'I became a bit of a monster': HGTV 'Fixer Upper' star Chip Gaines shares how he came to love the 'mind-boggling' process of borrowing money

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October 17, 2017 8:21 PM

Chip Gaines of HGTV's 'Fixer Upper' learned early on that borrowing money is valuable in business, but says it's important to only borrow what you can repay.

Self-proclaimed "serial entrepreneur" Chip Gaines — one half of the married couple starring in HGTV's hit home-renovation show "Fixer Upper" — discovered the power of borrowing money when he was just a college student.

"I was a sophomore or junior in college and I borrowed $5,000 from a local banker to go start a lawn [mowing] company, and it sort of got in my blood. There was something about that process that I could not fathom," Gaines told Business Insider in a recent interview.

"And let's say it was $5,500 that I had to repay to the local banker, it was mind-boggling that I could borrow that money and use that leverage to go out and make money off of it," he said.

"But I did... I became a bit of a monster," Gaines said.

In fact, in Chip and Joanna Gaines' book, "The Magnolia Story," he writes, "I was so excited about the whole thing, I got hooked — hooked on starting businesses, hooked on borrowing money, all of it. ... I love borrowing money!"

The couple announced earlier this year "Fixer Upper" will conclude after its fifth season airs this fall. The pair also owns and operates Magnolia Homes, a real estate, renovation, and design company, in addition to several small businesses under the Magnolia brand, including a retail shop, bakery, and a "Fixer Upper"-style bed and breakfast.

"We got into the house-flipping business pretty early on, and if I could do five [projects], I did it. If the bank would loan me enough to do 10, I did it," Gaines said. "I always pushed the envelope to the furthest common denominator."

Though Gaines admits he toed the line, he says he understood from the beginning the importance of repayment.

"You can't push yourself further than your abilities will allow you as far as the repayment process," he said, regardless of whether you're borrowing from the bank or from friends and family.

"For me, it's 'I'm going to do everything humanly possible to pay this money back.' And that was sort of always the initial foundation," he said.

But Gaines says the turmoil of the financial crisis spanning 2007, 2008, and 2009 "hit us like a ton of bricks" and pushed them to explore "creative financing" in order to pay back loans.

"People restructuring loans, evaluating the actual interest rate, those things were like light bulbs that went off in my mind ... it made me realize that sometimes things aren't always what they seem," Gaines said.

"If you take out a loan and you get to repaying that loan and things get really tough," he said, "Call your local institution, ask if there's any flexibility in the interest payments or the terms themselves, and sometimes you'll be surprised with their answer."

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