Questions about buying RE with all cash
Investor · Indianapolis, IN · Member since 2023 · 6 posts · 6 votes
Questions about buying RE with all cash
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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
- Investor · Indianapolis, IN · Member since 2023 · 6 posts · 6 votes3y
Quote from @Todd Jones:
Quote from @Zachary Bush:
Thank you all for the responses. I didn't expect to start such a heated debate, but I have learned a lot, so thank you. And thank you to those that reached out to me to answer specific questions.
I was anxiously awaiting your reply to this long thread as I imagined you would be shocked.
From what I've seen this is rare.
The biggest problem I've seen on this thread is limiting beliefs.
The one strategy you used/seen in your specific markets is the only strategy that works in all use cases and all markets. Any other strategy? Well, that's either not correct or not smart.
Two things to consider:
1) Respect variables. There are sooo many factors that make one strategy more efficient than others.
Plans for the home (minor touches, "to the studs", make it glamorous), condition of the home, its price in comparison to comps in the area, credit score, personal goals and fears (big factor), plans for children such as college, terms of the sale, trust in your inspector and your team, your workload, your current medical health, your stress tolerance, tax benefits, your family's stress tolerance, area's growth, your trust in the seller's disclosure, offers on the table, current interest rates...you get the idea.
2) One of the most beautiful formulas (besides Euler's Identity) is:
Interest = P (Principal) x R( Annual Rate %) x N (Time Period).
One point of view is, yes, you borrow money but you pay less out of pocket and you just pay a small amount per month and you can keep doing this for other homes. Yes, you're in debt but you have monthly rental income!
Another point of view is a $200k loan at 7% interest on a conventional 30 year means you pay $13k in interest for the first few years (Total interest of $279k and total cost is $479k). This is why that formula is beautiful. Why am I just giving my money away?!The author of Rich Dad, Poor Dad stated he doesn't use any of his money and emphasizes to "use other people's money, stupid."
So which approach to use?
It depends on all of the variables and what you're trying to do. Both loans and cash paying are one of the many, many tools to fulfill your goals and situation. Is cash king? Not all the time. HELOC, 1031, refinancing, lease to own, etc. are all available tools.
So think if you have Let's move away our limited / "blinders on" perspective and analyze all the available chess moves.
Thanks,I didn't really know what to expect, as this was my first post. I have been lurking on the forums for a while. I didn't really expect the debate around buying with cash. I was just asking for people who follow or have followed this method, and I appreciate those who have answered some of my questions and especially those who are in my area who reached out to me.
Zachary,
I "kind of" fit the bill for what you are looking for with one difference. I do pay all cash on some sfr purchases in the midwest, but as soon as the property is up and running I mortgage it. Cash can be a great tool to help you get quicker closes, more offers accepted and often at a better price, but in the end, I want my cash back so I can go onto the next deal. Let me know if you have specific questions about my experience.
Best,Mike
- Real Estate Agent · Greenville, SC · Member since 2016 · 52 posts · 43 votes3y
I think we're all missing something here with the buy cash model and probably what Zachary is trying to achieve. what if he's trying to achieve security and there is nothing wrong at all with buying a property cash and generating cashflow (security) so that he can retire. I think we all get sold a dogma listening to podcasts and attending seminars and meetups that we need 100's of doors, when in reality we really need 5 paid off houses generating at least 1k a month in rent each. I don't know the midwest market, but say Zach has 500k sitting around and can find a rental property for 100k turn key that generates 1k a month in rent. Let's say 20% goes to expenses and management, so he makes 48k a year... now, lets say Zach now doesn't want to fully retire, maybe he has a pasion project that also earns him income. He now has a "base salary" of 48k from his rentals. How many financed deals at a 12% cash on cash return would it take to generate that 48K after all expenses? How long would it take if you had amazing deal flow? How long would it take if your deal flow sucked... So I think we need to not crap on people that go in all cash With no intention of financing... Real estate is an amazing tool... just like an axe that can be used to cut a tree, it can also be used in self defense, or to carve a canoe out of log.
- Lender · Oklahoma City, OK · Member since 2017 · 138 posts · 130 votes3y
I love this topic. I have a friend that was an "all cash" Investor. I, on the other hand, was a " have as little in the project as possible" investor. I wasn't irresponsible. I always kept my Invesment to value at around 70-75% all in. I secured local bank debt on 10,12, and 15-year amortization schedules. My friend received immediate cash flow every time he purchased a new property. I had to wait what seemed like forever to get cash flow on my leveraged properties.
After about 12 years my friend had accumulated 20-something free and
clear rentals. I wound up with 110 free and clear rentals.That's the power of leveraging other people's money to get rich. Every day 110 families got up and went to work to pay off my properties.
It's a slow grind and definitely not a get-rich-quick plan....but a get-rich eventually plan.
- Real Estate Agent · Dayton Ohio · Member since 2019 · 38 posts · 15 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.
There is no one better strategy it all depends on your comfortable level of risk and how you want to go about it. I bought a few properties all cash because inflation was taking off and there were very few deals to grab. I let my money sit in there instead of the bank, eventually got a home equity line and recycle the money as deals go up.
Also, if you have a high earning job and your self employed it is easier and less time consuming to go cash in. Pull out 70-80% and go from there. My personal strategy has me only at 47% leverage currently which I love. If there is a market downturn I'm relatively safe and can always pull money out if needed. I produce a good amount of cash flow that allows me to buy 2 properties a year off of my cashflow and I would never have to touch my personal income if I don't want to.
To say one strategy is better than another is naive. It depends at that persons goal, risk tolerance, and timeframe.
- 3yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Jay Hinrichs, LOL the playground is moving! I sat at the draw bridge at Madeira Beach last week behind a 2023 Bentley Convertible - with Montana License plates!!! A new playground in Tampa Bay. And the noise on the CA evacuation to Miami is stirring the pot as well. To your point, @Zachary Bush, There's tons and tons of properties owned for cash. And you've got 5-10 years to build. I don't see a bad answer here. Just different ones. And they'll all be different from what really works for you. The key calculation you'll use for a comparison to see if cash or debt works better for you is the IRR (Internal Rate of Return). The sum of all the sources of revenue (operating cash, appreciation, amortization, and depreciation). All of these determine what you really make.(and keep).
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Quote from @Dave Foster:
@Jay Hinrichs, LOL the playground is moving! I sat at the draw bridge at Madeira Beach last week behind a 2023 Bentley Convertible - with Montana License plates!!! A new playground in Tampa Bay. And the noise on the CA evacuation to Miami is stirring the pot as well. To your point, @Zachary Bush, There's tons and tons of properties owned for cash. And you've got 5-10 years to build. I don't see a bad answer here. Just different ones. And they'll all be different from what really works for you. The key calculation you'll use for a comparison to see if cash or debt works better for you is the IRR (Internal Rate of Return). The sum of all the sources of revenue (operating cash, appreciation, amortization, and depreciation). All of these determine what you really make.(and keep).
- Rental Property Investor · Closter, NJ · Member since 2015 · 884 posts · 722 votes3y
I paid all cash for quite a few of my properties. I like being able to sleep at night, knowing I have no debt hanging over my head.
- Lender · San Clemente, CA · Member since 2017 · 77 posts · 35 votes3y
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 - Lender · San Clemente, CA · Member since 2017 · 77 posts · 35 votes3yAll cash is interesting, but, and this is a true story; I own a commercial building and when I had my tax advisor send my returns for my review, I went to my wife and started laughing; "I can't believe the write off's I get from this property". Depreciation is a fun one but the biggest are the interest deductions. Leverage is key on investment properties; I also like the idea of self directed IRA's; who manages your money better than you?
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesYou would rather have maximum risk?
Quote from @Judy Parker:
I paid all cash for quite a few of my properties. I like being able to sleep at night, knowing I have no debt hanging over my head.
- Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes3y
Quote from @Jack Martin:
All cash is interesting, but, and this is a true story; I own a commercial building and when I had my tax advisor send my returns for my review, I went to my wife and started laughing; "I can't believe the write off's I get from this property". Depreciation is a fun one but the biggest are the interest deductions. Leverage is key on investment properties; I also like the idea of self directed IRA's; who manages your money better than you?Yes, it's nice to deduct interest on your tax return, but it is also one of the stupidest reasons to get a mortgage.
Now I don't know what income bracket you are in, so let's just pretend you are a very high earner in the 37% bracket. That means that for every $100 in interest that you pay your mortgage holder, your favorite uncle lets you pay $37 less in tax.
I will make you a better offer. Send me $100, and I'll give you $50. That's $13 more per hundred than your uncle, and if you are actually in a lower tax bracket, it's an even better deal! There is no limit to the number of times you can take advantage of this offer!
- Lender · San Clemente, CA · Member since 2017 · 77 posts · 35 votes3y
Hi Sylvia, I may have over emphasised the importance of interest deductions, of course, my purchase was based on cap rate, not write off's; write off's are a nice bonus as there aren't many write offs left. Depreciation and every cost and expense also lowers my taxable income., what criterion do you use to evaluate investments?
- Member since 2023 · 32 posts · 17 votes3y
Quote from @Rose Jones:
When you say you don't think you will be approved for a mortgage, I wonder if you have tried to run a few deals past some mortgage brokers. I didn't think I able to buy a house, until I just went to a good mortgage broker.Quote from @Charles Lambert:
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.
...
When I bought my (modest) current house/personal residence (I'd consider it between a B and C neighborhood), I paid all cash in 2015 before the prices exploded. Then I wanted to draw out some of the equity to do renovations and increase its value and usability for me, and put in a legal basement suite. I knew I had a good credit score, but as before, a not-so-attractive work history. I went to a mortgage broker who got me a line of credit, only half-expecting to be approved, but I was. In hindsight, I kind of wish I hadn't, because the house would probably be still worth quite a bit even if I hadn't renovated it, and I'd still be mortgage free. But, it made me much more financially savvy and a better person for it, despite some lean times, so there is a silver lining.
I don't want another mortgage, monthly payment or debt right now. So, even if a mortgage broker could get me a mortgage, at this point, I don't want a mortgage. I want to be debt-free, and since I will have enough to buy a small multi-unit building for cash, I think that is the best choice for me. Bonus that I might even get a better deal with a strong cash offer, and then save all of that interest. That's not to say that in the future I may not consider it, but right now is not the right time. So, yeah, I admit it, I'm one of those "less sophisticated" investors. I can take it. With some more investing experience, I may look at this differently later on an finance additional properties, but not right now.
Everyone is at a different place in their real estate investment journey with various levels of experience, assets, comfort level and contingency plans. What works well for someone people, and some people's personal preferences and risk tolerances, may be good advice for one person, but not for someone else. Trust me when I say that right now is not the right time for me to go seeking out financing for hundreds of thousands of dollars, even if a mortgage broker found a lender willing to finance me.
My plan was to first sell my current house to get the equity out of it, move out of this expensive area and buy a positive cash flowing turnkey quadplex in an area with a lower cost of living, for all cash, so no debts, no mortgage, just pay the property taxes, insurance, maintenance and property manager. I will live in one unit, yes, not very classy, I probably won't impress anyone (other than those into frugal living and real estate investing).
- Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes3y
Quote from @Jack Martin:
Hi Sylvia, I may have over emphasised the importance of interest deductions, of course, my purchase was based on cap rate, not write off's; write off's are a nice bonus as there aren't many write offs left. Depreciation and every cost and expense also lowers my taxable income., what criterion do you use to evaluate investments?
Well, Jack, I shouldn't have jumped on you. People talking about spending money primarily to get a deduction is one of my pet peeves.
My primary criterion is, will it make me money. I also evaluate how much work is involved in ownership, and is it an asset I want to own.
Hubby and I are in our early 60s, so we aren't building an empire. Our real estate investments are all in the small town that we call home. We buy distressed properties and make them into nice rental houses. Upfront that is a lot of work, but once it's done and a very well-screened tenant is in place, there is very little to do.
Do I want to own it? In regards to real estate, there are a few questions we ask ourselves. Location, of course, is first. Is it where we want to own? Will it make a good rental? Is it too big/small? Is there too much/little land with it? Is it too old? Will we be happy or ashamed to say we own this?
And will it make us money? How much will we have in it once rehab is done? How much rent can we charge? What is the outlook for appreciation?
All that is, of course, evaluation of potential new investments. There is a very different way we evaluate investments that we already own. But this post is already over-long.
It all sound good to me @Charles Lambert.
- Lender · San Clemente, CA · Member since 2017 · 77 posts · 35 votes3y
Quote from @Sylvia B.:
Quote from @Jack Martin:
Hi Sylvia, I may have over emphasised the importance of interest deductions, of course, my purchase was based on cap rate, not write off's; write off's are a nice bonus as there aren't many write offs left. Depreciation and every cost and expense also lowers my taxable income., what criterion do you use to evaluate investments?
Well, Jack, I shouldn't have jumped on you. People talking about spending money primarily to get a deduction is one of my pet peeves.
My primary criterion is, will it make me money. I also evaluate how much work is involved in ownership, and is it an asset I want to own.
Hubby and I are in our early 60s, so we aren't building an empire. Our real estate investments are all in the small town that we call home. We buy distressed properties and make them into nice rental houses. Upfront that is a lot of work, but once it's done and a very well-screened tenant is in place, there is very little to do.
Do I want to own it? In regards to real estate, there are a few questions we ask ourselves. Location, of course, is first. Is it where we want to own? Will it make a good rental? Is it too big/small? Is there too much/little land with it? Is it too old? Will we be happy or ashamed to say we own this?
And will it make us money? How much will we have in it once rehab is done? How much rent can we charge? What is the outlook for appreciation?
All that is, of course, evaluation of potential new investments. There is a very different way we evaluate investments that we already own. But this post is already over-long.
We agree then! I have to laugh when people brag about their Tesla purchase and how much they save on gas! Funny, they forget to mention their car payment. It's always about the bottom line, isn't it? Cheers!
Jack
- Realtor · LA · Member since 2021 · 8 posts · 7 votes3y
@Zachary Bush I invest both with a partner and individually all cash. I have extensive knowledge of my market and get net COC returns that beat the S&P500. I wouldn't listen to anyone that tells you that your strategy isn't a good one. RE investing is an individual process so do what fits your situation and tune out the negative comments. I know and consult for investors of varying degrees of wealth. Some of my happiest clients own their portfolios outright. They see larger monthly cashflow, sleep well at night, can weather market conditions etc...Many people like to stick their pinky up talking about how many doors they have via leverage. Investors I know with cash portfolios tend to have fewer but higher quality rentals with much less headaches. I've never met an investor that lost their portfolio that wasn't leveraging but have met a few on the other side. If you have the right market and you are focused on the efficiency of your portfolio you can live a very comfortable life with a cash owned portfolio. Anyone that gives you a hard time about your plan, ask them to run a risk analysis of leverage vs cash. You'll likely find many don't properly account for risk. For what it's worth, I consult a decamillionaire that purchases all of their properties cash. I would be foolish to say they don't know what they are doing.
Send me a message so we can chat further about my markets and what some of my clients are doing.
Best of luck!
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesYou pay all cash and you get as good a return as the S&P 500? That means if you put $500k in cash in, you would need to recover at least $30k IN CASH within the first year of putting the
Quote from @Matthew Romero:
@Zachary Bush I invest both with a partner and individually all cash. I have extensive knowledge of my market and get net COC returns that beat the S&P500. I wouldn't listen to anyone that tells you that your strategy isn't a good one. RE investing is an individual process so do what fits your situation and tune out the negative comments. I know and consult for investors of varying degrees of wealth. Some of my happiest clients own their portfolios outright. They see larger monthly cashflow, sleep well at night, can weather market conditions etc...Many people like to stick their pinky up talking about how many doors they have via leverage. Investors I know with cash portfolios tend to have fewer but higher quality rentals with much less headaches. I've never met an investor that lost their portfolio that wasn't leveraging but have met a few on the other side. If you have the right market and you are focused on the efficiency of your portfolio you can live a very comfortable life with a cash owned portfolio. Anyone that gives you a hard time about your plan, ask them to run a risk analysis of leverage vs cash. You'll likely find many don't properly account for risk. For what it's worth, I consult a decamillionaire that purchases all of their properties cash. I would be foolish to say they don't know what they are doing.
Send me a message so we can chat further about my markets and what some of my clients are doing.
Best of luck!
$500k in cash in.
Also, what "decamillionaire" does (can do) with all that money, and what someone just starting out does (can't do) with limited funds, should never be the same thing. They have different goals, different financial capabilities, etc...
Risk analysis comparing cash vs leverage is always compared wrong because of a lack of understanding what risk is. Ask yourself why a bank doesn't lend 100% of the cost of a deal. The bank understands risk because they understand what is "at" risk. When you pay all cash, you are 100% at risk because you are risking all of your cash in the deal. When you put only 20% down, you are only risking 20% of the deal.
Now let's add this to the thought process. Who is more likely to get sued? The person with 20% equity, or the person with 100%? One of the greatest risk controls is the leverage. - Realtor · LA · Member since 2021 · 8 posts · 7 votes3y
@Joe Villeneuve. Like I mentioned in my post it's better to ignore people that talk negatively about others financial goals. The best thing about RE is that it provides many options to investors. I made it very clear in my original post that investing is an individual process, so this would encompass my ultra wealthy clients as well as my clients starting out. I have clients on both ends of the spectrum that buy cash and are very happy with their outcomes. It could be that the original poster isn't worried wealth generation through leverage because of their age. Like they mentioned, they are retiring and would like a cash portfolio. Maybe they have great wealth in retirement accounts and are only looking for cashflow in RE. Maybe net worth isn't as important to them. Maybe they want to build a foundation of cash properties before they utilize leverage. Maybe there are many possibilities you aren't considering when you stress how important leverage is. Your point about risk of all cash is very mute. A good insurance policy is all one needs to protect themselves in the case of a legal event so your idea that leverage is your only protection isn't relevant. If I'm the original poster, I'm staying away from people that don't have to fortitude to understand how individual RE investing is, and pushes a single investment style.
- Real Estate Agent · Austin, TX · Member since 2023 · 57 posts · 27 votes3y
Buying with cash will limit you in Real estate investing. Leveraging debt allows you to maximize your purchasing power by controlling a larger asset base with less upfront capital. With financing you're able to spread that same amount of cash across multiple properties this will diversify your portfolio and minimize risk. Also, keeping more cash liquid allows you to maintain flexibility for emergencies, other investments and a larger rainy day fund.
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesI just asked a question for verification and clarification.
Quote from @Matthew Romero:
@Joe Villeneuve. Like I mentioned in my post it's better to ignore people that talk negatively about others financial goals. The best thing about RE is that it provides many options to investors. I made it very clear in my original post that investing is an individual process, so this would encompass my ultra wealthy clients as well as my clients starting out. I have clients on both ends of the spectrum that buy cash and are very happy with their outcomes. It could be that the original poster isn't worried wealth generation through leverage because of their age. Like they mentioned, they are retiring and would like a cash portfolio. Maybe they have great wealth in retirement accounts and are only looking for cashflow in RE. Maybe net worth isn't as important to them. Maybe they want to build a foundation of cash properties before they utilize leverage. Maybe there are many possibilities you aren't considering when you stress how important leverage is. Your point about risk of all cash is very mute. A good insurance policy is all one needs to protect themselves in the case of a legal event so your idea that leverage is your only protection isn't relevant. If I'm the original poster, I'm staying away from people that don't have to fortitude to understand how individual RE investing is, and pushes a single investment style.
- Member since 2023 · 32 posts · 17 votes3y
Wow, so many good points! I think it's safe to say that there are many pros and cons to paying cash as well as with financing. For some people and some circumstances, one will work better than the other.
It's great hearing from some of the more experienced investors and their opinions on paying cash vs financing. For me, I'm afraid if I jump head-first into this and get a 50 unit apartment building and then another one, or even start buying a few SFH each year, that just sounds too overwhelming for me. Some may like the challenge of it, but I wouldn't. However, with some experience, I think I may be comfortable having a few doors, maybe not hundreds, but a few. Unless I come into some amazing money, I wouldn't have enough cash to pay for anything beyond the first building, so financing is likely the way I would acquire subsequent RE investments.
- 3yJoe VilleneuvePro MemberPlymouth, MI · Member since 2013 · 13k+ posts · 19k+ votesWhy would you need, or want, 100 doors?
Quote from @Charles Lambert:
Wow, so many good points! I think it's safe to say that there are many pros and cons to paying cash as well as with financing. For some people and some circumstances, one will work better than the other.
It's great hearing from some of the more experienced investors and their opinions on paying cash vs financing. For me, I'm afraid if I jump head-first into this and get a 50 unit apartment building and then another one, or even start buying a few SFH each year, that just sounds too overwhelming for me. Some may like the challenge of it, but I wouldn't. However, with some experience, I think I may be comfortable having a few doors, maybe not hundreds, but a few. Unless I come into some amazing money, I wouldn't have enough cash to pay for anything beyond the first building, so financing is likely the way I would acquire subsequent RE investments.
- Member since 2023 · 32 posts · 17 votes3y
Quote from @Joe Villeneuve:
Why would you need, or want, 100 doors?Quote from @Charles Lambert:
Wow, so many good points! I think it's safe to say that there are many pros and cons to paying cash as well as with financing. For some people and some circumstances, one will work better than the other.
It's great hearing from some of the more experienced investors and their opinions on paying cash vs financing. For me, I'm afraid if I jump head-first into this and get a 50 unit apartment building and then another one, or even start buying a few SFH each year, that just sounds too overwhelming for me. Some may like the challenge of it, but I wouldn't. However, with some experience, I think I may be comfortable having a few doors, maybe not hundreds, but a few. Unless I come into some amazing money, I wouldn't have enough cash to pay for anything beyond the first building, so financing is likely the way I would acquire subsequent RE investments.
I don't really want 100 doors, that seems too intimidating for a newbie investor like me, but... some investors encourage it. I guess "Go big or go home!" perhaps? It would be impressive to have 100 doors, but honestly, I think that would make my anxiety go through the roof knowing that I'm responsible for homes for 100 families or individuals.
Maybe it was here on this forum, or maybe it was in one of Robert Kiyosaki's books, but I recall recently reading that one way to do this is to finance everything and get a lot of doors for more cash flow. The other option is to pay cash for the buildings, but own fewer doors, however, one's net worth would go up quicker if the properties are owned free and clear, even if there are fewer properties, unless I'm missing something. Of course, in time, financed properties will appreciate and in the meantime, there was rent coming in from 100 doors instead of 10 doors, but also mortgages to pay on those 100 doors.
I'd feel more comfortable with a smaller number of units, with my first one probably being bought for cash (and I like some of the benefits listed in this thread for paying cash). Then once I get comfortable, maybe get a few more properties over the next few years, but I probably won't be able to pay cash for those, so those would be financed. And, I'm in my fifties now, so not as much time to wait for a financed investment property to appreciate if I had bought it 20 years ago, like I wish I had.
BTW, sorry for hijacking this thread, but there is so much relevant information here and just what I was looking for, in addition to the OP.
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