You read that right.
Debt CAN BE smart. Really smart. So smart it makes you millions of dollars.
That is exactly what self made real estate millionaires did. They have two basic steps.
Step 1. Borrow millions
Step 2. Have someone else pay it back for you
Simple as that. How does it apply to real estate investing, you ask? You need to purchase millions of dollars worth investment properties and have them rented out. And you use it with debt. Good debt. Smart debt. You are essentially borrowing millions of dollars in mortgage debt, and have your renters pay back the debt for you, plus enough extra income for you.
Robert Kiyosaki, author of Rich Dad Poor Dad popular conceptualized the mantra of "good debt vs. bad debt." This millionaire author and real estate investor says that "good debt puts money in your pocket, while bad debt takes money out."
2 examples of good debt:
1. real estate investment debt- where the property provides income for you to pay for everything
2. business debt- that helps provide cash to increase income of your business
Real estate investors use debt to BUY the property and rent the property to pay off the debt PLUS EXTRA. And yes, Robert Kiyosaki, and Donald Trump especially are in DEBT UP TO THEIR EYEBALLS, hundreds of millions.
3 examples of bad debt:
1. credit card debt- because you pay for it
2. own house mortgage debt- because you still pay for it
3. car loan
Bad debt is NOT smart. BUT-- lots of Good debt is.
Let me say it again. Good debt makes you rich. Bad debt makes you poor.
Here is a video to explain: