Are you not afraid to be in debt for 30 years?

[Mary Jay]

Are you guys not afraid to be in debt for 30 years? All three of my houses I bought on a 15 year loans to avoid being in debt. But all three of them have negative cash flow. One is almost paid off so my plan is to sell it and it will help paying off the house where I live...

I see a lot of investors are taking 30 year loans and buy 50 properties/units that do have positive cash flow, but what if another market crash happens and you have 50 percent vacancies on your 50 properties? Are you guys not afraid? Or what is your strategy?

[Zachary LaJoye]

I agree with Max Tanenbaum on this one. If the numbers are too tight to allow for rents to decrease without turning cash flow negative, I don’t touch it. Also a big reason why I like solid B class properties with affordable rents. There will always be a demand. How leveraged you choose to be depends on a lot of things and how much risk you are willing to take though.

However, if the 15-year mortgages are turning your deals cash flow negative I would think this would be putting you at higher risk than what a 30 year with positive cash flow would. Just depends on your savings cushion and your individual goals.