Successful realtor agents have moved beyond the sometimes simplistic thinking of the financial self-help crowd and realize that the blanket statement, “Debt is bad.” is a silly thing to say. Some types of debt are definitely bad. Destructive debt accumulated by out-of-control consumerism is an example. On the other hand, constructive debt, the kind incurred whilst using other people’s money to grow your own wealth, is a whole different ballgame.
Let’s take destructive debt first – the one you want to stay away from. A good definition of this is the scenario of borrowing money, spending it on something that will only decrease in value, and find yourself left with nothing but high-interest debt payments and perhaps a car, big screen television, or vacation, all which are worth less than you paid the moment you closed the deal. To most realtor agents, it’s easy to see the prime offenders here are credit cards.
Constructive debt is the opposite. Yes, you still borrow other people’s money but use it to buy an asset that will continually appreciate in value. As you might guess, we’re talking about real estate which, to our mind, is the epitome of constructive, productive debt. To be specific, this sort of debt is normally taken in the form of a fixed-rate, long-term mortgage to buy a piece of income generating property. In short, become a landlord. This method allows you to buy something of increasing value that belongs to you using, here’s the great part, someone else’s money.
Experienced realtor agents realize it doesn’t get any better than that. Constructive debt is not a dirty word but rather a path to financial independence to those wise enough to take it.
The AIPIS Team
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