I’m over $1 MILLION dollars in debt, and here’s why this is actually a GOOD thing and how you can leverage debt can make you more money. Enjoy! Add me on Snapchat/Instagram: GPStephan
Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
So here’s why I’m a million dollars in debt - there’s a big difference between good debt and bad debt. The reality is that almost every successful business, at some point, needs leverage if it’s to grow exponentially…especially in real estate…and how you manage debt could either make or ruin you. Think of debt a like fire. Fire could give you warmth, cook your food, bring you light…or it could burn you. Debt is very similar.
I grew up in a family that was wrecked by debt…I grew up thinking debt was awful and that credit cards were the worst thing ever. But as I began to associate with people who were just insanely wealthy, I realized…these were people who weren’t afraid of debt. They embraced it and worked the system to their advantage.
Bad debt: This is when borrow money to buy stupid things that depreciate in value and doesn’t make you money. I shouldn’t even need to explain it because this is pretty self explanatory.
Good debt is money that you borrow to make you more money. Good debt is used as a tool to increase your cash flow by borrowing money at a cheaper rate than your money makes you. And right now, we’re at the end of an opportunity of borrowing cheap money - that’s why I’m trying to grab as much as I can while rates are still overall relatively low.
This is why I’m over a million dollars in debt…I have one 30-year loan at 3.375% interest rate, and another one at 4.5% interest rate…my investments make way more than this, and I’m able to profit the difference. It allows me to invest way more long term and increase my cash flow. This is also why there’s absolutely no reason for me to pay this down early…I can pretty much invest my money anywhere and get higher than a 4.5% return, so it makes sense to invest my money than pay down low-interest, tax deductible debt.
So what does this mean for YOU and how can this help YOU?
Knowing the difference between good and bad debt will help you evaluate what you can do to maximize your profits and the amount of money you make. If you’re borrowing $10,000 at a 5% interest rate, but your money is making you 10% elsewhere…that’s a no brainer. Borrow the money, make 10%, pay 5% in interest, and you’ve just got a “Free” 5% without using your own money. This is basic real estate 101, but it also applies to just about any business.
The tricky part, from my perspective, is when you start borrowing money in the 6%+ bracket. The higher your interest rate, the tighter the margins, and the more closely you need to evaluate if it’s worth it. If you’re borrowing in the higher tiers, you need to be absolutely sure you’ll be making a higher return and that it’s sustainable…at a certain point, it becomes more advantageous to pay down debt than re-invest. If I had an 8% loan, you bet I’d be aggressively paying that down as much as I can…but a 3.375% loan like I have on one of my homes? Nope. Keep it forever.
So if you get to the point where you need to grow your business or if you decide to invest in real estate, know that debt CAN be good when managed appropriately…it’s a little like playing with fire, as I mentioned earlier. Used appropriately, it’s great…and it’s how I’ve been able to get some pretty good returns in real estate.
So don’t be afraid of debt, but manage it carefully and consider what your money is really worth!
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: https://goo.gl/UFpi4c
Join the private Real Estate Facebook Group:
https://www.facebook.com/groups/therealestatemillionairemastermind/
So here’s why I’m a million dollars in debt - there’s a big difference between good debt and bad debt. The reality is that almost every successful business, at some point, needs leverage if it’s to grow exponentially…especially in real estate…and how you manage debt could either make or ruin you. Think of debt a like fire. Fire could give you warmth, cook your food, bring you light…or it could burn you. Debt is very similar.
I grew up in a family that was wrecked by debt…I grew up thinking debt was awful and that credit cards were the worst thing ever. But as I began to associate with people who were just insanely wealthy, I realized…these were people who weren’t afraid of debt. They embraced it and worked the system to their advantage.
Bad debt: This is when borrow money to buy stupid things that depreciate in value and doesn’t make you money. I shouldn’t even need to explain it because this is pretty self explanatory.
Good debt is money that you borrow to make you more money. Good debt is used as a tool to increase your cash flow by borrowing money at a cheaper rate than your money makes you. And right now, we’re at the end of an opportunity of borrowing cheap money - that’s why I’m trying to grab as much as I can while rates are still overall relatively low.
This is why I’m over a million dollars in debt…I have one 30-year loan at 3.375% interest rate, and another one at 4.5% interest rate…my investments make way more than this, and I’m able to profit the difference. It allows me to invest way more long term and increase my cash flow. This is also why there’s absolutely no reason for me to pay this down early…I can pretty much invest my money anywhere and get higher than a 4.5% return, so it makes sense to invest my money than pay down low-interest, tax deductible debt.
So what does this mean for YOU and how can this help YOU?
Knowing the difference between good and bad debt will help you evaluate what you can do to maximize your profits and the amount of money you make. If you’re borrowing $10,000 at a 5% interest rate, but your money is making you 10% elsewhere…that’s a no brainer. Borrow the money, make 10%, pay 5% in interest, and you’ve just got a “Free” 5% without using your own money. This is basic real estate 101, but it also applies to just about any business.
The tricky part, from my perspective, is when you start borrowing money in the 6%+ bracket. The higher your interest rate, the tighter the margins, and the more closely you need to evaluate if it’s worth it. If you’re borrowing in the higher tiers, you need to be absolutely sure you’ll be making a higher return and that it’s sustainable…at a certain point, it becomes more advantageous to pay down debt than re-invest. If I had an 8% loan, you bet I’d be aggressively paying that down as much as I can…but a 3.375% loan like I have on one of my homes? Nope. Keep it forever.
So if you get to the point where you need to grow your business or if you decide to invest in real estate, know that debt CAN be good when managed appropriately…it’s a little like playing with fire, as I mentioned earlier. Used appropriately, it’s great…and it’s how I’ve been able to get some pretty good returns in real estate.
So don’t be afraid of debt, but manage it carefully and consider what your money is really worth!
For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Favorite Credit Cards:
Chase Sapphire Reserve - https://goo.gl/sT68EC
American Express Platinum - https://goo.gl/C9n4e3
dislike
Debt that doesn’t make you money is very bad. Debt that makes you money is good as long as you don’t over leverage yourself.
This guy was making videos just a couple years ago saying why he’d never go in debt.
How to know where to invest it?(im talking about real estates)
What’s the end goal with banks looking at you owing good debt?
What a difference four years makes! Getting a loan at 3.75% interest did seem incredible. Who knew the rates would go even lower in 2020.
Two comments I would like to make:
FIRST – I was happy to get financing on my house in 1980 at 13.5%! Rates went as high as 18% and we all knew they would NEVER come down.
SECOND – Never finance a liability. The $200,000 car you wish to purchase is a LIABILITY! Even if it's fun or appreciates in value, it is a toy that does not put money in your pocket.
Simple rule,
ASSETS PUT $$ IN YOUR POCKET. LIABILITIES TAKE $$ OUT OF YOUR POCKET.
Know the difference.
🔥🔥🔥🔥🔥 LOL 🔥🔥🔥🔥🔥🔥
Thanks! I am looking to pay off my credit cards debt I did to invest in my business. It is helpful.
I’m a business owner for over 10 years and have learned so much from this video. Haha. Thanks G. I smashed the like button.
Bro u serious ? If u are okay to take a long debt cause remember we ain't gonna be young even means it take 30 years mortgage means your 30 years of your life
Please go back to videos like theseee
wow awesome video grahm this is so true there is good debt and bad debt this is what most people is afraid to take a chance
Made it to the end! Love ya!
Hey! Thank you for the advice I am really learning a lot. Btw I watched the entire video
I wonder if the analytics on completion is higher on this video.
Pretty sure most normal people wouldn't be able to get a loan with such a low-interest rate. Love the channel btw, really helped me manage my money.
Wow this actually changed some of my opinions on debt and financing. I always planned to pay for my first expensive car in full, but now I might just wait until I have enough money that I could afford pay in full, then finance instead!
Hi. Will you consider a monthly interest rate of 1.5 high or law?
I watched the whole video
I’m not gonna lie that’s a massive load of speeding knowledge, I’m trying to fit it all in my brain
Finally a good video explaining this
On a principle level, I would have to disagree. Whether you are borrowing money to start a business or borrowing money to go on a vacation, it's still borrowing money and I feel that is wrong.
Maybe I need to watch this video again. The whole concept of using debt as leverage is new to me. But If anyone could shed some insight as to why isn't it better to just buy the house (especially if you can afford it) and then lease it to tenants to earn cash flow? The way he does seems wrong to me because he doesn't own the house and the bank does ( he's only putting 20% down) and what happens if he dies before the 30 year loan, doesn't the bank own the property at that point? I'm guessing the name of the game is just to earn cash flow but at what cost? Just trying to understand the debt leverage concept…
I'm 16 and I'm so glad I saw this video right now, thank you Graham!
I’m waiting for the but….
🔥🔥🔥🔥🔥
Thanks man.
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Hi have one question if I give out personal loan in future for $80,000@12%is it considered passive income or do I pay capital gains? Thankyou from Toronto 🇨🇦
Here we are three years later with even better rates 😂
I think it’s more of a risk tolerance thing.
For example, while I could, I would never take a million dollars worth of loans. Even though I know it’s likely that I could profit off the debt, it makes me uncomfortable.
I’ll finance one property at a time, pay it off aggressively and then buy another. I know that’s going to be a slower return but it’s comfortable to me.
For the record, I make it the end of your videos 🤣
Could we get Macy's reaction to that goofball who keeps coming on?
Two years later mortgage rates are 2.5%