{"id":68449,"date":"2019-05-24T13:04:24","date_gmt":"2019-05-24T18:04:24","guid":{"rendered":"https:\/\/www.zilculator.com\/blog\/?p=68449"},"modified":"2021-01-22T05:33:27","modified_gmt":"2021-01-22T10:33:27","slug":"is-real-estate-debt-really-that-bad","status":"publish","type":"post","link":"https:\/\/www.zilculator.com\/blog\/is-real-estate-debt-really-that-bad\/","title":{"rendered":"Is Real Estate Debt really That Bad?"},"content":{"rendered":"\n<p>There are some who will try to argue that all debt is not bad. That is not what is about to take place here. While no one is ever going to allow themselves to believe that all debt is good, there are many who find themselves confused when it comes to the concept of &#8220;good&#8221; debt and &#8220;bad&#8221; debt in the world of real estate investment.<\/p>\n\n\n\n<p>&#8220;All debt is bad&#8221; might sound like an inflammatory blanket statement to many and understandably so. Many <a href=\"https:\/\/www.zilculator.com\/blog\/7-surefire-ways-to-fail-as-a-real-estate-investor\/\">real estate investors<\/a> like to live in that grey area, where some debt can actually be considered as a net positive. In order to learn more about why debt is bad, it is important to keep reading&#8230;..<\/p>\n\n\n\n<p><strong>Related: <a href=\"https:\/\/www.zilculator.com\/blog\/how-to-use-relationships-to-succeed-in-the-real-estate-game\/\">How To Use Relationships To Succeed In The Real Estate Game<\/a><\/strong><\/p>\n\n\n\n<div id=\"toc_container\" class=\"toc_white no_bullets\"><p class=\"toc_title\">Contents<\/p><ul class=\"toc_list\"><li><a href=\"#So_Why_Is_Real_Estate_Debt_So_Bad\"><span class=\"toc_number toc_depth_1\">1<\/span> So Why Is Real Estate Debt So Bad?<\/a><\/li><li><a href=\"#Why_All_Cash_Deals_Are_The_Way_To_Go\"><span class=\"toc_number toc_depth_1\">2<\/span> Why All Cash Deals Are The Way To Go<\/a><\/li><li><a href=\"#What_If_a_Cash_Deal_Isn8217t_In_The_Cards\"><span class=\"toc_number toc_depth_1\">3<\/span> What If a Cash Deal Isn&#8217;t In The Cards?<\/a><\/li><\/ul><\/div>\n<h2><span id=\"So_Why_Is_Real_Estate_Debt_So_Bad\">So Why Is Real Estate Debt So Bad?<\/span><\/h2>\n\n\n\n<p>Those who have already conducted hundreds of deals of this nature are already well aware of the pitfalls associated with debt. So why do <a href=\"https:\/\/www.zilculator.com\/blog\/are-15-year-mortgages-better-for-new-investors\/\">newbie investors<\/a> find themselves making the same <a href=\"https:\/\/www.zilculator.com\/blog\/is-buying-real-estate-investment-in-the-beginning-of-a-recession-a-mistake\/\">real estate mistakes<\/a>? For starters, even those who are truly experienced in this regard will still consider themselves to be in the learning process.<\/p>\n\n\n\n<p>Since real estate investment is a field that constantly\nexperiences shifts and changes, there is never going to be a moment where the\ninvestor truly knows it all. The top investors all have one simple rule that\nthey choose to live by, though. They make all of their deals with the cash that\nthey have on hand.<\/p>\n\n\n\n<p>This keeps investors from being forced to endure all of\nthe complications that are typically associated with loans of this nature. The\npeople who tend to claim that all debt is not bad have yet to pull off very\nmany real estate deals. Cash deals are the way to go. When investors are\ngetting started out, taking on more debt is never a good idea. <\/p>\n\n\n\n<p>Debt is also a credibility destroyer in most instances.\nAfter all, who wants to work with an investor that is already up to their\neyeballs in debt? <\/p>\n<!-- WP QUADS Content Ad Plugin v. 2.0.17 -->\n<div class=\"quads-location quads-ad2\" id=\"quads-ad2\" style=\"float:none;margin:0px;\">\n\n <!-- WP QUADS - Quick AdSense Reloaded v.2.0.17 Content AdSense async --> \n\n\n<script type=\"text\/javascript\" >\nvar quads_screen_width = document.body.clientWidth;\nif ( quads_screen_width >= 1140 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }if ( quads_screen_width >= 1024  && quads_screen_width < 1140 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }if ( quads_screen_width >= 768  && quads_screen_width < 1024 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }if ( quads_screen_width < 768 ) {document.write('<ins class=\"adsbygoogle\" style=\"display:inline-block;width:550px;height:90px;\" data-ad-client=\"pub-3164542121802998\" data-ad-slot=\"4497930067\" ><\/ins>');\r\n            (adsbygoogle = window.adsbygoogle || []).push({});\r\n            }\n<\/script>\n\n <!-- end WP QUADS --> \n\n\n<\/div>\n\n\n\n\n<h2><span id=\"Why_All_Cash_Deals_Are_The_Way_To_Go\">Why All Cash Deals Are The Way To Go<\/span><\/h2>\n\n\n\n<p>Real estate investors who make all cash deals have a far\ngreater amount of control over what has taken place. A real estate investor who\nis new to the process may not realize that any lender is able to call in the\nloan whenever they are ready. This removes all of the control from the process\nand places the investor in a far more precarious position. <\/p>\n\n\n\n<p>To be perfectly honest, the likelihood of this sort of\nevent occurring is not exactly sky high. On the other hand, this is the same\nsort of logic that landed real estate investors in hot water when the last\nrecession took place. Plenty of investors went bankrupt as a result of this\nmindset and that is what makes all cash deals so crucial. <\/p>\n\n\n\n<p>There are no overnight successes in the world of real estate investment. It is going to take several years to build a quality portfolio. Those who try to take shortcuts by asking for loans are only making things much harder on themselves over the long haul. Investing in <a href=\"https:\/\/www.zilculator.com\/blog\/a-beginners-guide-to-wholesale-real-estate\/\">real estate <\/a>is not for the faint of heart. <\/p>\n\n\n\n<h2><span id=\"What_If_a_Cash_Deal_Isn8217t_In_The_Cards\">What If a Cash Deal Isn&#8217;t In The Cards?<\/span><\/h2>\n\n\n\n<p>Of course, there are going to be investors who cannot make a cash deal who wish to get involved. These investors may not be aware of the best areas to invest in. For example, there is very little that can be done for those who reside in areas where even a $50,000 loan gets them next to nothing. A $100,000 loan might garner a parking space in a place like Los Angeles or New York.<\/p>\n\n\n\n<p><strong>Related: <a href=\"https:\/\/www.zilculator.com\/blog\/the-9-most-useful-tools-for-beginner-realtors-and-agents\/\">The 9 Most Useful Tools for Beginner Realtors and Agents<\/a><\/strong><\/p>\n\n\n\n<p>This is why the Midwest is ripe for investment opportunities. Moving to markets where the numbers are more sensible is the best decision for any <a href=\"https:\/\/www.zilculator.com\/blog\/do-not-do-it-flipping-houses-is-not-for-beginners\/\">home flipper<\/a>. Gone are the days where investors need to reside in the same home for the entirety of the mortgage. Purchasing a home to reside in before moving to another (and flipping the old property) is now a common investment strategy.<\/p>\n\n\n\n<p>In the vast majority of instances, it is in the best\ninterests of the real estate investor&#8217;s best interests to simply wait and save\ntheir capital. While there are strategies that allow the investor to make a\nname for themselves with the help of a loan, debt is bad and needs to be\navoided whenever possible. \n","protected":false},"excerpt":{"rendered":"<p>There are some who will try to argue that all debt is not bad. That is not what is about to take place here. While no one is ever going&#8230;<\/p>\n","protected":false},"author":3,"featured_media":68711,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[159],"tags":[202,172],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v15.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is Real Estate Debt really That Bad? | Zilculator: Real Estate Investment Analysis blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zilculator.com\/blog\/is-real-estate-debt-really-that-bad\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Is Real Estate Debt really That Bad? | Zilculator: Real Estate Investment Analysis blog\" \/>\n<meta property=\"og:description\" content=\"There are some who will try to argue that all debt is not bad. 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