Evan CarmichaelSpeaker / Author / Introvert

Not All Debt Is Bad Good Debt Is Called Leverage | #Shorts

30 Jan 2023 · 1 min

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In this short video, the speaker outlines a real‑estate leverage technique. An investor purchases a $100,000 house with a 20% down payment ($20,000) and finances the remaining $80,000. The investor then spends an additional $20,000 on renovations, raising the property's market value to $200,000. By performing a cash‑out refinance at roughly 70% loan‑to‑value, the investor can withdraw about $140,000, which is tax‑free. The total personal cash invested was $40,000, yet the investor now has $140,000 to redeploy into other income‑producing assets, while the property’s tenants continue to cover the mortgage payments. The speaker emphasizes that this cycle of leveraging, renovating, and refinancing can be repeated to build wealth.

Chapters

You buy a house for $100,000, guys, right? You only put down $20,000. You put 20% down, the bank gives you the other $80,000. You put $20,000 into the property to fix it up. That property now goes up to $200,000. Then you can go ahead and do a cash-out refinance and you could pull out, what, 70%? So remember, you only put in about $40,000 of your own money into the deal. Now you're getting $140,000 out. You can take that $140,000 tax-free, which is the key, yeah, and roll it into buying another asset that's going to make you more money. You ain't paying it, your tenants aren't, right? So why not continue to do that and buy You're trying to close that off.