Pay cash for first rental property or finance?

3 Replies

Hello all, I've recently began listening to BiggerPockets podcast and reading forum posts. I currently have a large portion of my portfolio in Bitcoin and with the recent rises in price and I wanted to transfer some of the profits into a more stable asset and potentially create some cash flow to replace my 9-5. I have two obvious options, please suggest others if you think of any. The first option would be to liquidate some of my Bitcoin and buy a couple properties with cash and after rehab and rent, apply the BRRR strategy. Second option since this is my first property I could buy a property and live in it and finance the purchase paying minimum down and rehab while living on the property.

What would be a smart option for someone who is just starting out?

kind of depends on your goals.  if you have the knowledge and do your numbers on doing the brrrr strategy, then my preference would be to pay cash then refinance out.  what this does is lowers your holding costs and reduces fees when buying the property.  also if you have cash available it often times benefits you as the buyer to say you can close in a week as opposed to waiting typical escrow period. having said that though, make sure you educate yourself fully.  buying the house close to where you live for your first deal would be a good move i believe.  you mentioned buying a " couple " properties, well again if you have never done before maybe you buy one that is in rent ready shape with cash that you can make good cash flow on, and then buy another fixer to get experience.  just cause you have the cash doesnt mean you will do good deals ya know. anyways hope that helps...

@Justin Hannah

Thanks for the reply Justin! I agree with all of what you said. I lean more toward taking it slow, and buying one property at a time and really focusing on the numbers and making sure they cash flow well, as that's really my goal. My Priority is Cash flow, Equity(for refi), finally appreciation. I really like the idea of buying cash at least early to leverage the closing time. Are there any other benefits with offering cash over financing that could help me make lower offers?

i mean not really that i know of. the way i view it is the seller will get paid one way or another. cash is just faster, but that only matters if they want a quick sale ya know.  maybe someone else will chime in 

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