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Rookie Reply: Why Real Estate Debt Isn’t So Scary
Description
This week’s question comes from Jessica through Tony’s Instagram direct messages. Jessica has seen what Tony and his wife Sara have been doing while building their short-term rental empire. But, Jessica is having some doubts. She’s asking: How do you invest in real estate when the idea of debt scares you?
Many new investors have this fear. If you’re buying your first property, the thought of five or six-figure debt may seem like a massive weight on your shoulders. After all, isn’t the goal to be debt-free? Fortunately for real estate investors, the answer is no. Using leverage to buy properties makes your investing far more profitable and can help you get comfortable when taking on good debt.
Here are some suggestions:
Scared of debt? Pay off your personal debt before you invest in rental properties
Think of debt as a tool that can help you build wealth with real estate
Know the difference between good debt and bad debt and how to use both
Define your “worst-case scenario” if you’re unable to pay your rental mortgage
Use the BiggerPockets Calculators to calculate your rental property profits (especially when taking on debt!)
And more in the episode…
If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).
Links from the Show
Real Estate Rookie Youtube Channel
Real Estate Rookie Facebook Group
Real Estate Rookie Podcast in Apple Podcast
Check the full show notes here: https://www.biggerpockets.com/blog/rookie-178
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