Investment Property Is Good Debt

There is a lot of buzz on the web about Good Debt vs Bad Debt.
The fact is, most of the baby boomers learned money matters from parents who
grew up during the Great Depression. Since that time, many things have
changed such as the Federal Reserve Board, insurance for deposits, checks
and balances on banking procedures and since the 80s, checks and balances on
Savings and Loans businesses.

If you talk to a banker, you will hear one side, if you talk to a real
estate investor, you will hear another side. The point is to gather all the
facts so that you can then make a wise decision concerning going into
greater debt in order to have greater returns.

The old adage is true, 'You must spend money to make money', or consider
this one, 'Spend a dime to make a dollar.' No one ever made money by
stuffing the mattress with dollars.

Most families spend anywhere between 20% and 36% of their gross household
income on mortgage and credit cards. The average U.S.
Household has at least one credit card with an average balance of $9,200,
according to CardWeb.com. This is when it is necessary to put that pencil to
paper and budget your income.
It is crucial not to spend more than you can afford to spend.
Unless.

Bad Debt: is incurred on things you can't afford and that you don't need
such as that high interest rate on your credit card that is maxed out. If
you buy something that has no potential to increase in value, or goes down
in value-furniture or appliances-that is bad debt.

Good Debt: can be described as that debt which occurs when you purchase
something you must have but do not have the cash to acquire it. Your home is
an excellent example of this. College is another example. The problem arises
when your loan payments exceed your income, or more than you can comfortably
afford to pay back.

Now consider this for a moment.

Good debt can also be when it is tax-deductible. If you could take out a
mortgage that was more than you could afford to pay back, it would seem to
be financial suicide. Except. if you take out this mortgage and the property
gives you a positive return on your dollar. It means that it pays you more
than what you are spending on the mortgage and other maintenance expenses.
That means your money is working for you, and describes positive cash flow:
an example of very good debt.

Investment properties have GREAT TAX BENEFITS. So, the decision to incur
more debt for investment properties should be discussed with your tax
advisor and real estate professionals.

About The Author: Investment Property Specialist - Alex Anderson Connects
Real Estate Investors With High-Quality Investment Properties. Get A Free
Copy Of, "The Investor's Rental Guide" at:
http://www.GreatInvestmentProperty.com