Help me understand these approaches

[Alison Lee]

It seems like there would be less headaches by simply buying one property outright with cash versus leveraging 8-10 properties. 

I'm in this pickle right now where I'm sitting on a pile of cash and contemplating each of these options. My math shows I can buy one brick ranch for 90-100k, rent it for 1k/mo and collect my earnings with little headache. However, I could also use leverage and buy 8-10 similar properties that would probably spin off roughly the same net cash flow as buying one outright. 

What's the pros and cons for and against these two approaches? It just seems like a huge hassle doing it via leverage and being responsible for that many structures when the cash flow would be similar for many years. I guess the main attraction through the leveraging approach is the upshot in networth it would eventually create versus only owning one property outright. Thoughts?

[Tyler Gibson]

@Alison Lee One major pro is the tax benefits of leverage. when you use leverage the interest is tax deductible. In addition to the tax benefit when leveraging several properties you will increase your net worth over time exponentially with the loan pay down from the tenants increasing the equity along with any increase in the value of the property you might see. In 10 years all of the properties my have a total of 100k in equity which you could leave in or refi out and use to buy 5-6 more units and increase cash flow. A good rental property investor will marginally increase rents on a regular basis to keep with current market rates and therefore increase total cash flow over time. With 1 place fully paid out you increase rent by $100 you net $100 more. With 10 you increase $100 your net is $1000. The economy of scale along with the benefit of tax advantages is why you see investors by multiple properties using leverage. There is nothing wrong with buying a house cash and being happy with that. But 90k in the stock market might outperform a rental property. But 10 leveraged homes using the 90k will likely out perform the market in the same time frame.