Leverage- Max or no?

[Robert Duffer]

Going into 1031 exchange as a newbie...question for the experienced folks. I have enough for possibly 5 properties...some tell me get 5 and leverage as much as you can. Some people tell me leverage 2 or 3 and pay them off quickly and then go into next one...

Everyone has a different strategy for their own reasons. - my question is what are the predominant thoughts here? Max leverage (max properties) or conservative approach? (their thoughts -"what if we get into a recession"? "conservative is better"(?))...I understand it can all be relative...I'm just trying to make an informed decision. Any thoughts ?

Thanks in advance!

All the best!

Rob

[Dave Foster]

@Robert Duffer,Instead of deciding a number going in let the market speak to you.  See what good deals are out there and only respond to those.  There's some wisdom in breaking it down into small bites.  Rather than max leverage into more properties, use a mix of small or no leverage along with one or two that have max leverage.  By doing this you stress yourself less on the completion of your 1031.  Your cost to do the 1031 will be lower.  And you will still be able to move nimbly going forward.  

If you have low or no leverage on a property you can always do a quick refi and purchase the next good deal when it comes up independent of the 1031.  

This is also more recession resistant because your not spending everything on properties priced at the top if that's what you believe.