Chapter 2
Bank Loans
Essential Idea: Get a Basic Business Loan from a Bank
If you want to understand how valuable—and critical—a traditional bank loan can be in the process of starting and growing a business, just consider the case of my colleague, Jeremy. Jeremy is a very successful airline pilot who travels all over the world. While he loved his job, Jeremy also wanted to start a real estate business on the side to augment both his income and his retirement.
To do that, he needed the help of a bank.
So Jeremy went to work. He met with some investment real estate agents and together they drafted a plan: Jeremy was first going to buy a small duplex, and over time, with the assistance of his bank and tax code laws that would allow him to sell the property and move up while deferring taxes (called 1099 exchanges), Jeremy would grow his real estate holdings. The bank liked the plan and the duplex, and they believed in him. So he got his first loan—and the plan was put into play.
It worked, big time.
After a few years, Jeremy sold that duplex and bought a four-plex. Five years later, he sold that, got another bank loan, and bought a small apartment building. I just heard that last week, Jeremy bought two more buildings (not selling any this time), worth more than $1.1 million.
All with the help of his bank.
