By Brent Greer
Prudential CRES Commercial Real Estate
Recently, I received a number of emails from readers asking about debt. The consensus was that utilizing debt to purchase property (borrowing from a lender) isn't a hard-fast rule, its more a choice. I would agree. The words I use with my clients are "comfort level." It all depends on your comfort level. There is nothing wrong with purchasing investment property TO HOLD by paying all cash -- if you can swing it. You will still have the benefits of income, appreciation, depreciation and expense deduction. You just won't be able to leverage -- utilizing a lender's money, and you are tying up a large amount of personal capital.
One thing that amazes me in this ongoing discussion about debt taking place in our nation and around the water-cooler each day is how people will shudder at the thought of utilizing debt to purchase investment property. Yet they don't blink an eye at their consumer debt to buy "pretty things" that provide no income. And it is these impulse purchases on debt that is getting people into trouble, as they pile more and more charges onto their credit cards.
Leveraging a lender's money to purchase investment property is a smart approach. But ultimately, it is a personal choice.
It all comes down to each and every buyer's comfort level.
Brent Greer is an investment specialist in Columbus, Ohio with Prudential CRES Commercial Real Estate. Brent represents buyers and sellers of income-producing properties, particularly multi-family, land and office, and consults on IRS 1031 tax-deferred exchanges. Email: bgreer@prudentialcrescolumbus.com
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