From a consumer perspective, no debt is good debt. The basic consumer goal is to be debt free.



This is not the way that the most creative real estate investors think about debt. They regard debt as an investor's best friend.

Good debt allows you to take advantage of "other's people's money," known as OPM.

Another word for good debt is "leverage." In physics, a lever is something that allows you to move something else. If you stick a rod under a rock, and then push down on the lever, you can move the rock.

If you have to rely on your own strength, you are limited in what you can do. A lever allows you to move what you could not move without it.

When you borrow money, you create a type of leverage. You can use someone else's money as a lever to accomplish what you could not do with your own money. This type of debt is a powerful tool. You are using someone else's money for your own purposes.

The reality is that someone always has the money you need to buy investment property. If you don't have it, you can borrow OPM to buy property you could not afford to buy with your own money.

This is an example of good debt. You use borrowed money to create wealth. Debt is a tool you can use to buy what you could not buy with your own money. If the investment creates profit, you create profit from the leverage of good debt.

Compare good debt with bad debt. Consumer debt means going into debt for something that won't bring you profit. If you charge $3000 for a plasma TV, you have created bad debt. The TV is not going to bring you profit. It is going to cost you money.

Consumer debt does not give you leverage. It is not a tool you can use to create wealth. This is why consumer debt is bad debt.

So what is good debt? Good debt is a tool to create wealth. This means you can borrow the same $3000, and invest it in property to create profit. When you do this, you have good debt.

Some of the biggest debtors on the planet are people like Donald Trump. Donald Trump owes fantastic amounts of money. He's in debt, but he leverages the debt to build his skyscrapers.

If you want to create wealth, the fastest method is to use borrowed money to do it. You might prefer to talk about using leverage and OPM, but in reality, these are simply another way to refer to good debt.