Opinions on debt in a rental properties

[David Richmond]

If you can pay off the mortgage on your first rental property should you? And is it a viable strategy to then use a HELOC on the (now paid off) rental to buy a second? I ask this because my wife and I dislike debt but love rental properties.

[Steve McGovern]

if you hate debt, then you should REALLY hate a HELOC. Higher rates, and adjustable? In this economic climate? Personally, I don't hate debt, but if I described myself like you described yourself...but assuming you can't buy with cash today, then I'd work to buy and leverage my assets up-to 40-60% of the value (even the high end is definitely low enough to cash flow securely with a significant cushion and room for vacancy and picking the RIGHT tenants). Furthermore, I would do this with only the the lowest, surest capital available on the market. This is a fixed rate mortgage loan, and absolutely not a HELOC. Save the HELOC for those lean times when you know you need a new roof but can't or shouldn't pay for it outright.