I should apologize for being sarcastic but I wasn't really asking. Leveraging like that is just asking for trouble in my opinion. - I agree, don't try this at home. I'm merely trying to illustrate a point. - What if the market slips further and renters shy away from the area? I still have 90k and the asset and you have lost 100k and might lose 10 properties. - No, you have your entire $100,000 tied up in the property - you paid cash remember. You have the asset only, at whatever its current value is but presumably you are still OK because you are collecting rent - The risk factor goes up by more than the leverage percentage. - Depends on the property. - If you have the million in the bank anyway why let someone else take away all of your appreciation with a loan? 5% apprciation is close to historic norms. - Indeed. Why not just put your cash in a CD? Forget RE. It is all calculated risk - If you don't have the cash why not buy 1 property and roll cashflow into more properties? - Confusion here. If you don't have cash, you must leverage to buy property to create cash flow? - Is there a tipping point when the market goes down? - Yes, if rents fall and/or costs rise and you can't break even, You are tipped right off a cliff. You bought the wrong property and should have stuck to CDs - RE is cyclical and prices/rents don't always go up. - Yes, it is a calculated risk - everything depends on the property you buy. - 95-100 percent loans contributed greatly to the explosion in prices in the area everyone complains about. - Agree -Think of how careful people would be if it was all their money going towards that investment. - If they are not even MORE careful with borrowed money they should stick to CD's - I prefer cash but leverage is smart at smaller percentages to make deals with fantastic returns work. - average return is OK too if you get it - I feel it shouldn't be used to make mediocre deals turn higher cash flow. - Absolutely agree - A beach rental rarely falls into the first category. - Absolutely agree -