Questions about buying RE with all cash
Hello everyone. I am looking to connect with another member (preferably in the midwest) who is buying SFH or MFH with all cash. I am looking to get involved with investing as a second career when I retire from my W2 in 5-10 years. I am in the position to be able to buy a few properties with all cash and I was wanting to connect with someone who uses this "all cash" strategy. I realize most people here do not buy their RE properties with all cash, but I am wanting to ask some general questions and learn from anyone here who follows this method of investing. Thank you.
Zach
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- Real Estate Broker
- Cody, WY
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Why are you employing an all-cash strategy?
Read a few books on real estate investing to learn the power of leverage. I like the Unofficial Guide to Real Estate Investing. Here's a very basic explanation to get your juices flowing:
Assume a house costs $200,000 and rents for $1,500. The market appreciates 3% per year.
Pay cash for one house and rent it for $1,500. After five years you'll have earned $90,000 in rent income and gained $34,000 in appreciation.
Buy four houses with $50,000 down on each. Mortgage payment is $1,000 on each house, so you're essentially earning $500 per house or $2,000 a month. After five years you'll have earned $120,000 in rent income and gained $136,000 in appreciation. You've earned $132,000 more by splitting your money and leveraging it.
- Nathan Gesner
