My husband is into estate investment properties. Heíll buy a run-down house for very little money, fix it up and then rent it out. The debt weíre racking up makes me nervous. Each house has a loan, but he says itís okay because we can sell them. Can you give me any advice?
I went broke years ago doing exactly what your husband is doing right now. Iíve known several others who went broke doing it, too. Lots of folks in real estate
tend to believe that debt is okay so long as the property is worth more than the debt, but there are several down sides to that kind of thinking. At the end of the day, the borrower is always slave to the lender. And Iím afraid your husband may be on that path.
At best, this kind of thinking will make for lots of uncertainty. The worst case scenario has you guys ending up bankrupt,
just like we did. My experience way back when is proof that things like this can quickly escalate out of control when you make debt one of your building blocks.
Thereís nothing wrong with investing in real estate, but I recommend that he do it much more slowly Ė and with cash!