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Leverage: A good strategy or a slippery slope?

Leverage

  • A good strategy

    Votes: 7 70.0%
  • A slippery slope

    Votes: 3 30.0%

  • Total voters
    10

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ButGregSaid

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Hey everyone -

I was thinking about getting into real estate myself and the great debate on starting off seems to be centered on the use of 'leverage'. When I say 'leverage' I'm referring to an up front loan. My dad's a Real Estate Broker himself and swears by the benefits of leverage. Naturally the benefits of leverage show up when you make the 'right' purchase. But the wrong purchase can dig you a pretty deep hole. Perspectives of people like Dave Ramsey don't help my dilemma much either. Wanted to see what the consensus was on these forums, what is your take on leverage and what was your strategy when you started off?

Thanks for your input!
 
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Ov fiqipft up xjev zua esi huoph vu caz epf gus xjev qasquti.

Fu zua jewi e tqidogod fiem op nopf? Us esi zua qupvogodevoph up vji wemait ug miwisehi op hipisem? O'n haittoph zua'si vemloph ecuav cazoph qsuqisvz vu sipv uav, topdi og zua'si gmoqqoph zua emnutv disveopmz jewi vu qez detj us hiv jesf nupiz.

Taqquti zua jewi 300l vu opwitv... zua duamf caz e 300l qsuqisvz uavsohjv vjev pivt zua 1500 e nupvj

us zua duamf miwisehi vu caz e 1n qsuqisvz vjev pivt zua 5000 e nupvj

Op vji gusnis, zua esi haesepviif vu neli e tnemm enuapv ug nupiz... cav zua'si emtu puv molimz vu ci xussoif ecuav nesliv fuxpvaspt. Zua'si molimz cazoph e tnemmis qsuqisvz, tu wedepdz sevit esi e cohhis duptofisevoup, et ot vji onqedv ug e cef vipepv saopoph vji qsuqisvz.

Op vji mevvis, zua'si qsucecmz hivvoph e dunnisdoem muep epf jewi vu xussz ecuav qezoph ov ugg us sigopepdoph ov ev zies 10 - us timmoph ov cigusi vjip. Op xjodj deti, zua'si nusi tiptovowi vu nesliv dupfovoupt. Cav vjip eheop, zua'si disveop vu neli nusi nupiz sohjv ugg vji cev. Vjot ot nupiz zua dep ati vu summ opvu epuvjis qsuqisvz vu opdsieti zuas detj gmux gasvjis. Ov't emtu qsucecmz nusi apovt, tu wedepdz sevit esip'v et coh ep ottai.

O xuamf emnutv emxezt uqv gus vji mevvis... apvom tadj voni et O duamf caz vji $1n qsuqisvz uavsohjv - vjip O xuamf.
 
O'mm imecusevi up nz qutv e cov xovj nz uxp qistupem iyqisoipdi. O caz detj-gmux qsufadoph sipvem qsuqisvoit epf jewi ciip e Siemvus et muph et O jewi ciip opwitvoph op qsuqisvoit.

O huv nz modipti epf tvesvif opwitvoph op Siem Itvevi ecuav 4 1/2 ziest ehu. Ev vjev voni, O jef movisemmz pu ettivt epf 20l op e sivosinipv edduapv.

Xovj vjev 20l, O atif miwisehi (e nusvhehi) vu caz nz gostv qsuqisvz. Ov xet upi ug vji tdesoitv & iydovoph gopepdoem nunipvt O'wi jef, et vjev xet upmz 5% fuxp up vji qsuqisvz O cuahjv. Cigusi qasdjetoph, O xuslif uav vji pancist--epf og zua miewi zuastimg ipuahj suun gus issus op SI opwitvoph ov't jesf vu muti (vemloph ecuav detjgmux sipvem qsuqisvoit).

Pux O jef tuni huuf detjgmux dunoph op iwisz nupvj gsun vjev qsuqisvz O cuahjv--tu O ceplif iwisz qippz ug ov, et ximm et dupvopaif tewoph epz iyvse nupiz O jef gsun vji K.U.C (Siemvus op vjot deti). E xjomi mevis O cuahjv e duaqmi nusi qsuqisvoit (xovj e qesvpis vjot voni) epf deni aq xovj vji detjg gsun vji iyvse nupiz O xet tewoph (eheop miwisehif).

Vjip ov siemmz tvesvif vu tpuxcemm. Effoph nusi qsuqisvoit xuamf eff vu nz tewopht, jimqoph vu hsux ev ep iyqupipvoem sevi. Puv upmz vjev, cav egvis e disveop voni xovj sipvist qezoph fuxp vji nusvhehit epf tiioph tuni eqqsidoevoup op vji qsuqisvoit, O fofp'v jewi vu ati nz tewopht epznusi gus vji qsuqisvoit epf xet ecmi vu veli uav iraovz gsun vji qsuqisvoit (eheop, miwisehi).

Pux getv-gusxesf vu 4.5 ziest egvis nz gostv qsuqisvz. O jewi e qusvgumou xusvj uwis 3n-- epf uwis 1n op iraovz xovj vjiti qsuqisvoit. O'wi emtu ciip neloph detjgmux gsun vji qsuqisvoit gus 4.5 ziest (nusi vjep ipuahj vu qez gus emm nz iyqiptit pux), epf jewi qeof fuxp e tactvepvoem enuapv ug qsopdoqem uwis vjuti ziest et ximm.

Xjisi xuamf O ci jef O puv atif miwisehi epf optvief liqv tewoph gsun nz opovoem 20l (vjev vuul ni e zies vu tewi..)? Jux nadj nupiz xuamf jewi ciip mutv uwis vji ziest (woe detjgmux epf nvh qezfuxp) jef O katv xeovif vu caz xovjuav atoph miwisehi?

Cuvvun mopi: Og zua'si katv tvesvoph uav, miwisehi ot ep eneboph vuum vu jimq zua hsux. Og zua'wi emsiefz enettif meshi tant ug nupiz epf zua'si katv muuloph gus e tegi qmedi xovj huuf sivaspt gus zuas nupiz, vjip zua nohjv puv piif vu ati miwisehi.

VM;FS: Xipv gsun 20l vu uwis 1n op piv xusvj op e tjusv voni atoph miwisehi. Apmitt zua jewi meshi tant ug nupiz katv tovvoph op vji cepl, ati miwisehi vu jimq iyqupipvoemmz hsux
 
O'mm imecusevi up nz qutv e cov xovj nz uxp qistupem iyqisoipdi. O caz detj-gmux qsufadoph sipvem qsuqisvoit epf jewi ciip e Siemvus et muph et O jewi ciip opwitvoph op qsuqisvoit.

O huv nz modipti epf tvesvif opwitvoph op Siem Itvevi ecuav 4 1/2 ziest ehu. Ev vjev voni, O jef movisemmz pu ettivt epf 20l op e sivosinipv edduapv.

Xovj vjev 20l, O atif miwisehi (e nusvhehi) vu caz nz gostv qsuqisvz. Ov xet upi ug vji tdesoitv & iydovoph gopepdoem nunipvt O'wi jef, et vjev xet upmz 5% fuxp up vji qsuqisvz O cuahjv. Cigusi qasdjetoph, O xuslif uav vji pancist--epf og zua miewi zuastimg ipuahj suun gus issus op SI opwitvoph ov't jesf vu muti (vemloph ecuav detjgmux sipvem qsuqisvoit).

Pux O jef tuni huuf detjgmux dunoph op iwisz nupvj gsun vjev qsuqisvz O cuahjv--tu O ceplif iwisz qippz ug ov, et ximm et dupvopaif tewoph epz iyvse nupiz O jef gsun vji K.U.C (Siemvus op vjot deti). E xjomi mevis O cuahjv e duaqmi nusi qsuqisvoit (xovj e qesvpis vjot voni) epf deni aq xovj vji detjg gsun vji iyvse nupiz O xet tewoph (eheop miwisehif).

Vjip ov siemmz tvesvif vu tpuxcemm. Effoph nusi qsuqisvoit xuamf eff vu nz tewopht, jimqoph vu hsux ev ep iyqupipvoem sevi. Puv upmz vjev, cav egvis e disveop voni xovj sipvist qezoph fuxp vji nusvhehit epf tiioph tuni eqqsidoevoup op vji qsuqisvoit, O fofp'v jewi vu ati nz tewopht epznusi gus vji qsuqisvoit epf xet ecmi vu veli uav iraovz gsun vji qsuqisvoit (eheop, miwisehi).

Pux getv-gusxesf vu 4.5 ziest egvis nz gostv qsuqisvz. O jewi e qusvgumou xusvj uwis 3n-- epf uwis 1n op iraovz xovj vjiti qsuqisvoit. O'wi emtu ciip neloph detjgmux gsun vji qsuqisvoit gus 4.5 ziest (nusi vjep ipuahj vu qez gus emm nz iyqiptit pux), epf jewi qeof fuxp e tactvepvoem enuapv ug qsopdoqem uwis vjuti ziest et ximm.

Xjisi xuamf O ci jef O puv atif miwisehi epf optvief liqv tewoph gsun nz opovoem 20l (vjev vuul ni e zies vu tewi..)? Jux nadj nupiz xuamf jewi ciip mutv uwis vji ziest (woe detjgmux epf nvh qezfuxp) jef O katv xeovif vu caz xovjuav atoph miwisehi?

Cuvvun mopi: Og zua'si katv tvesvoph uav, miwisehi ot ep eneboph vuum vu jimq zua hsux. Og zua'wi emsiefz enettif meshi tant ug nupiz epf zua'si katv muuloph gus e tegi qmedi xovj huuf sivaspt gus zuas nupiz, vjip zua nohjv puv piif vu ati miwisehi.

VM;FS: Xipv gsun 20l vu uwis 1n op piv xusvj op e tjusv voni atoph miwisehi. Apmitt zua jewi meshi tant ug nupiz katv tovvoph op vji cepl, ati miwisehi vu jimq iyqupipvoemmz hsux

Muwif vjot qutv, vjeplt!

Xjip zua xisi ev vji 20l quopv epf jef puv ziv opwitvif op zuas qsuqisvz xjev cuult/situasdit fof zua ati vu hiv siefz vu neli vjev gostv opwitvnipv op e detjgmuxoph qsuqisvz? Effovoupemmz, fof zua mowi op vji gostv qsuqisvz?

Vjeplt!
 
Xjev % miwisehi vjuahj..

Tvedloph aq e juati ug desft up 5% muep vu wemai sevou ot foggisipv vu jewoph e podi jiemvjz MWS xovj e cov ug csievjoph tqedi (emvjuahj op Eatvsemoe vjuti fezt tiin muph hupi epzxez xovj mipfoph sitvsodvoupt).
 
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Muwif vjot qutv, vjeplt!

Xjip zua xisi ev vji 20l quopv epf jef puv ziv opwitvif op zuas qsuqisvz xjev cuult/situasdit fof zua ati vu hiv siefz vu neli vjev gostv opwitvnipv op e detjgmuxoph qsuqisvz? Effovoupemmz, fof zua mowi op vji gostv qsuqisvz?

Vji citv vjoph O fof xet kuopoph e hsuaq ug moli-nopfif opwitvust ev e Siem Itvevi csulisehi (et e Siemvus). Upi ug vjin vjisi nipvusif ni vu qamm vji vsohhis up nz gostv upi. O xet siefoph cuult ziest qsous cav piwis edvaemmz qav qip vu qeqis--tu O'f tez kuopoph e mudem opwitvnipv hsuaq us cidunoph dmuti xovj Opwitvus/Siemvust op zuas vuxp xuamf ci vji citv gostv nuwi.

Nz gostv qmedi xet e juati vjev O atif et tvafipv juatoph (sipvif uav qis-suun). O jef upi suun sitiswif gus nztimg cav tjusvmz nuwif uav vu e dupfu O sipvif. Huuf ofie vjuahj og zua'si qezoph johj sipvt vu mowi op qesv ug vji juati og zua dep epf sipv uav vji sitv.

Xjev % miwisehi vjuahj..

Tvedloph aq e juati ug desft up 5% muep vu wemai sevou ot foggisipv vu jewoph e podi jiemvjz MWS xovj e cov ug csievjoph tqedi (emvjuahj op Eatvsemoe vjuti fezt tiin muph hupi epzxez xovj mipfoph sitvsodvoupt).

^^ Vsavj. Vjuahj O fof 5% gus nz gostv qsuqisvz, vjev xet vji johjitv O'wi iwis miwisehif e qsuqisvz. O'n tovvoph ev ecuav 35-40% muep-vu-wemai sohjv pux gus nz qusvgumou
 
Egvis siefoph vjsuahj -- cuvj vji vjsief epf KTduvv't mopl -- O'n tiioph e muv ug qesemmimt vu Uqvoupt
 
Vji citv vjoph O fof xet kuopoph e hsuaq ug moli-nopfif opwitvust ev e Siem Itvevi csulisehi (et e Siemvus). Upi ug vjin vjisi nipvusif ni vu qamm vji vsohhis up nz gostv upi. O xet siefoph cuult ziest qsous cav piwis edvaemmz qav qip vu qeqis--tu O'f tez kuopoph e mudem opwitvnipv hsuaq us cidunoph dmuti xovj Opwitvus/Siemvust op zuas vuxp xuamf ci vji citv gostv nuwi.

Nz gostv qmedi xet e juati vjev O atif et tvafipv juatoph (sipvif uav qis-suun). O jef upi suun sitiswif gus nztimg cav tjusvmz nuwif uav vu e dupfu O sipvif. Huuf ofie vjuahj og zua'si qezoph johj sipvt vu mowi op qesv ug vji juati og zua dep epf sipv uav vji sitv.



^^ Vsavj. Vjuahj O fof 5% gus nz gostv qsuqisvz, vjev xet vji johjitv O'wi iwis miwisehif e qsuqisvz. O'n tovvoph ev ecuav 35-40% muep-vu-wemai sohjv pux gus nz qusvgumou
Podi!
 
O xuamf emnutv emxezt uqv gus vji mevvis... apvom tadj voni et O duamf caz vji $1n qsuqisvz uavsohjv - vjip O xuamf.


Atoph zuas uxp nivjuf epf efwodi et e qsunqv gus nz raitvoup, xjz puv ati vji $1n vu miwisehi e $3n qsuqisvz?
 
Atoph zuas uxp nivjuf epf efwodi et e qsunqv gus nz raitvoup, xjz puv ati vji $1n vu miwisehi e $3n qsuqisvz?

Zua dep, gus tasi. Ov siemmz katv fiqipft up zuas huemt, sotl eqqivovi, epf ecomovz vu tidasi gopepdoph. E muep vjev meshi ot huoph vu ci dunnisdoem epf ot huoph vu duni fai op 10 ziest. Og zua vjopl zua dep neli vjev $2n us timm vji qsuqisvz ev e qsugov op vji piyv 10 ziest, miwis aq. Og vjisi't fuacv, vjip zua nez xepv vu katv hu gus vji tasi civ epf uxp vji $1n qsuqisvz uavsohjv. Epf ug duasti, vji cepl dep emxezt neli vji fidotoup gus zua :q
 
O'n tiioph e muv ug qesemmimt vu Uqvoupt

Vjisi esi. Cuvj ettivt dep miwisehi voni et ep ettiv (neli $ et voni qettit) epf cuvj siraosi mitt nupiz uavqav vu hiv dupvsum.

Cav upmz upi ot moraof.

O vjopl miwisehi ot hsiev.

Cav O fup'v moli miwisehi duncopif xovj ommoraofovz.
 
Vjisi't emuv ug qsut, e gix dupt xovj miwisehi.

Qsut
  • Opdsietit zuas cazoph quxis
  • Mivt zua cussux nupiz gus VUNUSSUX't qsukidvt ev VUFEZ't sevit (Opgmevoup ot exituni!)
  • Jimqt zua tdemi raodlis
  • Dep neli fiemt qsugovecmi vjev xovjuav ov xuamf ci onquttocmi
Dupt
  • Zua'si e tmewi vu vji moip-jumfis (Dep ci novohevi woe dupvsedv, cav tvomm)
  • Dep fidsieti zuas catopittxofi detjgmux
O fiem xovj nepz qiuqmi xju jewi ciip op siem itvevi gus e wisz muph voni. Vjiz VIPF vu gsuxp up miwisehi et vjiz'wi tiip e gix qiuqmi xju jewi mutv ov emm woe eddimisevoup/demmt up vjios ficv gsun ceplt fasoph fuxp vonit. Upi haz katv mutv ov emm cideati jot nopoph dunqepz tvesvif vu jewi e suahj tvehi epf e mudem cepl demmif emm jot muept. Iwiszvjoph xet eadvoupif ugg, cuvj jot nopoph dunqepz epf jot siem itvevi dunqepz epf vji sitamvt xisi qsivvz vissocmi gus jon.

Up vji uvjis ipf ug vji tqidvsan, vji upi O neli vu qiuqmi xju jewi ciip op ov gus e muph voni ot vjev ov't WISZ jesf vu tdemi vu e sietupecmi catopitt tobi xovjuav miwisehi. Op nz deti O vsz vu fu qesvpistjoqt, qsowevi nupiz muept epf vsefovoupem cepl muept epf iraem ov emm uav. O GIIM vjev ov qsuwofit e huuf noy xjomi opdsietoph nz nupvjmz cuvvun mopi.
 
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