The bottom line is that all this talk about buying a house is because most of the buyers you see on TV are talking about the negative price to earnings ratio. A ratio of 2.0 or less is considered a great risk, and I’m not going to waste money on properties that have a negative ratio.
I’ve made this point many times since I started real estate investing. It seems that most people think that buying a house is a risk-free investment. That’s not really true. As you can see from the chart below, the only real risk that I’ve seen in buying a house is that the local bank will close the loan and you’re out of debt.
It seems that most people do understand that buying a house is a risk, but they do not understand the risk of having a negative price to earnings ratio. We all have the money, so it seems that we should be buying houses with cash and making us rich quick right? I don’t think so. When I made my first million, I did it by buying a home that had a negative price to earnings ratio.
The risk of a negative price to earnings ratio is that if you have a house with a high price to earnings ratio, it makes you more likely to owe more on it than you can afford. In other words, lenders might be more likely to lower your interest rates if you have a high enough price to earnings ratio. In the past, Ive had a house with a negative price to earnings ratio that was paid off without any problems.
I think my point here is this. If you can make a negative price to earnings ratio, then you should be able to make it work for you. If you don’t, you’re probably better off renting, buying a car, or selling a house.
My point is that the reason a house can be more expensive than you can afford is because of the negative price to earnings ratio. Ive had houses with negative price to earnings ratios that were paid off due to bad credit before, but I do tend to have better luck with rental properties and car sales. I think this is because renting is generally much more expensive, and car and home sales are all about the price of the property.
However, I’m not sure how you can make that correlation, because renting your home also requires that you have good credit. To make the correlation, you need to show that the home in question has a negative price to earnings ratio, and that isn’t the case with many rentals. For example, if you want to rent out an apartment, you’ll need to be able to prove that you have a negative price to earnings ratio.
The negative price to earnings ratio is a concept that I read about in one of my college textbooks. Basically, it means that if a home is priced at $X and you earn $Y, then you’ll be paying too much for the house. The concept is most often applied to homes with high asking prices, but is also applicable to homes with high prices based on the market or on the number of units.
The problem is that negative price to earnings ratio means that you only have to pay the rent, not the actual mortgage. The actual mortgage must be paid, which means you still have to pay the mortgage on the property. This means that if you rent out an apartment, you will not have the cash flow you need to keep paying the mortgage. This can be a big problem in the real world, where mortgage rates are so low, because the real world often has negative price to earnings ratios.
Also, if you rent an apartment, you can usually sell it at a profit. This is why so many people buy apartments and rent them out. And it’s why apartments are so popular because the rent is generally very affordable.