Ever Afraid to Begin Real Estate Investing Due to Debt?

[Joseph Fernandez]

Have you ever been held back due to fear of being in debt? What did you do to pass this obstacle? I'm currently learning Real Estate and one thing that would hold me back is the fear of debt. How can I overcome this?

[Jeff Houpt]

Well you're wise to respect leverage and debt as over doing it is the major way people to lose their properties.

For me I got over it by starting slow but taking action, my first property I bought in cash as I was afraid of debt at the time. As I educated myself I learned that the ability to lock in the price of a home in todays dollars is actually the most powerful force in real estate investing. What I mean by that is lets say the house you live in is worth $150k. What if you could go back in time and buy it 30 years ago? You would probably pay more like $40k. A mortgage allows you to lock in todays price, then have others pay it off for you.

After i understood that I became very pro leverage, but I still wont keep more than 70% ltv on a property, and I keep adequate cash reserves to be able to adapt to a drastic market change.

Because if you lose the property, the power of the leverage doesn't mean anything.