from household and pals, shop cards need to go into this area. Your mortgage can be included here if you want however I would suggest keeping the home mortgage out of this section and simply focus on the Revolving Debt that you can pay off in a few years.
When looking for a debt relief option, you have to understand that there are particular credentials that you require to adhere to. All of them are reliable but you need to receive it economically to be able to make the most of the advantages of each.
It is never simple to live a life that is entirely financial obligation free however those efficient in ultimately doing so can take solace in the fact they will never have to handle the shackles extreme financial obligation can attach to their lives.
And just at the end of the bankruptcy treatment. You will not make any extra payments unless you have no unsecured debt to pay. A fine example of this remains in the real estate market.
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