Good Debt, Bad Debt and No Debt

[molly1a]

Hi All

Question , Question we attended a great Seminar today in Sydney the presenters were Nhan Nguyen, Matt Jones, Jennie Brown and David Wright. It was a fabulous day and opened our eyes to many concepts. What i am questioning is their thought on No Debt, to tell you the truth we always thought it was a great idea to have debt, like investment debt is good debt... after hearing the presenters today it really is something I am questioning going forward.

Thanks in advance

PS has anyone done any courses with any of the above presenters??

 

[NPB]

Hi All

Question , Question we attended a great Seminar today in Sydney the presenters were Nhan Nguyen, Matt Jones, Jennie Brown and David Wright. It was a fabulous day and opened our eyes to many concepts. What i am questioning is their thought on No Debt, to tell you the truth we always thought it was a great idea to have debt, like investment debt is good debt... after hearing the presenters today it really is something I am questioning going forward.

Thanks in advance

PS has anyone done any courses with any of the above presenters??

why would you want debt?

if you are going to have debt it is better that it is investment debt but the ideal would be to have no debt at all.

i have never heard of those presenters.

while i agree with the theory you of course need to look into the reason why it is being promoted.

many a great scam has been committed in the name of a sound theory so do your homework, I have never heard of this guys so it is general not specific advice to this group

 

[Colin Rice]

Was it Vendor Finance they where promoting.

You know, get a property for $1 down?

 

[Terry_w]

Hi All

Question , Question we attended a great Seminar today in Sydney the presenters were Nhan Nguyen, Matt Jones, Jennie Brown and David Wright. It was a fabulous day and opened our eyes to many concepts. What i am questioning is their thought on No Debt, to tell you the truth we always thought it was a great idea to have debt, like investment debt is good debt... after hearing the presenters today it really is something I am questioning going forward.

Thanks in advance

PS has anyone done any courses with any of the above presenters??

What are their thoughts on 'no debt'?

 

[molly1a]

Seminar

Hi

The Presentation was based on the different opportunities that have worked for them and not necessarily waiting for the growth.
They talked on many subjects subdivision, splitter blocks, reno, options, goal setting, mindset etc
Of course they all promoted their course or product at the end of their talk but definitely no push etc.
Its just that i have never thought of no debt with investment I actually thought it was good to have some debt with investment even at the end close to retirement..
You may not have heard of them as they all come from Queensland.
overall it was a good day and of course we were able to network and meet some great investors.

 

[ellejay]

Wow, it's better to have no debt. I can see why you're excited. Did you pay for this presentation?

 

[Xenia IM]

They are property educators - they make money on mentoring programs but as far as I'm aware I don't think they sell properties, unless things have changed now! They never used to!

Their rule on no debt is that they take a bullish/conservative view point on the property market and want to protect clients from margin calls.

It is one of many view points on the property market!

 

[molly1a]

No Debt

Hi

Their thought was to either have low debt or no debt. The deals that they are doing were for eg subdivision,they may sell off both the land and the house, or sell off the land at the back to pay down the front house then all rent from this was theirs.

They also talked alot about free block of land and what they may do with it as in Reno existing house on the block and the either put 2 to 3 houses/ duplex at the back which gave them multiple streams of income.

Its always great to hear what others are doing especially when they are all successful

Molly1a

 

[molly1a]

Cost

Hi The presentation cost $19.95 for myself Hubby no cost. The only thing they tried to sell was their mentorship program but honestly they barely spent 5 min on this all the rest was just great info

 

[Rolf Latham]

Hi The presentation cost $19.95 for myself Hubby no cost. The only thing they tried to sell was their mentorship program but honestly they barely spent 5 min on this all the rest was just great info

great to hear of some paying forward courses

ta
rolf

 

[HomePage]

Without using debt, property investment loses its greatest wealth-building trait - leverage - and reduces portfolio growth to a snail's pace. I can understand saying no to high debt levels (ie. high LVRs) as this increases the risk of negative equity in a market turndown, but no debt at all is ridiculously conservative.

 

[redwing]

An interesting read about property development and marketing companies

Nhan Nguyen

With his university degree behind him, Nhan took a role with a property education company earning just $25,000 per annum. What he didn?t receive in cash he received in education, learning how to do deals, qualify leads and look for opportunities.

After 12 months Nhan changed jobs to work for a different property development and marketing company that was moving over 80 properties a year.

He learnt how to tie up opportunities with little money and onsell the properties at a significant profit.

After three years as an employee, and aged 23, Nhan quit working for someone else, and in December 2003 he moved into full-time investing.Nhan on bus

He has now done more than 70 deals worth over $20 million in total. In the past 24 months alone, he has done $3 Million worth of property transactions using none of his own money.

Nhan is an established speaker and bestselling author, speaking on property investing and no money down deals.

Onsell to clients?

 

[TMNT]

good debt vs bad debt is a fundamental understanding,

no offence to anyone above the ages of 20, but if you cant tell the difference between the two, then you probably arent suited for investing

as for no debt, sure if you have pots of money, then no debt is good

if you can do those option deals with no money down, then good for you, ive looked at them and done my research and you need a lot of luck, time, persistence, low sucess rate, connections, and is quite risky

other then that, leeveraging is a good (the only???) way to get ahead in financial investment. controlling a bigger asset value then your cash.

obviously higher leverage = higher risk,
higher risk usually means higher reward

 

[MRO]

The whole 'no debt' concept to me is just a way of getting people with no capacity to borrow to sign up for expensive mentoring courses.

A while back it was 'use the equity in your home' sales pitch. Once this was exhausted the mentor sales market needed to find a new type of customer, hence the 'no debt' push. I assume this requires the use of options, vendor finance and other non mainstream ideas.

These ideas are good in theory but i struggle to see how there would be that many deals around that you could apply this too. Maybe i need to go to a 'seminar' to learn about it...

 

[BayView]

Debt is required when you need/want to buy something you can't afford right now.

It costs money (interest), so better to avoid it always, and reduce it asap.

However, investment debt needs to considered as a tool; most folks with less financial education think of debt as always bad.

For eg; our 3rd PPoR was bought using $100k cash from our previous PPoR sale, and the rest borrowed. It was a big stretch financially for us at the time.

But, after selling it 2 years later, the return on that $100k plus the interest on the loan over that time was over 300%. It was a total fluke, for sure; but if we hadn't borrowed, we wouldn't have had the financial win.

That was a good use of debt as it turned out.

In the scheme of investing; borrowed money can allow you to accelerate a lot of wealth for only the cost of the borrowed money (interest) - which is also tax deductible.

The argument is that you should save the deposit in cash, then borrow for a property. Very few folks can pay for a house entirely in cash.

The only problem is, by the time you've saved the larger deposit (rather than borrowing more of the purchase price) the property might have gone up as much as, or much more in value in that time than you have been able to save the money.

 

[Ace in the Hole]

You really do need debt to get off the mark in most cases.

Personally, not sure if true with others, is that when starting out you can endure a high debt ratio without too much risk.
Then as you progress and collect more assets and build equity to larger numbers, it's best to tame down the debt a little to avoid getting wiped out by some unfortunate event.
I'd guess most people would automatically do this anyway as they head towards a financial freedom goal.

 

[Chomp]

He who dies with the most debt wins

 

[The Y-man]

Hi

Their thought was to either have low debt or no debt.

Its always great to hear what others are doing especially when they are all successful

Molly1a

Having debt (hopefully good!!) or not, I believe is tied in with "stage of life" and "events".

For example
It is tied in with age ("can afford to take bigger risk when young" theory)
"Having Child event" - potentially lower debt
"Job looking shaky event" - potentially lower debt
"Lost job event" - uh, mmmm.....you wish you had lower debt
"Just lost a ton on the sharemarket and got margin calls galore" - uh, mmmm.....you wish you had lower debt
"Nothing much happening, all debts paid off, but no big growth" - time to increase debt

etc

The Y-man


etc

 

[perthguy]

I would find it hard to invest in residential property without increasing my debt. As long as I am interested in investing, I will probably have some level of debt. It doesn't bother me. I would certainly be very much worse of if I had not taken on my current level of debt. I plan to keep investing well into retirement. Being debt free is not one of my goals. I do plan to slowly reduce my LVR over time though. I would not like to be in retirement with a 95% LVR.

 

[westminster]

Hi

Their thought was to either have low debt or no debt. The deals that they are doing were for eg subdivision,they may sell off both the land and the house, or sell off the land at the back to pay down the front house then all rent from this was theirs.

They also talked alot about free block of land and what they may do with it as in Reno existing house on the block and the either put 2 to 3 houses/ duplex at the back which gave them multiple streams of income.

Its always great to hear what others are doing especially when they are all successful

Molly1a

This process and upside of developing is what leads many mature investers to investigate and follow if it suits their risk profile. If done well a triplex development may end with sell 2 to pay off debt and keep 3rd debt or very low debt free.

Good debt is necessary during accumulation phase but eventually you need a plan for how you are going to reduce debt for retirement. This might be sell half/keep half when LVR reaches 50%, reduce along way with developments etc etc