Financing rental properties and market crash
I just want to ask what are the dangers of building a rental property portfolio through financing compared to buying them cash and owning them free and clear?
I currently got one duplex that I got FHA 3.5% down and I was getting ready to house hack a quad plex same way. I just want to know before I continue to finance my way through if there are some things to consider.
I’ve heard a couple people say that financing is dangerous in the case if/when the market crashes. I would like to hear what the exact dangers are and if there are things you can do to prevent it.
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@Jonathan Perez to me it is immaterial whether you financed or bought with cash. What counts is how you underwrote, well they cashflow, and that you have an adequate money supply to weather a sudden storm so you are not forced to liquidate the asset. Over leveraging can be hazardous in any market.