When am I over leveraged?

[JD Morris]

Hey everyone, I am trying to set some goals for myself for acquiring rental properties and I am wondering how fast I should go. I will have to finance every property I buy. I want to focus on rentals and not flips or wholesaling. At what point am I over leveraged? Should I only finance what I can afford to pay for assuming I made zero income from rentals? Or is it ok to finance more than that?

[Thomas S.]

Define over leveraged...it is merely a state of mind when dealing with income properties that are purchased correctly.

If your home is paid off you are never going to be over leveraged on income properties. A HELOC will provide you with all the protection of your investment that you will ever need. It is dead cash that is presently serving no purpose and earning next to nothing in return.

Not prepared to use your home as a safety net.....then as a investor you are already overleveraged and over your head. Money is a tool, nothing more, nothing less.

Rule #1: Never use your own money when you can profit from using someone else's.