Wow guys, this is an awesome discussion. I'm not going to agree one way or the other, but I'll just tell my story.
I bought my first rental back in March. I put down 25% and got a 15 year fixed with no problems. We put in renters and everything was great until we had a major plumbing problem. We had to move the tenant out and I had to eat the insurance deductible and mortgage for about 45 days while repairs were done and we found new tenants.
I found another property in August, just as the credit crunch was really snowballing. Stupid me I forgot to pay a parking ticket and it showed up on my credit. Dropped my score to 697 and I couldn't get a loan. I had the cash though, so I just went ahead and bought the house. On Jan 1st we had a cold spell and a pipe burst at the house. Nothing like the other problem, but I still had to eat about $800 in repairs. This time though, getting full rent with no mortgage, there was no real money out of my pocket. That made it a lot easier to sleep at night.
Now that my FICO is back up in 700's I could probably refinance and buy another property, but I'm not going to. Sure, I might not be maximizing my potential, but sometimes the piece of mind is worth it.
