Noelle Randall often discusses real estate and entrepreneurship on her YouTube channel, emphasizing the smart use of debt to generate wealth. Here are five ways she suggests that rich people can make money using debt:
1. Leveraging Real Estate with Mortgages
Wealthy individuals use mortgages to acquire income-generating properties with minimal down payments. By using other people’s money (the bank’s), they can control valuable real estate assets. These properties generate rental income, often surpassing the cost of the mortgage, providing both cash flow and property appreciation over time.
2. Using Business Loans to Scale Enterprises
Successful entrepreneurs often take out business loans to expand their companies. Rather than using personal savings, they borrow money to hire more staff, increase inventory, or upgrade equipment. The goal is for the growth to produce more revenue than the loan’s cost, increasing profitability while maintaining liquidity.
3. Debt Recycling for Investments
Wealthy individuals use a technique called debt recycling, where they borrow against assets like property or stocks. The borrowed money is then reinvested into other income-generating investments. This allows them to grow wealth while deducting the interest on the loan as a tax-deductible expense (where applicable), further reducing their tax burden.
4. Syndicating Debt for Bigger Deals
In real estate syndication, wealthy investors pool funds with other investors to finance large projects using debt. They leverage the group’s combined borrowing power to access larger, more profitable opportunities than they could individually. This enables them to profit from high-value projects while sharing the risk.
5. Accessing Low-Interest Debt to Buy Assets
By securing low-interest loans or lines of credit, wealthy individuals can purchase appreciating assets—such as stocks, businesses, or more real estate—without tying up their own capital. This strategy allows them to spread risk and benefit from asset appreciation, dividend payments, or rental income, all while paying lower interest rates than the returns on their investments.
These strategies emphasize leveraging debt to increase wealth by making strategic investments that generate cash flow and capital appreciation.
