The right kind of debt
FROM THE DESK OF GRANT CARDONE: I love debt that will produce income for me. I’m not talking about pretending to be a baller and racking up 20K on your Amex that you can’t pay off. There is stupid debt—and then there is good debt. One is a path to financial slavery, the other is a way to financial freedom. I use debt to my advantage and you can too.
I’ve single-handedly built a real-estate empire without raising external capital. I didn’t do this as a full-time career but as a side business. I wanted to have a stable place to park my income from my other businesses that could be a wealth preservation and creation vehicle. Cardone Acquisitions has been involved in more than $425 million in transactions and I’m looking to grow it to not just 1, not 2, not 3, but FOUR BILLION dollars.
I’M ALSO LOOKING FOR PARTNERS WHO WOULD LIKE TO INVEST WITH ME.
Taking on the right kind of debt lets you keep what’s yours, you don’t need to give up company equity for cash. Debt can help you manage cash flow. It’s not really that complicated. Let’s say you have a company that has an opportunity to sign a contract for $100K but you need some equipment to fulfill it that will cost you $40K you don’t have. Debt is great for you—get a loan, pay a little interest, and make your profit. Just do the math. If profit will outweigh the debt with interest, why not take it on? Measure the return on investment (ROI). With debt, you need to be certain that an investment’s ROI exceeds its after-tax interest cost.
When I was 29 I bought my first property—a single family property in Houston. After a couple of months, the tenants left. With no cash flow coming in, I sold and broke even. I swore I’d never buy single family again because I don’t want my occupancy rate to go from 100% to 0%. After that, I didn’t buy again for five years, during which time I just accumulated cash by becoming a master salesman, hustling like crazy, and saving. I bought a…