Quote:
Originally Posted by Travis  So let’s say you buy 10 rent houses using all debt. What will you do if all of the tenants move out?
That’s right; all 10 houses that you have a mortgage on are empty. Now you are stuck paying the mortgage payment.
What if you had paid cash for all the house, and then they emptied out? The loss on the bottom line would not be as bad.
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Let's say you have enough money for 10 houses leveraged, or one house paid outright. Let's say you lose one tenant from the 10 houses and one from the one house.... In the first instance you still have income from nine. In the second situation, you have no income and if your house needs repairs, you have to pull from equity or from some other income.
This is the reason Kyosaki suggests that you use "other people's money." However, you do have to buy at a price that will allow you to rent a home for a profit. This is not as easy as it sounds, and won't work in many areas. You have to check with the local realtors, to find out what renters are paying and what they can comfortably pay, and check the local ads to see what the asking range is. I found that I wasn't willing to talk the owners down to a price that would make financial sense for me.
But, I'm a social worker and wanted to be fair.....
