Which is really more risky?

A lot of people worry about risk, so let's take a look at it...

The last three newsletters have been a three-part series outlining some of my most recent personal deals.

This is a property I actually just bought! It’s one of the deals we’ve discussed in this newsletter.

I received a lot of feedback, comments, and questions from people. Most were very excited to learn more and thankful that I was sharing a detailed look into the transactions.

Others come from a more traditional background or follow Dave Ramsey’s approach, meaning they believe you always should put 20% down. Some have learned this on their own from the likes of Ramsey, while others have been taught it by their friends or family.

I get emails and DM’s on Instagram very frequently asking me if they should put 20-25% down if they can.

It’s often believed that you’re taking far more risk by not putting down 20% in cash.

I don’t necessarily believe that’s the case.

Let me ask you this question:

Person A and Person B both buy a $100K house and, in the end, have 15% equity in the deal.

Person A puts down $15,000 cash as a down payment to get their 15% equity. They do this by buying the house for $100K, putting $15K down, and getting an $85K loan.

Person B does a light rehab to BRRRR the property and has $0 of cash left in the deal, but still has 15% equity, as the refi is done at an LTV of 85% (loan at $85K, property value at $100K).

Who has more risk?

Both people have 15% equity in their deal, but one has $15K of their own money in the deal, and the other has $0 of their own money in the deal.

Who really has more risk?

All the best,

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