Rid fear of debt to grow portfolio for passive income.

[Patrick Parkinson]

Hi all,

Only recently discovered this whole word so excuse the ignorance. Curious for assistance here. In my personal life we avoid debt at all costs and have a paid off primary residence, don’t use CC’s etc. Relatively stable dual income (600k), 1 property rented out and paid off (750k) by accident as was our old primary house. We have savings (400k) and want to get into more properties as the passive income is fantastic and would be a nice way to retire early.

Can the forum help me understand the need to use other people’s money to grow wealth or shall we just focus on buying what we can afford with cash then buy another once we have cash. Signing for a loan is against my nature and certainly more conservative of an investor but do want to build more and more wealth and open to changing my opinion.

Thanks for your guidance in advance here.

[Nick C.]

Scalability. In our market if you buy with cash using your 400k you can get 2 or 3 solid houses. If you use your 400k as 25% down payments you can get 10 or more solid houses. 

The debate of using cash vs leverage is ongoing. The truth is there is no right or wrong answer, it all depends on your risk tolerance and your personal situation. It sounds like you might be happier having a few houses with no debt. Nothing wrong with that. It will just take longer to accumulate a portfolio enabling you to retire.