Different States treat debt obligations differently; so borrowing money to buy houses carries different levels of risk associated with financing.  In California, a person can owe hundreds of thousands of dollars on a house, and if things don’t work out, simply hand the house back to the lender and walk away without any liability.  But, in many States, if you personally guarantee a loan, even after a house is foreclosed, you will still have to pay any losses the lender incurs if the house sells for less than the loan balance.  You could spend years working to repay off what you owe while the interest-clock ticked on.

           When I first went into the real estate business, my office building sat next to a little wooden shack.  The proprietor, Frank, drove an old Toyota and seemed to have no means of income.  One day he explained to me that he’d made over $100,000 per year for 30 years simply buying houses on low interest terms from owners and selling them on installment contracts at higher interest rates rather than renting them.  Borrowers, who were owner/occupants took care of all expenses, taxes and insurance, and paid him interest for the privilege of doing so.  When loans were defaulted, he foreclosed and resold the property at a price that reflected any appreciation in value.  Thus, he captured income, appreciation, investment yield, leverage, and loan amortization.  By giving up all depreciation, he also avoided all repair expenses.  As a new Broker, I didn’t pay much attention,  but when the real estate market slowed down and Frank’s income continued to come in while I worked harder just to stay even, I vowed to learn more about financing.

          Suppose you learned to manage your own houses, and had the capacity to manage many more; look at all the ways there are to create streams of income:  

         FEAR has robbed more people of success than any other factor.  Fear is what freezes a deer in the headlights.  Fear is what makes a person aim low to avoid failing instead of trying to get to the top.  Fear of rejection keeps people from making low or creative offers and aiming for higher profits.  Fear of the future is what motivated me to settle for a mediocre career in the Air Force rather than becoming an entrepreneur at an early age.  To avoid going out on their own, fear drives people into college to get a degree in a specialty that they never work in.