Highly Leveraged Apartment Buildings - Posted by Peter

Posted by ray@lcorn on December 29, 2002 at 13:09:48:


If you read the article about overleveraged properties, then you have some idea of the dangers of too much debt. Credit card debt qualifies just as mortgage debt does. I’m not familiar with the author you mention, so I don’t know if this his main focus or one of several strategies. My guess is the latter. The use of credit cards in acquiring property is an aggressive strategy that requires a keen understanding of how to use debt as a lasso, and avoid the possibility of it turning into a noose.

I have leveraged properties to the hilt in acquiring a project I knew had upside. That’s the key… you have to have an exit strategy. A friend of ours, Jim Piper, that used to post a lot on the main newsgroup was fond of saying, “If you don’t have a plan for getting money out of a property before you put it in, then you will soon be out of money.” How true.

So to answer your question, your ability to participate in commercial property is directly tied to your ability to find and structure a deal, construct and articulate a plan, and then execute the plan.

Every property is different. I too write of examples of successful deals, and as you saw in the article, those not so successful as well. To apply any one approach to deals without evaluating the individual characteristics of the property, market and your own resources is financial suicide.

My advice to you is to read and study the articles and posts here about analyzing property and structuring deals. Examine and develop an understanding of your own capabilities, financial and personal, and then find a deal that fits your capacity. You can start from wherever you are, but before you can expand your capacity, you have to first work with the tools you have.


Highly Leveraged Apartment Buildings - Posted by Peter

Posted by Peter on December 27, 2002 at 18:17:00:


I am totally new to the real estate investment arena. I just purchased a guy’s manual on income properties. It is called “The Complete Uncensored Guide To Income Properties” by Brian Abruzzi. He advocates using credit card lines of credit to help finance these types of deals. He seems to work out numbers in his manual that show very decent profits per deal, however, I just read Ray Alcorn’s newest article “100% Financing: Feeding the desire to Acquire” Since I am new to this, perhaps someone with alot more practical real world experience in income properties than myself would be kind enough to comment further on this. Is this even an area of real estate that a beginner should be looking at or not. I have excellent credit, a large credit line from credit card accounts, but limited capital, and a less than stellar job income. Is this area of real estate investing off limits to someone like me just starting out? I would greatly and sincerely appreciate advice from more experienced successful investors including Mr. Alcorn. Thanks very much!