I bet many of you are thinking those rates are criminal. Some debt, though, really is good debt. People will scoff at a deal like this and then go take out a $50,000 loan at 5 percent on a car (a rapidly depreciating asset) that is worth 20 percent less the minute you drive it off the lot and think its a great deal. A 5 percent rate on a depreciating asset is a much worse deal than a 16 percent rate on a deal with a 30 percent profit margin. You also dont need millions of dollars to do this.
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Real Estate Investing: Risks and Benefits
Benefits:You would make all decisions, earn all profits (if any) and directly control the asset. Risks:You could face the possibility of bad tenants and other management hassles, making a poor financial choice, losing money on the sale of the property and assuming full liability past insurance coverage. Partnerships with close or well-known associates You could also partner with a friend, a small group of like-minded investors or family members. Hopefully you know your co-investors well and their financial position, motivation, work ethic and desire to share in the management of the property.
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