Real Estate Leverage

[Guka Kagu]

I'm so confused. I watched so many you tube videos but still I haven't gotten the answer.  Is there any specific book that would answer the following questions?

1. How does investors use leverage to buy rental properties? I always hear people saying mortgage debt is good. Don't use your own money. How? Homes are so expensive plus interest rate is so high. Rent isn't that much. 

2. Investors/wealthy people don't take out salary. They take out loan. How does that work? Let's say their business is $1 million, they take out $100,000 loan (income), what do they do the next year?

Let's say you have $500,000. Which one is the best option and why?

1.Buy 1 property for $400,000 cash (no mortgage, positive cash flow after expenses)

2. Buy 2 properties 400k each with 225k down for each property (interest rates are so high - it will eat up all the rent). 

3. Buy $950,000 home, pay $450,000 cash, $450,000 mortgage. LTR will cover the mortgage and other expenses. STR might be profitable.

[Ran Iarovich]

Quote from @Eric Gerakos:

Quote from @Guka Kagu:

I'm so confused. I watched so many you tube videos but still I haven't gotten the answer.  Is there any specific book that would answer the following questions?

1. How does investors use leverage to buy rental properties? I always hear people saying mortgage debt is good. Don't use your own money. How? Homes are so expensive plus interest rate is so high. Rent isn't that much. 

2. Investors/wealthy people don't take out salary. They take out loan. How does that work? Let's say their business is $1 million, they take out $100,000 loan (income), what do they do the next year?

Let's say you have $500,000. Which one is the best option and why?

1.Buy 1 property for $400,000 cash (no mortgage, positive cash flow after expenses)

2. Buy 2 properties 400k each with 225k down for each property (interest rates are so high - it will eat up all the rent). 

3. Buy $950,000 home, pay $450,000 cash, $450,000 mortgage. LTR will cover the mortgage and other expenses. STR might be profitable.

 My vote is for

4. Don't buy real estate in the current market. Take advantage of high interest rates and buy first trust deeds currently paying around 9% or some other investment that actually pencils out and makes sense. All the best.

 Don’t buy real estate unless the numbers make sense. You always want to at least break even on any property unless you have a lot of cushion cash to save yourself.