One of the most major decisions which you have got to make when it comes to your real estate portfolio is the decision of whether to pay cash for what you buy, or whether to leverage it through taking out a loan and financing it over time. Granted, both of these options have their upsides and their downsides. But there is no right or wrong way to go about this type of operation. Who you want to be is going to be decided by how you decide that everything involved in your real estate business should be paid for. Will it be the security of cash, or the freedom of debt?
A lot of people strive to be able to do everything with cash. And while this does have the advantage that it leaves you accountable to no one but yourself, it also carries the disadvantage that it can drain you dry if something seriously bad happens. After all, even if you are insured, if the house burns down because some crack addict feels like building a fire in the living room while you are not around, you are still going to be out some money. Not to mention the amount of time that it will ultimately cost you.
You may have noticed that we talked about the freedom of debt. While a lot of people see any kind of debt as a burden which should be shaken off as soon as is humanly possible, debt is actually a form of freedom for two reasons. For one, it allows you to walk away if the situation gets too terrible, having only lost some credit and some of the money you would have spent if you would have paid cash. For another, it allows you to use your cash to do the things which need to be done to the place, instead of saving up further.