Since you can be foreclosed upon and walk away, your downside is capped at the money you put into the property (and however much you value your credit rating for the following seven years). Your upside isn't strictly capped. So for certain high-earning, low-net-worth individuals (say, a 22yo programmer), the expected value for such a risk is high enough that there's a good argument for rolling the dice.
only in non-recourse states, of which there are twelve. if you don't live in one of those, the downside is still capped, but it's the full purchase price of the house.
it's not a good idea to yolo invest like this unless you really know what you're doing.
True, but those twelve comprise a large portion of the country (mainly since they include Texas and California).
Honestly, in most states your greater risk is likely that a renter just stops paying and you have limited or slow recourse options. But like most undiversified investments, it's possible everything could go to zero (see Detroit).
