I'm TERRIFIED to over-leverage

[Jordan Coates]

I'm worried about over-leveraging myself on my properties. My wife and I have our primary residence and a rental property (that we have owned for about 4 months). I'm thinking about using $20K of the $80k equity in my primary residence to buy another buy and hold SFR rental. I'm also about 2 months away from being able to use the equity of our current rental house for a down payment on another SFR rental.

My wife and I make enough from our W-2 employment to make the mortgage payments if the rentals go vacant.  What are the dangers of using the equity for down payments on other properties? Can we just keep doing this?

[Jay Hinrichs]

most will tell you leverage to the max and its all about number of doors ... and or refi till you die.

end of the day you have to be comfortable .. if vocation throws off enough cash flow to debt service all your units if they were vacant for a year or so or indefinitely then I personally feel your not taking a huge risk.. unless job security is an issue.  As you mature as an investor IE get older  like me.. then you will start to feel the need to pay things off like I have been doing last few years.. for me I want ZERO debt and am working my way there.. to me that is the only way your truly financially free.. ( I have seen to many markets crater in my years to think that it could not happen) and the only people that make it through those are usually those with limited to zero debt.. But I will be in the vast majority.

Like you I make money in other places than rental income. So rental income is way down the list for me personally on something I need or want.