Long term risks of investment properties

[Rick Via]

I fairly new to RE investing. I have 2 rental properties and they just meet the 1% rule.  I've listened to just about all of the BP podcasts and read a few RE books.  I hear people talking about losing everything with a bad market downturn.  On one of the podcasts an investor had over a hundred houses and went bankrupt. I think Dave Ramsey's story was that he had a lot of real estate in Tennessee when he started when he was in his twenty's and when the market went bad the banks called his loans even though he had never missed a payment.  I hear people say you have to protect against it to be ready for a market downturn.  On the one hand I hear use leverage to build your portfolio as much as possible, yet I also hear its bad to be overleveraged.  I haven't heard anyone specifically address this and as a new investor, I want to put my plan on the right track to begin with.  I don't understand how you get in trouble with rentals even if you're upside down in a bad market if they are staying rented or how to make the right decisions up front to keep yourself safe.  Can anyone help me with this?

[Rick Via]

Thanks Dalton for the reponse.  I still wonder about what is considered being "over leveraged." One of my strategies is to refinance whenever I can to pull the equity out and use it for a down payment on another property, that way so I can grow the portfolio faster and let the business grow itself. But this strategy keeps you fully leveraged.

Also, what causes your vacancies to go up in a market downturn? Don't people still have to have a place to live?