Am I over leveraged?

Question

Al Williamson · Answer

Hi Michael,

So there's negatively, neutrally, and positively leveraged debt.

You don't want negatively leveraged debt because you need to bring money to the table each month to pay for the bill.

Positively leveraged debt throws off cash each month. This is great if you have the right amount in your mix.

So, to answer your question, I'd like you to classify your debt and consider getting read of the negatively leveraged stuff.

Hope that helps.

Jim Pellerin · Answer

What's the total value of your properties and your total mortgage amount. Leverage is based on loan to value. You provided cash flow numbers.

Nathan Frost · Answer

Could you take a look at my portfolio and help me out?

This is my exact situation.  Would anyone be willing to look at my portfolio and give me solid advice?  I can withstand the next 5-6 months but if I have any vacancies or repairs I am going to hurt a little.  I really think I should sell 2-4 properties but really would like some solid advice on smart action steps I could take now to set myself up in more sustainable position.  It would be great to sell just 3 and go get an STR or something that cash flows nicely but it would have to be a solid deal or else it could put be back into a position where I can't withstand the monthly mortgage payments.  Please reach out as I could use the advice/tips.

John Acheson · Answer

Michael, that's a scary Forum Title at the beginning of a downturn.

Australia, China, Canada, California, New York have already dropped

and the big banks have recently laid of 100s of high paying mortgage jobs.

With interest rates over 5% for most average SFH buyers, are you leveraged

fixed at 3-4%? Can you handle a vacancy at the same time value drop 25-40%?

If not, generate cash and build credit profiles for free i.e. 800 FICOs and 80 PAYDEX LLCs

because when you need to raise money, the more options the better.

If you need any advice on building credit effectively on the cheap,

feel free to reach out :)

This is my opinion and I'm not licensed,

John Acheson, MBA

Michael Simolke · Answer

Thanks everyone for the replies!

Anthony Gayden · Answer

This question can't be answered easily. The problem is that each individual is different in terms of how comfortable they feel with leverage.

Sam Shueh · Answer

What is your Debt to Income ratio?

Everything described seems to be OK until I see that eviction (from tenant ?).  Your $18K saving will not last long. Is your FICO above 700?

Not sure about your profession/income steadiness.  I would suggest you not having to borrow as it seems to be on the boarder line.

Am I over leveraged?

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