Managing Debt - Posted by phil fernandez

Posted by Scot - SoCal on July 13, 2001 at 17:44:15:

Managing Debt - Posted by phil fernandez

Posted by phil fernandez on July 13, 2001 at 15:23:33:

Often times on this forum and about I hear people asking or wanting to find a way to pull cash out of their property. It almost seems like at times many of these people think it’s free money you are refinancing out of the property. Believe me this is not free money.

Once you refinance the cash out, you will be making monthly payments on that debt whatever the amount is. It is not free money. Granted you don’t have to pay taxes on that money because it’s borrowed money, however you will have payments on the borrowed amount.

So don’t be so quick to just automatically want to pull cash out. To pull cash out you :

1./ Have to have a need to pull it out. A downpayment to buy more income producing real estate or to buy a discounted note etc. You don’t pull money out to finance a new car or a vacation.

2./ You have to have the disipline to only take out what is needed and a plan to pay it back through the monthly payments. A plan could be cashflow from the new investment or cashflow from your other investments.

So let’s stop and think before we plunge into the thought of pulling cash out of a property. Debt is a wonderful thing if it is managed properly and with disipline. Debt can also be an awful albatrass around your financial neck if mismanaged. Remember the piper always has to be paid. And I’m not referring to Jim Piper.

From What I Understand… - Posted by ScottS

Posted by ScottS on July 14, 2001 at 23:58:49:

Jim Piper doesn’t mind being paid either! :slight_smile:

Hi phil


Re: Managing Debt - Posted by Lou

Posted by Lou on July 14, 2001 at 14:14:51:

I like Robert Kiyosaki’s view point. Instead of creating liabilities to get what you want why not create income producing assets to pay for your lifestyle. That’s what this site is all about. It is a lot less painful than becoming a slave to creditors from borrowing more than you could handle.

Great post

Thanks Phil…great post! - Posted by Carey_PA

Posted by Carey_PA on July 14, 2001 at 13:11:44:

I think I needed that. Remember when I posted about my new “plan” to do deals.

80% refi, hold 2 yrs., then 1031 exchange…well I was thinking all wrong, but now I can execute that plan IF I choose to and do it properly, meaning do the 80% refi ONLY if I’m buying a new property that will be giving me the necessary cashflow that I need.

Thanks again Phil,


Great Post (nt) - Posted by DanT

Posted by DanT on July 13, 2001 at 21:57:32:


Re: Managing Debt - Posted by Kiersten

Posted by Kiersten on July 13, 2001 at 20:21:00:

I have so many clients who need cash out that they are willing to pay amazingly high fees in order to do it. Say they want 15K so I do a refinance to get them cash out. By the time they pay all costs (from appraisal, title, recording, etc. to my fee!!) they have not only tacked on 15K but 6-8K in closing costs! Very good points you have made! I talk people out of these deals all the time–I almost always waste my time when it comes to refi calls because they often just don’t make sense and I tell them so. But lots of lenders won’t do this–it’s so important to pay attention to what Phil said!