Buy and Hold cash: How Far can you Leverage the Property?

[Chris Stedman]

Hello All,

Chris from Arizona here. I just joined BP recently and introduced myself just a few days ago. Was looking to flip my first property with cash, but now I'm curious about the option of buying a distressed property, rehabbing it and renting it out. 

But my question is, if I do this, how far can I leverage this property to get the next one (assuming 100% equity). 

Wether this discussion is a basic formula or your own success story on what you've done, I'm trying to get an idea of what my best approach is to grow the fastest. 

Thanks

[Charlie Fitzgerald]

The best way for a buy and hold investor with a 100k in cash to build a rental real estate portfolio is to buy 4 asset using the power of leverage, in my opinion.  The thing that people miss is that although having a debt free real estate portfolio would certainly be nice, the vast majority of large scale investors (yes even the millionaire ones), do not have debt free assets.  What they do have is assets that are cash flowing sufficiently to cover the entirety of the debt and other expenses associated with the ownership of the asset, and a ROIC (return on invested capital) that meets the desires and fundamentals of the investor holding the asset.  That #, may be and should be different for almost all investors.  We all have different goals and desires, and fundamentals.  Invest based on these that you establish for yourself.  Start with establishing your "Why?"  Why are you even investing.  Responsible use of debt is NOT a bad thing in a business (I'm sorry Dave Ramsey...I love you but it's the facts and for every 10 millionaires you have that are debt free, I'll show you 10,000 that are bigger millionaires that are not...and 100's of billionaires in the same position.