Cash flow vs leverage

[Stephanie W.]

We needed cash flow fast, to pay our bills, since my husband 'medicalled out' of his airline flying career. We had enough money in savings to buy five rental properties in two years and so we paid cash for all of them (almost, but that's another post). We now cash flow more than enough to pay our bills, put the appropriate amount in reserve for each property and even to replenish our savings. Should I be thinking now about using some of the equity ($500,000+) we have to continue to grow or is this 15% return we're getting on our savings plenty good enough? I know the magic of leverage, but why would I go into debt and add to the stress/trouble if we're doing fine right now?

[Walt Payne]

Originally posted by @Walt Payne:

Originally posted by @Stephanie W.:

We needed cash flow fast, to pay our bills, since my husband 'medicalled out' of his airline flying career. We had enough money in savings to buy five rental properties in two years and so we paid cash for all of them (almost, but that's another post). We now cash flow more than enough to pay our bills, put the appropriate amount in reserve for each property and even to replenish our savings. Should I be thinking now about using some of the equity ($500,000+) we have to continue to grow or is this 15% return we're getting on our savings plenty good enough? I know the magic of leverage, but why would I go into debt and add to the stress/trouble if we're doing fine right now?

Your situation Is similar enough to mine that I will share the conclusion I came to about myself. And that is that you can do whatever you are comfortable with, and also that it doesn't have to be an all or nothing situation. For example I decided to keep a few "core" properties mortgage free. Then I will get 50% LTV on the rest. That is conservative enough for me to feel secure enough to retire on it at any time, yet allows for some growth. Maybe a slow and stable growth would let you have security and growth that feels right, and leaves no regrets. Just a thought.