Does rei mean forever debt?

[Keith Sehi]

I am new to rei and was wondering about the debt we get into. As we keep scaling more properties and acquiring more debt from each one do we basically just have mountains of debt the rest of our lives as other people pay it down? Or am I missing something? Thanks

[Charles Carillo]

@Keith Sehi

After a couple of decades of investing in real estate, I have found that most new investors take on more debt and have higher leverage on their properties. As they become more experienced (and make some money) they decrease their leverage and pay down their properties. When they refinance their properties, they might do it at a 50% LTV not a 75% LTV. My first multifamily property was leveraged at 97% LTV; our most recent one was leveraged at 65% LTV.

There is not an issue with debt on cash-flowing rental properties if it is used conservatively. One of the most consistent themes in real estate investing is when a property is in trouble; it is usually because of debt (structure, amount, term, rate) and/or management.