Over leveraged

[David Ptak]

Hi everyone. I've been reading and listening to podcasts and hear about all these folks that build these huge portfolios within just a few years. What I can't make sense of though is how can one keep accumulating properties. Unless you have a huge income don't you end up over-leveraged at some point? How can one keep getting lending property after property? Any thoughts? Thanks in advance! Dave

[Russell Brazil]

With each subsequent property you buy it becomes easier to buy the next one quicker because you continue to acquire income producing assets. Let's say you are able to save $10,000 a year on your own. You buy a property that throws off $5,000 in cash. Now you can save $15,000 in a year. You buy property 2 and 3 at the same levels and then you are saving $20,000 and then $25,000 in a year and it just snowballs from there. The key is to reinvest that cash and not spend it.