One way we are being more conservative and safe is that in the early years we are expecting to have zero chance of becoming bankrupt from having a bank foreclosing on, even if there is another 2008, because we are planning on having 0% debt on these short-term rental properties.
Medium length Answer
Again, we don’t have a crystal ball, we are not immune from problems in the economy, and anything could happen.
One advantage of working with us over others is that in addition to making millions of dollars of our career as we have unfortunately lost millions of dollars as well and have no intention of ever doing that again.
And while you might see other people in the short term rental space willing to take potentially significant amount of debt even up to 90% debt.
For now we want 0% chance of a bank ever for closing on us, even if there's a recession. There is really only on way to get this type of security, it's by taking zero debt. That is our plan for at minimum the early years and possibly forever for the short term rental properties.
If there's another 2008, even if there's just a regular recession, and our rental rates need to go down, and our occupancy rates go down, the competitors who have too much debt will be forced to sell or go bankrupt, but we won’t have any mortgage payments to miss, so there's no chance of bank foreclosure that way.
There could be other problems that could put us out of business, but according to Bruce Flat the CEO of the $600 billion investment firm Brookfield, the number one mistake that people make in real estate is taking too much debt.
Maybe after we have incredibly stable cash laws, or after we've been through whatever the next recession will be, we'll feel confident to start taking some debt. But that is not our current plan at all.