Is it better to have debt than own free and clear?

[Terri B.]

I heard an investor on a call say it's best to have some debt on properties for protection. There wasn't time to discuss in detail so I'm asking you all fellow investors about this. What's your perspective and why? I was thinking perhaps from a legal perspective any suits would also involve the lender and thus have greater "protection." ??? What do you think, what advice have you taken or what are you doing on this?

[Chris Seveney]

Quote from @Terri B.:

I heard an investor on a call say it's best to have some debt on properties for protection. There wasn't time to discuss in detail so I'm asking you all fellow investors about this. What's your perspective and why? I was thinking perhaps from a legal perspective any suits would also involve the lender and thus have greater "protection." ??? What do you think, what advice have you taken or what are you doing on this?

Personal preference, to me a lot of these asset protection schemes are like wearing a covid mask when driving alone.  Oh some scrupulous attorney will not sue you because you have debt and they will go after properties that are free and clear. In order for them to do that, you have to have some pretty serious negligence. Ask them what possibly could they be sued for that insurance would not cover you on? 

If you want true asset protection, hire a property manager and make sure your attorney reviews that contract and get proper insurance.