I've looked into purchasing quadplexes and things like that with very little down, improving them, and then renting them out. This seems to be what most folks do to generate a passive income... I don't get the impression folks are putting a bunch down. So let's do a thought experiment on that... if I want to have a really good monthly income flowing in, I'm probably going to need quite a lot of units. That means multiple very large mortgage loans tied to my name. So maybe I achieve financial independence as a result of this.
But there is quite a lot of risk baked in here in that maybe I end up carrying a few million in loans as a result. If everyone bailed on their rental payments at the same time... hell if just a significant percentage did... that could be really bad really fast. Obviously there would be lease agreements in place, and priority one would be building up a large bankroll as a buffer, but if 2008 happened again people might just walk away and not care about breaking their leases.
So how do you guys protect yourselves against something like that happening? Or maybe the easily more likely scenario of a combination of a few freeloaders and a few a**hole tenants that trash your stuff? From the numbers I have run, it doesn't take much of that before your profits are wiped out.
Are you guys just living with the risk, it is what it is, or are you mitigating it somehow?
But there is quite a lot of risk baked in here in that maybe I end up carrying a few million in loans as a result. If everyone bailed on their rental payments at the same time... hell if just a significant percentage did... that could be really bad really fast. Obviously there would be lease agreements in place, and priority one would be building up a large bankroll as a buffer, but if 2008 happened again people might just walk away and not care about breaking their leases.
So how do you guys protect yourselves against something like that happening? Or maybe the easily more likely scenario of a combination of a few freeloaders and a few a**hole tenants that trash your stuff? From the numbers I have run, it doesn't take much of that before your profits are wiped out.
Are you guys just living with the risk, it is what it is, or are you mitigating it somehow?
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