Questions about buying RE with all cash
Investor · Indianapolis, IN · Member since 2023 · 6 posts · 6 votes
Questions about buying RE with all cash
Most Popular Reply
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3yQuote from @Zachary Bush:
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.
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197 Replies
- Specialist · NJ · Member since 2022 · 1k+ posts · 663 votes3y
Zach, cash buyers do have a leg up in the marketplace. Sellers love that all cash offer.
A few things to remember:
1) When you buy all cash, the seasoning is usually about 6 months for the cashout refi
2) When you use all cash, you're allocating lots more capital than necessary. If you buy a house for 150k cash, that's one house. In the HM space you can use the same 150k to pick up 5+ properties.
Just something to think about.
@Zachary Bush- thanks...good luck ......just as a FYI - if you plan to try to refinance any property that you intially buy with cash - be aware that you may need to wait a little bit ( 6 mos - 12 mos) before you will be able to do this .....good luck
- Member since 2023 · 2 posts · 0 votes3y
Quote from @Nathan Gesner:
Quote from @Zachary Bush:
Easier said than done
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.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes3y
Quote from @Andres Murillo:
@James Hamling is definitely correct.
Terms matter the most.
And to add to the idea of "terms matter most", Cash vs Financed is a term of confidence for the seller. If you're purchasing conventional and have enough cash in the bank to pay for it cash, your seller will be extremely confident in your ability to close, despite the fact you're getting the loan. Sellers want to know that if they choose your offer, you will close. Make sure you're tight with your contingency periods or even remove contingencies when possible and you'll find much greater "offer power" than simply buying cash.
Contingency terms, earnest funds and the terms on earnest funds.
I can not recount how many buys I have made, scalping a property for LESS than the other MULTIPLE offers, because (a) my earnest funds proved I was serious (b) I had contingency terms on PA that made it an all but certainty this WAS going to close. And, being a darn-good negotiator I would tell listing agent they had a choice, a sure thing or roll the dice and see IF it closes with others. And I assure EVRY TIME I get asked if I will be a back-up offer, of "sure thing, minus $10k on our offer".
I call it the "FOMO Offer". It works every-time, half of the time, lol.
- Member since 2023 · 32 posts · 17 votes3y
Quote from @James Hamling:
Quote from @Andres Murillo:
@James Hamling is definitely correct.
Terms matter the most.
And to add to the idea of "terms matter most", Cash vs Financed is a term of confidence for the seller. If you're purchasing conventional and have enough cash in the bank to pay for it cash, your seller will be extremely confident in your ability to close, despite the fact you're getting the loan. Sellers want to know that if they choose your offer, you will close. Make sure you're tight with your contingency periods or even remove contingencies when possible and you'll find much greater "offer power" than simply buying cash.
Contingency terms, earnest funds and the terms on earnest funds.
I can not recount how many buys I have made, scalping a property for LESS than the other MULTIPLE offers, because (a) my earnest funds proved I was serious (b) I had contingency terms on PA that made it an all but certainty this WAS going to close. And, being a darn-good negotiator I would tell listing agent they had a choice, a sure thing or roll the dice and see IF it closes with others. And I assure EVRY TIME I get asked if I will be a back-up offer, of "sure thing, minus $10k on our offer".
I call it the "FOMO Offer". It works every-time, half of the time, lol.
This is great news! I figured there has to be some kind of benefit to an all cash offer. I know the most common way to buy properties is to get a lender to help finance it, but as I mentioned earlier, in my case, I have a good credit score, but not a good work history, which won't matter if I pay all cash. Looking to get a multi unit building like a quadplex so I can live in one unit and rent out the others.
Once I get my first investment property, and am comfortable with it, maybe the following year (or at least six months later) I'll look at getting another property, and maybe then, after having owned the first one for a year or so, and with my good credit I should have more luck getting approved. Or maybe I'll form a holding company and apply through that, and build up credit in the company name.
- Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes3y
@Zachary Bush there is nothing wrong with all cash. You can always use your equity and borrow against it. Just make sure when you are ready to borrow that the current financial situation you are in is going to be something the bank will lend money to you. If you quit your job and then have no income the banks may or may see you as a liability. run this through your head and take a look into the future as to what your income will be, where it will come from and will the banks be open to lending to you.
- New to Real Estate · FL · Member since 2022 · 7 posts · 4 votes3yBut having a cash reserve if rent is not paid is crucial. Otherwise you can grow but if suddenly lots of rents are not paid then you are at risk of loosing those properties
Quote from @Joe Villeneuve:
Quote from @Ray Hage:
@Tim J. said it best. You can buy it in cash and then re-fi out of it afterwards. It will cost a bit more that way but if you are in a cash-competitive market, it's not a bad idea to buy in cash initially. You can easily do a conventional investor or DSCR loan right after.
Linear return...and slow. Starting out using same cash on multiple properties as DP's is an exponential return, and is a much better use of funds.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Eliott Elias:
Why are you looking for an investor buying all cash? That is likely the least sophisticated investor you will meet.
Yes.
If one is buying a hotel in Phuket for all-cash since mortgage is not possible, then it makes sense.
But buying cash-flow rental property in Midwest for cash, it is not sophisticated. You may just want to buy S&P500 index for cash rather than real estate. - Lender · Orlando, FL · Member since 2016 · 340 posts · 115 votes3y
@Pam Brown. Agreed.
As a private lender, I teach my team to understand seller expectations and why they might be selling for a “cash” price.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Charles Lambert:
Quote from @James Hamling:
Quote from @Andres Murillo:
@James Hamling is definitely correct.
Terms matter the most.
And to add to the idea of "terms matter most", Cash vs Financed is a term of confidence for the seller. If you're purchasing conventional and have enough cash in the bank to pay for it cash, your seller will be extremely confident in your ability to close, despite the fact you're getting the loan. Sellers want to know that if they choose your offer, you will close. Make sure you're tight with your contingency periods or even remove contingencies when possible and you'll find much greater "offer power" than simply buying cash.
Contingency terms, earnest funds and the terms on earnest funds.
I can not recount how many buys I have made, scalping a property for LESS than the other MULTIPLE offers, because (a) my earnest funds proved I was serious (b) I had contingency terms on PA that made it an all but certainty this WAS going to close. And, being a darn-good negotiator I would tell listing agent they had a choice, a sure thing or roll the dice and see IF it closes with others. And I assure EVRY TIME I get asked if I will be a back-up offer, of "sure thing, minus $10k on our offer".
I call it the "FOMO Offer". It works every-time, half of the time, lol.
This is great news! I figured there has to be some kind of benefit to an all cash offer. I know the most common way to buy properties is to get a lender to help finance it, but as I mentioned earlier, in my case, I have a good credit score, but not a good work history, which won't matter if I pay all cash. Looking to get a multi unit building like a quadplex so I can live in one unit and rent out the others.
Once I get my first investment property, and am comfortable with it, maybe the following year (or at least six months later) I'll look at getting another property, and maybe then, after having owned the first one for a year or so, and with my good credit I should have more luck getting approved. Or maybe I'll form a holding company and apply through that, and build up credit in the company name.
This is different. This is the case where you are not qualified for credit.
Long time ago I was being educated as well to do "cash transaction and then refi" but this strategy has more risk and only benefitted the real estate agent and/or seller. - 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesWhat does a cash reserve have to do with what I wrote
Quote from @Menachem Serraf:
But having a cash reserve if rent is not paid is crucial. Otherwise you can grow but if suddenly lots of rents are not paid then you are at risk of loosing those propertiesQuote from @Joe Villeneuve:
Quote from @Ray Hage:
@Tim J. said it best. You can buy it in cash and then re-fi out of it afterwards. It will cost a bit more that way but if you are in a cash-competitive market, it's not a bad idea to buy in cash initially. You can easily do a conventional investor or DSCR loan right after.
Linear return...and slow. Starting out using same cash on multiple properties as DP's is an exponential return, and is a much better use of funds.
- 3yKerry Noble JrPro MemberInvestor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
You can definitely get some great deals surrounding marion county too.....
- New to Real Estate · FL · Member since 2022 · 7 posts · 4 votes3yYour advice on growing exponentially is only if you have enough cash reserves for rent and other expenses. Otherwise no point in exponential growth
Quote from @Joe Villeneuve:
What does a cash reserve have to do with what I wroteQuote from @Menachem Serraf:
But having a cash reserve if rent is not paid is crucial. Otherwise you can grow but if suddenly lots of rents are not paid then you are at risk of loosing those propertiesQuote from @Joe Villeneuve:
Quote from @Ray Hage:
@Tim J. said it best. You can buy it in cash and then re-fi out of it afterwards. It will cost a bit more that way but if you are in a cash-competitive market, it's not a bad idea to buy in cash initially. You can easily do a conventional investor or DSCR loan right after.
Linear return...and slow. Starting out using same cash on multiple properties as DP's is an exponential return, and is a much better use of funds.
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
Quote from @Menachem Serraf:
Your advice on growing exponentially is only if you have enough cash reserves for rent and other expenses. Otherwise no point in exponential growthQuote from @Joe Villeneuve:
What does a cash reserve have to do with what I wroteQuote from @Menachem Serraf:
But having a cash reserve if rent is not paid is crucial. Otherwise you can grow but if suddenly lots of rents are not paid then you are at risk of loosing those propertiesQuote from @Joe Villeneuve:
Quote from @Ray Hage:
@Tim J. said it best. You can buy it in cash and then re-fi out of it afterwards. It will cost a bit more that way but if you are in a cash-competitive market, it's not a bad idea to buy in cash initially. You can easily do a conventional investor or DSCR loan right after.
Linear return...and slow. Starting out using same cash on multiple properties as DP's is an exponential return, and is a much better use of funds.
So you advocate stepping over a dollar(s) to pick up a dime?
Where did you get the impression that you won't have cash reserves if you exponentially grow?
What makes you think that the exponentially growth itself couldn't cover any need for cash reserves?
- Member since 2023 · 32 posts · 17 votes3y
Quote from @Dustin Lauer:
@Pam Brown. Agreed.
As a private lender, I teach my team to understand seller expectations and why they might be selling for a “cash” price.
This may be obvious to those more experienced, but I'm new to this. What sort of expectations are there when someone pays cash?
As I mentioned, my reason for wanting to pay cash for a quadplex (or whatever type of multi unit building I buy), is because once I sell my SFH (personal residence) and pay out the mortgage, I estimate I will have about $500,000 (maybe even approaching $600,000 depending on the market).
In the areas I'm looking at moving to with a lower cost of living, I can buy a quadplex, triplex, duplex, etc, for $300,000 to $600,000. My goal is to find something decent, move-in ready in a good location that I can buy for cash and have some money left over, that I will probably invest in index funds or an ETF (something else new to me that I'm just learning). Fairly liquid if I need it, though I'd rather leave it in and let it grow.
I also don't think I'd be approved for a mortgage. Under my personal name, I have an excellent credit score in the high 700s, but a poor employment history so I probably wouldn't be approved. And if I incorporate, it would be too new and without a proven track record to qualify for financing. Everyone has their reasons for paying cash or financing, those are my reasons. I hope they are reasonable, if I'm mistaken on anything, please let me know.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3yBuying with all cash is unusual, what is it you hope to achieve?
Quote from @Zachary Bush:
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 - Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @Charles Lambert:
Quote from @James Hamling:
Quote from @Andres Murillo:
@James Hamling is definitely correct.
Terms matter the most.
And to add to the idea of "terms matter most", Cash vs Financed is a term of confidence for the seller. If you're purchasing conventional and have enough cash in the bank to pay for it cash, your seller will be extremely confident in your ability to close, despite the fact you're getting the loan. Sellers want to know that if they choose your offer, you will close. Make sure you're tight with your contingency periods or even remove contingencies when possible and you'll find much greater "offer power" than simply buying cash.
Contingency terms, earnest funds and the terms on earnest funds.
I can not recount how many buys I have made, scalping a property for LESS than the other MULTIPLE offers, because (a) my earnest funds proved I was serious (b) I had contingency terms on PA that made it an all but certainty this WAS going to close. And, being a darn-good negotiator I would tell listing agent they had a choice, a sure thing or roll the dice and see IF it closes with others. And I assure EVRY TIME I get asked if I will be a back-up offer, of "sure thing, minus $10k on our offer".
I call it the "FOMO Offer". It works every-time, half of the time, lol.
This is great news! I figured there has to be some kind of benefit to an all cash offer. I know the most common way to buy properties is to get a lender to help finance it, but as I mentioned earlier, in my case, I have a good credit score, but not a good work history, which won't matter if I pay all cash. Looking to get a multi unit building like a quadplex so I can live in one unit and rent out the others.
Once I get my first investment property, and am comfortable with it, maybe the following year (or at least six months later) I'll look at getting another property, and maybe then, after having owned the first one for a year or so, and with my good credit I should have more luck getting approved. Or maybe I'll form a holding company and apply through that, and build up credit in the company name.
@Charles Lambert: I'm a little confused by your comment. For instance, I don't know my credit score, I haven't been W2 , well I can't remember when, maybe early 1990's and I don't use banks to buy houses. I just bought a house in North Phoenix for $525,000 that appraised for $750,000 and the house down the street just sold for $730,000 with a lesser view. I paid no real estate agent fees, I paid no bank anything and I got an extra $75,000 cash at closing in my pocket.
Bought a house, in a nice neighborhood, No bank, No credit used, No work history, Cash to me. Maybe I have a little experience, understand the system, know how to buy, but I don't have any of the things you seem to be sold on that you have to have to be successful in real estate. That is very different than my reality, so I am a little confused.
Please explain why you think the way that you do. - Member since 2023 · 32 posts · 17 votes3y
Quote from @Account Closed:
Quote from @Charles Lambert:
Quote from @James Hamling:
Quote from @Andres Murillo:
@James Hamling is definitely correct.
Terms matter the most.
And to add to the idea of "terms matter most", Cash vs Financed is a term of confidence for the seller. If you're purchasing conventional and have enough cash in the bank to pay for it cash, your seller will be extremely confident in your ability to close, despite the fact you're getting the loan. Sellers want to know that if they choose your offer, you will close. Make sure you're tight with your contingency periods or even remove contingencies when possible and you'll find much greater "offer power" than simply buying cash.
Contingency terms, earnest funds and the terms on earnest funds.
I can not recount how many buys I have made, scalping a property for LESS than the other MULTIPLE offers, because (a) my earnest funds proved I was serious (b) I had contingency terms on PA that made it an all but certainty this WAS going to close. And, being a darn-good negotiator I would tell listing agent they had a choice, a sure thing or roll the dice and see IF it closes with others. And I assure EVRY TIME I get asked if I will be a back-up offer, of "sure thing, minus $10k on our offer".
I call it the "FOMO Offer". It works every-time, half of the time, lol.
This is great news! I figured there has to be some kind of benefit to an all cash offer. I know the most common way to buy properties is to get a lender to help finance it, but as I mentioned earlier, in my case, I have a good credit score, but not a good work history, which won't matter if I pay all cash. Looking to get a multi unit building like a quadplex so I can live in one unit and rent out the others.
Once I get my first investment property, and am comfortable with it, maybe the following year (or at least six months later) I'll look at getting another property, and maybe then, after having owned the first one for a year or so, and with my good credit I should have more luck getting approved. Or maybe I'll form a holding company and apply through that, and build up credit in the company name.
@Charles Lambert: I'm a little confused by your comment. For instance, I don't know my credit score, I haven't been W2 , well I can't remember when, maybe early 1990's and I don't use banks to buy houses. I just bought a house in North Phoenix for $525,000 that appraised for $750,000 and the house down the street just sold for $730,000 with a lesser view. I paid no real estate agent fees, I paid no bank anything and I got an extra $75,000 cash at closing in my pocket.
Bought a house, in a nice neighborhood, No bank, No credit used, No work history, Cash to me. Maybe I have a little experience, understand the system, know how to buy, but I don't have any of the things you seem to be sold on that you have to have to be successful in real estate. That is very different than my reality, so I am a little confused.
Please explain why you think the way that you do.Sure, there are a few reasons I was thinking of buying all cash:
1. I'm brand new to investing. So, no history of investing or proof of my credit worthiness as a business.
2. I actually hadn't checked my credit score in a few years and was pleasantly surprised that is it in the high 700s, but I would probably be turned down for just about any form of personal credit because my work history has been inconsistent for many years. (I'd rather not be an employee anymore, anyways, so I'm not going to work on building up a work history, though if it happens anyways, then that's ok)
3. I don't want to own any properties in my personal name for liability and accounting reasons.
4. After hearing about how powerful an all-cash offer can be, I like the idea of it even more now.
5. I'm working my way out of debt and, at least for now, don't want any more debt, personal or corporate. Fortunately, my own house has more than doubled in value in just under eight years, so in the near future, I will sell it, pay out the mortgage and use the balance to buy a multi-unit building like a quadplex in an area with a lower cost of living (and lower real estate prices). I've been really bad, and have not invested or saved anything for retirement (never thought I'd make it to 50, but here I am). So, I want to buy a property for cash, house hack and live in one of the units while renting out the rest, so a slow but steady way to more wealth. Then, have at least $100,000 left over (more if possible) to invest in an ETF or Index Fund (still learning about those). That way the money is fairly liquid if I need it.
6. For quite a while, I've always had a good cash reserve in my savings account at the bank (not the best place to park my money, I know, live and learn). Since the pandemic, and especially in the last year, no thanks to outrageous inflation, and not working much, my savings account is dwindling. I'd feel a whole lot more secure if I had $100,000 I could tap into if I needed to, but in the mean time, it could be (hopefully) earning about 10% return.
7. I also just really want to be debt free right now and maybe finally get over my insomnia which has been going on for three years, much of which I'm sure is about financial worries.
I hope that clarifies my reasons for wanting to pay all-cash for my next real estate purchase. Maybe I'm mistaken on some of these things. But, that's not to say that in the future I may not consider financing. Just for my first investment property, I want the peace of mind knowing I have a safety cushion. Then, maybe after a couple of years' experience, I may look at more investment properties which I would have to finance, or borrow against my first (still to be purchased) quadplex. At that time, I could explore the options for financing - banks, private lenders, vendor financing, etc.
And, since I plan to house hack and live in the first investment property I buy, I like the security of knowing I own it free and clear. For a while, I was mortgage-free and it was a great feeling. I've been super stressed lately about having a mortgage and what would happen if the lender ever called in the mortgage, or for whatever reason, something went bad and I had to sell quickly, or worst case, lose the property all together. Kind of what I'm stressing over in my current situation. I just want the peace of mind knowing I'm living in a fully paid-for home and all I need to do is pay property taxes, insurance and maintenance/repairs. It's still money to put out, but not as much as with a mortgage on top of that.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @Charles Lambert:
Quote from @Account Closed:
Quote from @Charles Lambert:
Quote from @James Hamling:
Quote from @Andres Murillo:
@James Hamling is definitely correct.
Terms matter the most.
And to add to the idea of "terms matter most", Cash vs Financed is a term of confidence for the seller. If you're purchasing conventional and have enough cash in the bank to pay for it cash, your seller will be extremely confident in your ability to close, despite the fact you're getting the loan. Sellers want to know that if they choose your offer, you will close. Make sure you're tight with your contingency periods or even remove contingencies when possible and you'll find much greater "offer power" than simply buying cash.
Got it.
The offside risk of "all cash" is pretty substantial.You are assuming all risk yourself.With the Dodd-Frank law, the bank can take your money as a "bail in" for rmonths with no recourse and FDIC insurance payouts may take a year or two.
Banks are not your friend. They are in business to get whatever money out of you they can. You already know that.
Properties are likely to go through a dip and then level out. So, if you paid $300,000 cash for a property and it dropped 20%, which happens, you have lost $60,000 in equity out of your pocket. With Subject To or Seller Financing it is "unrealised equity" so it 's less of a problem. The idea is to make money not lose it. ;-)
Others have talked about the advantages of carrying a mortgage.
I simply take over an existing mortgage and get the same benefits with little risk. That's something you qualify for and would benefit from.
- Member since 2023 · 32 posts · 17 votes3y
Quote from @Account Closed:
Quote from @Charles Lambert:
Quote from @Account Closed:
Quote from @Charles Lambert:
Quote from @James Hamling:
Quote from @Andres Murillo:
@James Hamling is definitely correct.
Terms matter the most.
And to add to the idea of "terms matter most", Cash vs Financed is a term of confidence for the seller. If you're purchasing conventional and have enough cash in the bank to pay for it cash, your seller will be extremely confident in your ability to close, despite the fact you're getting the loan. Sellers want to know that if they choose your offer, you will close. Make sure you're tight with your contingency periods or even remove contingencies when possible and you'll find much greater "offer power" than simply buying cash.
Got it.
The offside risk of "all cash" is pretty substantial.You are assuming all risk yourself.With the Dodd-Frank law, the bank can take your money as a "bail in" for rmonths with no recourse and FDIC insurance payouts may take a year or two.
Banks are not your friend. They are in business to get whatever money out of you they can. You already know that.
Properties are likely to go through a dip and then level out. So, if you paid $300,000 cash for a property and it dropped 20%, which happens, you have lost $60,000 in equity out of your pocket. With Subject To or Seller Financing it is "unrealised equity" so it 's less of a problem. The idea is to make money not lose it. ;-)
Others have talked about the advantages of carrying a mortgage.
I simply take over an existing mortgage and get the same benefits with little risk. That's something you qualify for and would benefit from.
Nice to know about some of the other options. I'd rather not deal with a bank, though the idea of assuming a mortgage (when possible) sounds more appealing to me. Maybe not for my first investment property though, but who knows, maybe by the time I'm ready to buy, I'll be thinking differently.
For a second, and subsequent investment properties, I'd feel more comfortable financing them. Plus, by then, maybe a couple of years later, I'd have some experience and may look better to lenders by then. In any case, I doubt many lenders would be interesting in lending me money right now, except maybe hard money lenders who may charge a lot more interest. And, I figure if I've got the money, and it's not only going to be an investment as well as my primary residence (one of the units in the building), I might as well pay cash. It just seems wrong to take out a mortgage if I have enough to pay in full in cash, and save the interest and maybe even get a better deal with an all-cash offer.
But, some good points here, not to say I'll never finance, just for the next property I'm really leaning towards paying for it in cash.
- New to Real Estate · FL · Member since 2022 · 7 posts · 4 votes3yIf you look at 2008 crash when people stopped paying rent that created lots of foreclosures.
Quote from @Joe Villeneuve:
Quote from @Menachem Serraf:
Your advice on growing exponentially is only if you have enough cash reserves for rent and other expenses. Otherwise no point in exponential growthQuote from @Joe Villeneuve:
What does a cash reserve have to do with what I wroteQuote from @Menachem Serraf:
But having a cash reserve if rent is not paid is crucial. Otherwise you can grow but if suddenly lots of rents are not paid then you are at risk of loosing those propertiesQuote from @Joe Villeneuve:
Quote from @Ray Hage:
@Tim J. said it best. You can buy it in cash and then re-fi out of it afterwards. It will cost a bit more that way but if you are in a cash-competitive market, it's not a bad idea to buy in cash initially. You can easily do a conventional investor or DSCR loan right after.
Linear return...and slow. Starting out using same cash on multiple properties as DP's is an exponential return, and is a much better use of funds.
So you advocate stepping over a dollar(s) to pick up a dime?
Where did you get the impression that you won't have cash reserves if you exponentially grow?
What makes you think that the exponentially growth itself couldn't cover any need for cash reserves?
always look at both sides of the coin. The upside and downside. - Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @Charles Lambert:
Unfortunately, you are not ready to invest yet and you will miss the benefits of this cycle or buy something inappropriate. You should not buy at this point. That's okay though, cycles come around every 10 or 12 years or so.
You have analysis paralysis, which is a very common amongst wannabe investors. It is not that unusual. I do wish you well though. @Zachary Bush makes perfect sense. Going into retirement without accumulating debt is the way to go.
@Joe Villeneuve In the market I am currently trying to purchase in, you are pretty much out of the game if you aren’t paying all cash. The last property I wanted had 12 offers, most cash and all over asking price. The seller’s agent said the only ones that were considered the all cash ones.
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesSo you would rather pay all of your negative CF upfront as if nobody is paying their rent?
Quote from @Menachem Serraf:
If you look at 2008 crash when people stopped paying rent that created lots of foreclosures.Quote from @Joe Villeneuve:
Quote from @Menachem Serraf:
Your advice on growing exponentially is only if you have enough cash reserves for rent and other expenses. Otherwise no point in exponential growthQuote from @Joe Villeneuve:
What does a cash reserve have to do with what I wroteQuote from @Menachem Serraf:
But having a cash reserve if rent is not paid is crucial. Otherwise you can grow but if suddenly lots of rents are not paid then you are at risk of loosing those propertiesQuote from @Joe Villeneuve:
Quote from @Ray Hage:
@Tim J. said it best. You can buy it in cash and then re-fi out of it afterwards. It will cost a bit more that way but if you are in a cash-competitive market, it's not a bad idea to buy in cash initially. You can easily do a conventional investor or DSCR loan right after.
Linear return...and slow. Starting out using same cash on multiple properties as DP's is an exponential return, and is a much better use of funds.
So you advocate stepping over a dollar(s) to pick up a dime?
Where did you get the impression that you won't have cash reserves if you exponentially grow?
What makes you think that the exponentially growth itself couldn't cover any need for cash reserves?
always look at both sides of the coin. The upside and downside.
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