Land Contract vs Paying all Cash

[Andy Chen]

I am interested in a Land Contract for an investment property in Michigan so more funds would be available for additional property purchase. If I am able to pay cash on a property, say worth $100,000, what are the cons of putting 20% down and leveraging the money? 

Is 20% down and 8% for 3 years with a balloon payment a bad deal? What would be a win-win configuration for seller and investor? 

[Ned Carey]

Leveraging can add return but it adds risk. It is that simple. Leveraging does not have to be all or nothing. You can use less leverage (lower loan amounts) and take less risk but still add to your return.

If you are in a growth phase leveraging usually makes sense. If you are in a preserve capital mode less leverage makes sense.