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Updated about 4 years ago on . Most recent reply
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- Rental Property Investor
- Gilbert, AZ
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Would you rather be leveraged 80% w/ low reserves or 100% w/ more
Thanks to everyone who shared their opinion about whether they would rather have 10k monthly cash flow or 1,000,000.
To keep the thought process going, I’d like to know, given the 2 different options, would you rather have a property worth 200k leveraged at 80% (mortgage of 160k) and have 2k in reserves or have the property leveraged at 100% (mortgage of 200k) with 42k in reserves? And why?
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@Shiloh Lundahl Oh this is an interesting one! I'd go with the 200k Mortgage with 42k in reserves!
Being over-leveraged is never a good thing, especially when lenders look at one's portfolio but this is probably the one time I will go for the 100% leverage option.
Think about it: The mortgage will be paid monthly by the tenant, so that's covered by the tenant while I have a good chunk of cash to weather any storm that comes with the property.
More money, more problems?!! Nah, not this time lol.