How to Bust Debt Fast With Tenants
By Larry Goins
There are numerous ways that you can eliminate your debt. They all start out and end up the same way – increase your income and apply it to your principles. One vehicle that you can use to bust debt fast is rental properties.
Let’s assume that you invest in a property at about 70% After Repair Value including your purchase, rehab, and closing costs. Once you have fixed the property up, you should be in a position to re-finance at 75-95% of the loan to value and pull out the cash, your cash, that you original invested in the property. This is Tax Free cash as you don’t pay any taxes on borrowed money. Once you rent the property out, at a positive cash flow, your tenant pays your mortgage AND puts money in your pocket.
So what do you do with this money? Look at your bills. Credit cards, car payments, student loans, your own home mortgage, debt consolidation loans, medical bills, etc. Let’s assume that you have $15,000 in credit card debt. Its probably not at a great interest rate. As a student of my Ultimate Buying and Selling Machine course, you know you can make $5000 to $10000 on each and every real estate deal.
Take the credit card with the LOWEST balance, and pay it off when you refinance your first rental property. If there is any money left, apply it to your next lowest credit card, and so on. In doing this with your Tax Free money you are lowering your debt balance AND increasing your monthly income from the rents due on the property every month. Imagine if you eliminate $250 in monthly debt or loan payments every month AND you increase your monthly income by $250. That’s like getting a $500 per month raise from your real estate business, rather than putting $5000 in your pocket. So at the end of ten months you have increased your income, lessened your debt, and added to your real estate net worth portfolio.
By doing this you are also raising your credit score. Making it easier to finance your real estate deals.
Start by paying off your credit cards. Then automobile loans and student loans. Follow up with medical bills or other old debt. Then pay off your personal mortgage on your residence. Once your own home is paid off, you can re-finance with a Home Equity Line of Credit at prime. That is the cheapest money you can put your hands on.
Once you reach this milestone, and you talk to someone about a property you can actually ask, “What is the least amount you can accept for this property if I write you a check by Friday?” You know you can do this deal because you can literally write a check against your Home Equity Line of Credit. At this point, you are living debt free with the single exception of the properties that your tenants are paying for with their rent checks.
This is one of the very powerful ways that my Ultimate Buying and Selling Machine course can truly improve your quality of life and allow you to spend more time with your family and less time chasing the almighty dollar.
Larry Goins
For many more articles and a 10 part e-course on how to create your own Ultimate Buying and Selling Machine! as well as over 50 training audio recordings you can listen to online, download and collect, simply go to www.TheCoachingClub.com where you will gain instant access to all of this and 51 Exclusive Editable real estate investing Forms and Documents all FREE! You will also get two FREE real estate investing eBooks, A free Personal Coaching Profile to help you jump start your real estate Investing, FREE Nationwide Wholesale Property Listing Notification, FREE Weekly Training Teleconferences with Different Topic Each Week, FREE subscription to
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