Strategy Conundrum

9 Replies

Strategy 101 question,

If you have cash, and your goal is to make this an income producing business (to live off of) by purchasing buy and holds, is it better to use your own money to buy properties or to still use financing? I don't want to tie up my cash reserves, but if I use financing, obviously the payout is less until you get the properties paid off.

Suggestions?

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Originally posted by @Jeffrey G. :

i think i would finance several properties, using my cash to down-pay them.  that way all your eggs wouldn't be in one basket.

 If you use your cash for down payments, they have no way of coming out.  If you use all cash, you can refinance it all out.  Which is better?  Using the money more than once, and never spending it (on all those same properties you want to pay down payments on), or paying down payments and the money just dies in those houses?

Originally posted by @Jeffrey G. :

well when you put it like that it sounds awesome.  How long would you wait before refinancing?

 That depends on your lending source.  I have sources that will lend to me on a Cash Out Refi after 6 months, and within 10 days (starting the process) to just do a cash Back Refi.

@Joe Villeneuve  

Joe has it Right! I am in the middle of my second one now. First one I was all in at $45K and it got appraised at $80K and I got back $56K. My second one I'll be all in around $110K and it should appraise for $225K and I should get back $157K. It took awhile, but I found a lender that will refi under 12 months, but the terms aren't the best. 70% LTV and 15 term 3/1 arm and they said I was their first one and only did it because I have other mortgages with them. Joe what terms are you getting on your cash-out refis?

Originally posted by @Josh C. :

@Joe Villeneuve 

Joe has it Right! I am in the middle of my second one now. First one I was all in at $45K and it got appraised at $80K and I got back $56K. My second one I'll be all in around $110K and it should appraise for $225K and I should get back $157K. It took awhile, but I found a lender that will refi under 12 months, but the terms aren't the best. 70% LTV and 15 term 3/1 arm and they said I was their first one and only did it because I have other mortgages with them. Joe what terms are you getting on your cash-out refis?

 Cash Back:  70%; 2 months to close; 7% for 15 years

Cash Out:  75%; 6 months to close: 4.25% for 30 years