Am I using enough Leverage?

[Tony Nguyen]

Hey guys,

Like any other investor, I'm always looking for ways to grow. I will share with you a simplified scenario of what I'm doing below and I would absolutely love any feedback from you guys about if I'm using enough leverage, how can I leverage more, etc...

Property 1
Initial Investment/purchase price: 100k
Purchase ARV: 150k
Obtained Hard Money: 95k

Property 2
purchase price: 95k
Purchase ARV: 140k
Obtained Hard money: 90k

Property 3
purchase price: 90k
Purchase ARV: 130k
Obtained Hard Money: 85k

** This stream continues on for another 2-3 properties. I am basically taking out a HML on every property in order to help buy the next since my money is tied up in property 1. I wanted to see if you guys see any room for improvement in regards to leverage so I can grow faster (what we all want!). Thanks in advance!

[Vikram C.]

Originally posted by Tony Nguyen:

If I am still coming out w/ a profit in the end, is the over leverage still considered bad?

Leverage maginifies the outcome of your investments. If your investments are good, leverage will make them look stunning. If your investments are poor, leverage will make you take a big loss. The problem, of course, is that no investor goes into an investment expecting it to turn out poorly, so the losses will always be a surprise.

I like to have a big equity cushion in everything I do to make sure that the worst case outcome is still acceptable to me.