The Case for Debt-Free Real Estate Investing

For centuries, the wisest voices have warned against debt. We took them seriously.

For Centuries, the Wisest Voices Have Warned Against Debt

Long before modern finance, leverage ratios, and Wall Street models existed, debt was viewed with deep skepticism. The Bible cautions that “the borrower is a slave to the lender.” Shakespeare advised, “neither a borrower nor a lender be.” And in modern times, financial thinkers like Dave Ramsey continue to echo the same warning, calling debt a wrecking ball to both financial stability and peace of mind.

Despite these timeless lessons, today’s real estate investing world operates on the opposite assumption. Most syndicators believe that debt is not just helpful, but essential. Mortgages are treated as a requirement, leverage is celebrated, and risk is often justified as a necessary byproduct of higher returns.

After more than 40 years of investing through multiple real estate cycles, I’ve come to a very different conclusion.

In my experience, the riskiest part of owning real estate is not the property itself — it’s the debt attached to it. Yet we live in a society that has grown comfortable with the idea that “debt is good.” I strongly disagree. Time and again, I have seen how leverage can quietly magnify small problems into catastrophic ones, especially when markets shift or unexpected events occur.

That belief has shaped how I invest, how I structure partnerships, and how I think about long-term wealth preservation.

Most real estate syndicators think real estate investments "must" include a mortgage. But isn't the riskiest part of owning a property being in debt to the bank? Let's face it: We live in a society that has come to accept that "debt is good." But I strongly disagree.

Debt in Real Estate Increases Risk

As a sponsor of many real estate limited partnerships, I simply don't feel comfortable with debt. With no bank loan, the downside risk is mitigated. Cash flow distributions are steadier without a mortgage payment, and a future foreclosure is precluded. 

Real estate cycles are a fact of life. Values go up and down. Recently, we have been reminded that interest rates are subject to uncertainty. In most real estate investments, the harrowing effect of an unexpected event can cause extreme anxiety and, of course, financial distress. 

The Anti-Debt Community is Very Small

So, why does debt play such an important role in real estate investing? The answer is "greed and need." Leverage can significantly multiply your financial returns. In addition, it's not easy to buy a property with "all cash" because most people don't have a million dollars sitting in their savings account. 

But my conclusion after 40 years of real estate investing experience is this. I have developed an aversion to debt in my real estate deals. For my 250+ investors and me, bank loans in our real estate investments are simply not wanted. Most people think this is "unusual." 

It is very unusual--because it's hard to do. But my strategy is to bring together a group of like-minded investors, each contributing $50,000 to $250,000, so we can make multimillion-dollar investments with no debt. 

Debt-Free Thinking is Not a New Concept

The Bible strongly discourages debt. In Proverbs 22:7 ...the borrower is a slave to the lender. Shakespeare, in Hamlet, writes ...Neither a borrower nor a lender be. And our modern-day anti-debt zealot, Dave Ramsey, says ...Debt is a wrecking ball, both to your money and your mental health.

In my case, I have experienced some devastating losses, with debt being the ultimate culprit.

Of my 100 real estate investments with debt, especially during the Great Recession, 10 were bad deals — and I am 100% certain that no losses would have been incurred if we had owned those properties debt-free. 

As a result, most of my recent syndications have been acquired debt-free and...

The question is this: Can a real estate investment still make sense without a mortgage?

Is the tradeoff worth it? 

Well, yes, in my case, for sure. I have assembled a group of investors who like the idea of a steady quarterly cash flow distribution that yields about 7% to 8%, approximately double the rate of the current 10-year Treasury Note, plus potential upside, and even some income tax benefits. 

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Once submitted, Joel, Eric, or a member of our team will reach out to discuss our current and upcoming investments, walk through our approach, and answer any questions you may have.

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