I am curious to see how some of the more seasoned investors feel about levering up their properties as opposed to holding an all cash portfolio. If you feel comfortable sharing, I would be curious to see what leverage ratio you feel most comfortable with and why.
This discussion is probably more geared towards the 2% Midwest type crowd, but anyone is welcome.
I am all about leverage! I have higher ended properties! My goal is to go into the deal totally leverage ( or as much as possible) and than have the tenants pay of the property while paying down the investments!
Leverage is your best friend and your worst enemy. But in this business it is a tried and true way to success. That's before considering today's low rates, tax advantages, and legal implications.
I say leverage as much as possible as long as you have positive cash flow and just keep your cash in the bank as a large reserve.
With good returns it can be tempting to over leverage. That said long-term money is so cheap these days, I would want some leverage with my real estate portfolio.
If I was primarily in C(low appreciation) properties - with 2% ratios without financing, I would look to get some B/A- properties with some leverage even ratios were closer to 1%. If I could get good rates, I would actually be more tempted to leverage the C properties, because I figure those are going to be hard to borrow against, if I need to get financing.
Leverage as long as you have the reserves and emergency funds!
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