Spreading yourself too thin

[Umar Farooq]

Hello BP members, how can you spread yourself too thin? If the property covers mortgage payments, repairs, vacancy, cap x, management fees and has positive cash flow how would a down market affect you if the values go down. Goal is to buy and hold

[Thomas S.]

When properly positioned...adequate cash flow, adequate cash reserves, maximum leverage, sufficient # of doors....you should not be at risk. Keep in mind the bank does not want your property they want your money.

The risk of a down turn comes primarily when you have not prepared financially, have too few doors to spread the losses and you have too much equity (you lose your equity in a down turn).

Concentrate on B markets to insure a solid tenant base regardless of economy. There will always be a pool of tenants that have lost their homes in a downturn economy.