What Is The Right Way To Buy Rental Property?

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[NicholasBall]

Back in 2007, during my time working in real estate, I witnessed people purchasing newly built homes from builders with the plan to sell them before the closing of escrow to another buyer for a profit. The crash hit hard and fast, and I vividly recall many of these units ending up foreclosed upon, with the builder's plastic still covering the carpets.

[GregActonCPA]

Yea, only keeping rental properties that you can pay cash for is insane! I have 3 rental properties and I have debt on all of them! They all cash flow really well. There is a smart way to do it. Don't over leverage, but use leverage. My 3 rental properties will help me pay off my debt so much faster than if I tried to pay off my house before investing.

[HLB]

I feel like Dave's philosophy is you have to have a high paying job and save. Pay for everything in cash and invest in mutual funds. That's it.

[dorianmiele]

I think you forgot to mention that if they kept their current home and rented it out, they would most likely have tenants pay off their mortgage every month and still have some cash flow left over.
Debt isn’t scary if you can leverage it. The misuse and misunderstanding of debt is what hurts people 👀

[bradenkelly]

This is unreal to me. There is good debt and bad debt. If the rental payments are more than the mortgage you are winning.

[SteveRam]

I bought 2 houses cash so far this year 2020, and looking for a 3rd right now. But I’ll be the first to say there’s nothing wrong with buying rentals with financing as long as you do it correctly. There’s so many people that don’t do it correctly or don’t know how to do it correctly is when there are problems.

[brucehicks]

Glad I came to the comment section and see so many people disagreeing. I thought this advice was misguided.

[curiouslass]

I do have to say that there is so much peace in knowing you have nothing to owe a bank. When things get bad and you outright own everything..there is complete peace knowing the banks can’t come after you.

[anthonykence]

Buying rental property in cash is rare use the banks money to do it.And become wealthy dave is not realistic, he is in his own world. Let tenents pay off mortgage. There is nothing wrong with loans to buy real property.

[tremaynetyler]

Uhh... I'm totally

Since when do savvy investors say you can only buy an investment property with cash???? My friend has a mortgage on 10 properties and makes 17% on each property after mortgage payments.

[hotandsour]

Dave's view of not wanting to use leverage to buy property is silly, IMO. The power of leverage is incredible and a big reason why real estate is an attractive investment option

[thomasminenno]

How are people supposed to save 200k, 300k, 400k to buy a house in all cash???? I would have to save for a minimum 5 years... meanwhile I could’ve bought a house, put down 3.5%, gotten rid of the PMI, seen appreciation and cash flowed all within those 5 years I would’ve waited to buy in cash. I say leverage money to a point where your comfortable then start paying them down.

[dizbaby]

Hate to add to the disagreements but I decided to keep my house and rent it out when it came time to upgrade. After closing costs I was only going to be making by selling what I could make in just a few years of renting out. So far it's been perfect. Able to make improvements to the property, adding value, all while still making profit. But his advice is genuine in that it's not a guaranteed thing, and it would be easy to go topside if things don't go as planned. But my point is that it's definitely possible to do it as long as you know the risks and have enough brains to pull it all together, because it's far from easy. Good luck!

[chrisstevens]

By this logic. I won’t be making any investments in real estate until I’m about 45...leverage increases returns I thought.

[ryangoodale]

Dumb. Debt on a rental property is “good” debt. You use leverage to increase your return on investment. Dave is wrong

[Eyore]

I bought my (next door) rental house, with cash. I didn't (and still don't) want to be a landlord. I only bought it to control who my neighbors are.

[GamerUprise]

You do not get wealthy by buying real-estate in cash! One of the HUGE attractions in real-estate is the power of leverage.

[alberts]

I started 30 years ago and took on debt to buy real estate. Did not overleverage but put about 20% down and sometimes less. It worked out fine and now they are unencumbered. Ive got several. So I'm not sure how Dave did it paying all cash.

[orangesun]

I saved up enough to buy my first income producing property with cash. Thanks Dave.

[ChrisParrishOutdoors]

Dave gave this man terrible advice. I could name off the top of my head a dozen real estate millionaires that would agree.