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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: stsimon who wrote (140246)	3/26/2018 2:56:25 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 217713

A passport and being neither a borrower nor lender is a nice luxury. You're not involuntarily strapped into a roller-coaster you'd rather not be on But debt is a 'necessary' companion to the owners of most businesses. Take a business like louel's where he needs debt or leasing (debt by another name) to finance equipment, or commercial real estate developers and owners like my parents. When my Dad worked for Chevron and had a comfortable home mortgage they had lots of disposable cash and no worries I was aware of - and they both had parents who could backstop and potential pitfalls. But once he started buying and converting commercial properties their lives became what a bank would call their "gap analysis" - a projected matching through time of your constantly changing income and obligations - and rearranging financing and project timelines so the cash-flows match. The life of a bank CFO is almost entirely gap-analysis, just as it is for their borrowers. One tenant who goes bankrupt unexpectedly and you suddenly have a gap you could never fill even with several salaries. So you always need to have potential tenants in mind in case you suddenly have an opening. And at least the way he has done that is often working with business people to help make it financially it possible for them to open a new additional location, or even worse help them get them started in business! In theory I now run that business, but it's really nothing more than the guidance I've provided to many real estate owners working through my nephew and with my Mom, because I'm not emotionally connected to the daily problems. My nephew is quite capable dealing with their accounting system to complete the spreadsheet analysis I give him. We just email them back and forth and he's delighted than his Mom and Dad basically report to him in many ways. Running a business which 'requires' debt is especially stressful because most business owners have loaded-up their personal finances with debt to help grow the business. I've reduced their use of leverage, but they only own a few properties free and clear without debt. It's a debt business. In theory any business can be run without debt if you start out wealthy enough, but even in that situation you can take on more opportunities with the use of debt and corporate entities as internal firewalls to prevent a collapse in one place from bringing down all of your holdings - but you quickly realize how reluctant lenders are to extend non-recourse financing, so that's usually not even a real world possibility.