Part I of 2: Leveraging vs. Cash PurchasingPosted by Monte Davis on
Let's begin with a basic consideration in real estate investing: leveraging.
Leveraging simply means using other people's money to purchase a property. It's a two-edged sword, but one that right now can cut very much in your direction.
Here's the situation you're trying to avoid. -- Falling on your sword. If you go into a purchase without enough down payment, you may not get enough cash flow out of the property to cover issues like:
- regular maintenance,
- and management expenses.
Word to the wise:
- If you can't afford to actually own the property -- to own the expenses that come with it and to endure periods of vacancy -- don't buy!
And never buy a highly leveraged property unless you are:
- prepared to be a…
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