How I am paying off $35,000,000 of Debt Without the Debt Snow Ball

Paying down your loans is the least effective and riskiest way to get rid of debt. In this video, I'm going to show you exactly what you can do instead to make millions of dollars to pay off all of your debt and to not pay down your loans over time. The debt snowball is a broken model. I will prove that in this video. Oh, by the way, if you're new to the channel, my name is Christian Osgood. I've bought hundreds of rentals starting with virtually no money. I did this through creative finance and methods that work universally in every market anywhere— red states, blue states, small markets, big cities, you name it, we've done it. I'm going to share with you on this video the best way to pay down your debt. So the conventional wisdom, the Dave Ramsey's model, pay everything off over time. Let those debts chunk down and down and down and down. Make monthly payments from your cash flow or your earned income into your debt until you've paid it all off. Here's the problem with that model. We call that an amortized debt. Just like when you buy a house, it's on a 30-year AMM, which means You have interest payments and principal payments. And over the course of 30 years, the house will pay itself all the way off. Sounds nice, right? But what if you need that cash? What if you're expanding a portfolio? What if you want a larger security net? And what if you're buying multiple properties? Now, on one property, take some excess cash flow, you pour it into the property, you pay it off over time. If you lose that property partway through, something tragic happens. You lose the property and you put a bunch of money into it. You use the— you lose the property and you lose the money. You do not want to lose both of those. You actually want to keep the risk on the lender. On interest only, we pay interest payments. We don't pay down the loan, but that money doesn't disappear. The principal gets paid to you. What you can do instead is store that money in a side account. Don't spend it on the car. Don't spend it on a fancy house. It's not spending money. You take what would have been forced to pay into your loan. And you sideline it in an interest-bearing account. Now that money is making money, is increasing your reserves, is adding stability, and you are keeping the risk off of yourself. In addition, imagine multiple properties. So we have a portfolio of, say, 10 buildings. Each of these buildings is on an interest-only loan. So all the cash flow, instead of being paid into this property, into this property, into this property, this property, every property slowly paying itself off. Over 25 or 30 years. All of that principal is going into one account. Now imagine you have a catastrophic failed roof or a major leak in one of your buildings. You were saving off to pay off debt, but you now have this huge pile of cash over here in an interest-bearing account where you can pull out of it and you can just pay for the roof. You've added to security. In addition, you do this over a long period of time. You have your 10 properties, maybe you add 10 more. Now you have 20 properties. All feeding this account. It's gone up and up and up and up. All of a sudden you have more cash in this account than your lowest mortgage. So you bought a bunch of million-dollar properties, but the first property you bought was only a $200,000 property. Well, now I have $400,000 in this account over here. I can take half of it, pay off the note in full. Now my cash flow goes off. I don't have any risk of foreclosure now. Now, yes, you still have to pay your bills. Yes, you still have to pay your taxes. You have no mortgage. Your biggest expense on the property has disappeared. Your global cash flow has gone up, your debt has gone down, and your risk has gone down. Keep the leverage on the lender until you can afford to pay off the note in full. Now we're saving even faster. Stacks, stacks, stacks, pay off the next mortgage. Oh, what happened? Our cash flow went up. Keep stacking the money. This method I have met so many investors, seasoned investors who've been playing the game for 30, 40 years. This is exactly the way they played the game. They saved, saved, saved in a side account. They did not go out and buy the yachts, the sports cars until they had already paid off several properties. And they're like, you know, we're cash flowing $75,000 to $100,000 a month. Sure, maybe we upgrade the car and then back to stacking and you stack, stack, stack, pay off debt, stack, stack, pay off debt. What you end up with is insane income, a side account that insulates you from anything that can happen in your portfolio, the highest cash flow model humanly possible because you're not paying down any principal, and you have 100% autonomy over all the money. I can take money from this property to pay off this property. I can take money from this property to do a renovation project over here, but I control the money instead of the properties. Each individually draining my cash flow every single month through an amortized schedule. This works as long as, I'm going to reiterate this one more time, you do not take the principal and spend it on something stupid. The people you see with the sports cars, the yachts, the like super ridiculous mega houses, you get there either over a lot of patience and a lot of time, or if you're an idiot and you're going to go bankrupt later. You do want to manage your debt stack. You do want to roll down debt over time. And I guarantee you, when you are farther along in your career and farther along in life, less debt will feel better. Dave Ramsey was right about that. Debt-free is an awesome goal. You can't get there, in my opinion, unless you're making over $600,000 a year and consistently saving for a long period of time, or you're scaling a business using debt. With a clear game plan to pay off that debt. That's why every deal I buy cash flows day one. I buy a deal, income goes up. I buy a deal, income goes up. I now have time to pay them off, but that account is growing every time I buy a deal. And if I want to speed up the process, we do more cash flowing deals. You don't know how? Follow this channel. Like, subscribe, but like, get in here. Follow the channel. We talk about creative finance, about finding cash flow, about different deal structures that you can do to take deals other people are looking at, even on market, and make them work so they cash flow day one. If you can do that and solve for that equation again and again and again, this gets easier and easier. But don't have your property eat the principal. Save the principal. You control the money, not your property. Interest only is the best debt product you could possibly find. Given any other option, I will always elect for interest only. Just don't blow that principal. Hope this helps. This model changed my entire investment model. If anyone disagrees, prove me wrong. This works. This is the fastest, least risky way to do it. Don't pay down your properties until you can pay them off. See you all in the next episode.