The Only Rule About Debt That Has Ever Actually Served Me: A Houston Real Estate Investor's Honest Take

Most advice about debt starts with how to get rid of it.

That is the wrong starting point.

Debt is not the problem. Debt used for the wrong things is the problem. And the difference between those two statements is the difference between spending your life paying things off and spending your life building something that pays you.

Here is the only rule about debt that has ever actually served me.

Go into debt for things that pay for themselves and pay for the things you used to go into debt for.

That is the whole framework. Everything else is a variation of it.

When I buy a rental property using debt the rent covers the mortgage, the taxes, the insurance, the maintenance, and still leaves money in my pocket every month. The debt paid for itself. The property paid for the debt. And over time the asset appreciates while the debt shrinks and the spread between those two numbers is called wealth.

When I finance a renovation on an investment property the forced appreciation I create pays back the cost of the renovation and then some. The debt paid for itself and created more value than it cost.

Now compare that to financing a car, a vacation, a television, or anything else that loses value the moment you acquire it. That debt does not pay for itself. It just costs you money every month until it is gone and leaves you with nothing on the other side of it.

The question to ask before you take on any debt is simple. Will this pay for itself and will it eventually pay for the things I currently go into debt for. If the answer is yes you are building something. If the answer is no you are just borrowing against your future to fund your present.

Real estate is one of the few places where debt used correctly becomes a tool for building wealth instead of an obstacle to it. The investors who understand that use debt intentionally and strategically. The ones who do not spend their careers trying to escape it.

Note — I am not a financial advisor and nothing here is financial advice. It is just what 25 years of using debt as a tool instead of a burden has taught me.

If you want to talk about what that looks like applied to a specific deal in Houston, let's talk.

📅 Book a free 15-min strategy call: calendly.com/jeph-reit