Buying a condo, should I pay cash?

6 Replies

Great forum. I've only stumbled upon it, but it looks like I've come to the right place. I realize my question is about as newbie as it gets, so thanks for your patience!

I have no experience whatsoever in real estate, but I recently decided I'm going to purchase a condo in the Las Vegas area for 100-200k. This will be for me to live in, but I also want to use it as a learning experience for real estate in general.

My question is, when I find the property, should I pay it all off at once? I'm fortunate enough to have the full amount in cash at the moment, and it seems like avoiding any financing would be best financially speaking, since I don't plan to buy multiple properties right off the bat.

This makes sense to me because I wouldn't be paying interest, but I just thought I'd throw it out there in case I'm missing something.

If anyone has any additional advice about where I should go from there, please let me know! I've only started looking at properties on, and my next move was to find an agent in the area that I could talk to.


You don't pay interest by paying cash but you also lose the opportunity to invest those funds elsewhere and you do not get a deduction for mortgage interest. If you are planning on real estate investments you could use a HELOC or equity line on the property you live in to fund real estate purchases if you do pay cash. It is a personal decision. If it were me I would put a small amount down and finance the rest and use the rest of the money for other investments.

BTW, I'm in Las Vegas myself.


That makes sense to me. The only problem is I'm not sure I'm confident enough in my investment strategy to make up for what I'd be paying in interest. I have my business, but my overhead is almost nothing and even my current projects don't require anywhere near that cash.

Aside from that, I have some stocks and an ING account 8). I'm in the process of learning about investing right now and developing a plan of some variety. Learning about real estate has always been interesting to me, but I don't know how much time I can devote to it straight away because of my business.

Anyway, your advice is much appreciated. What's your take on the Las Vegas market? It seems pretty crazy to me, but it looks like now would be a good time to get into something since I want to hold on to it for a while.


The Las Vegas market, like many others, is going through a period of adjustment. It was overheated for so long and is now taking a breather. It is the #1 foreclosure market in the US and the days of supply is over 1 year. On the plus side, we still have a strong job market and thousands of people are moving here every month. As of now prices haven’t come down much, I think sellers are holding onto the hope that the spring selling season will result in a rebound in the market. I do not think it will, there are so many homes on the market that need to be absorbed first. I think that as we approach the fall you will see a drop in prices as reality sets in. I think the future of this market is extremely bright, we just need to get through the current slump. If you are looking to learn more you may want to consider joining a Real Estate Investment club. Theses clubs have people of all different experience levels and offer a lot of information and networking opportunities. I belong to one that meets at The Orleans on the 2nd Wednesday of each month.


Hey Joey,

Great choice of a place to live! I go down there all the time, great place to be. Maybe one day I should do the same thing. Get a condo down there that I can escape too.


To answer your question REI is all about leveraging your money. The key to getting very wealthy is by using other peoples money (OPM). Because a mortgage on a property is all good debt. Your asset is appreciating and that mortgage is making you wealthy.

In light of this you're in a very good position. If I were you I'd most certainly by that condo. LV is appreciating at a very good rate so you'll do very well in no time. But put down the "absolute minimum" you can for that condo purchase. Even if that means buying it with 100% financing if you can get away with it. Worst case senario you put down 5% of your savings and you buy it. You'll have no trouble getting financing on a residential property that you plan to live in with 5% down.

The reason I say this is because that 95% you have left will by you a very nice sized apartment building. Listen, you only need 10% down to buy an apartment building. So $100k buys you a 1m dollar apartment building any day of the week. That apartment building will generate a ton of spendable cash for you each month, after all expenses and debt servicing. You can use that spendable cash to more than cover the mortgage payment on your condo and still have several thousand dollars left over as free money. Plus if a 1m dollar apartment goes up by just 5% per year you're making another $50,000 per year in appreciation, that's about $4200 per month. Plus your mortgage paydown will be starting at approximately $1300 per month.

So just for example purposes if you could find an apartment going for say 1m that has 30 units (the more units the better). It doesn't have to be in your city either. It can be almost anywhere in the state, or country for that matter. That building should make you about $5000 per month in liquid spendable cash, that's after your mortgage payment and after all expenses (as you should be grossing anywhere from $15k to $20k). Plus you'll make another $5500 in appreciation and mortgage paydown. So you'd be making about $10,500.00 net per month. That's if you can invest $100k which would make it easy to buy a $1m dollar apartment. That's a 126% return on investment your very first year.

So if you're serious about REI and you want to get ahead in life then under no circumstances are you to buy a condo that you plan to live in using all cash. You're personal residence has no cash flow. That's not leveraging your money one bit. Whatever principle amount you have to spend will by you 10x that amount in property all day long!!! And an apartment is the safest investment vehicle on the planet. There is no safer investment out there.

I'd suggest you start by going out and buying some books and courses that you can listen to in your car on buying apartments to get educated on the topic. But ya you're in a great situation to leverage that money into some really nice cash flow that will set you up for life.

Hey guys,

That's a lot of great information. I really appreciate you taking the time out to help me.

r2d246: I have a bunch of other questions, but for now I think I'll go to the books and come back when I'm more knowledgeable on the subject. I've seen you recommend Carlton Sheets "No Money Down", but are there any others that you would recommend I pick-up?

Also, how would an office building compare to an apartment building? I don't know that I would have time to manage such a large apartment building (I imagine that's where having others do it comes in), but I have thought about buying a smaller office building and then renting out the others units to possibly cover the cost of the mortgage.


All you need is an experienced resident manager. They will do everything for you. All you do it talk to them like once a month on the phone. That's all I do. Takes like 15minutes a month to manage, because like I said there's like 1 phone call to the manger and maybe paying 1 bill for a carpet cleaning or something. That kinda stuff you could teach the manager to do anyway.

Commercial is different in that if there's a vacancy it will take months to fill. Might go vacant for like six months or a year before you fill it. And in an economic down swing such as a recession you could see your building go vacant for a long time. Apartments are different in that you can always fill them up. If you take out a tiny ad in the paper your phone rings off the hook. And whether the economy is good or bad you'll be able to fill it because people need a place to live regardless of the economy. And the most important factor is that with commercial lenders will often only go up to 50% financing for the exact risk factors I just mentioned. They lend up to 90% on apartments because they're so low risk. Learn from the banks, if they lend more that means it's less risky, and visa versa.