Levering while protecting yourself in the future.

[Matthew Sturm]

I haven't posted anything on here before, but I've spent endless amounts of time reading some great advice that has aided me along the way.  I've read many interesting discussions and debates on which is the better strategy between leveraging, and being debt free.  I myself like the idea of leveraging and maximizing my rate of return.  Quick thing I want to add tho.  Not everyone is able to get thirty year fixed mortgages.  It just doesn't work that way with everyone one every property.  Many may have a few locked up on a fixed rate, but it's almost inevitable that at some point you will have a 3-7 year balloon.  If this is the case.  It's in my opinion that you have to run worst case scenarios with interest rates when you are figuring how much leveraging is to much on any certain property.  Remember, you can only play with the terms so much, and it's best to know what that limit is with each lender.  I'm not big on speculating.  No one is going to tell me that interest rates will never rise.  No one is going to give me even a 5 year projection on what interest rates are going to do.  At the end of the day, no one really knows.  So if you like to leverage like myself.  If you love the Brrrr strategy like myself.  Run your numbers with a possible 15% interest rate.  Make sure the property will still cash flow at such an extreme rate, and then figure out how much you can leverage a property based on that scenario. No matter what happens, you always want your property to cash flow.  Period.  If a bank will do 85% loan to value, I will back that down until I know it will cash flow at a higher interest rate.  I'll personally back it down to 70% loan to value if I have to. If I can do at 85%, and the bank will allow it then I'll do it every time.  Thoughts are appreciated.