Should I pay cash or buy property through the bank??

2 Replies

I have been planning to get into rental property for a while now. Have been saving up the money and have around $50k to invest. I currently have zero property, but would love to get enough cash flow to quit my day job lol.

Just not sure if I should just pay cash for the property I get, or if I should use my money as down payments and get multiple properties. 

Any and all advice is appreciated!

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As you will learn, in real estate there are lots of different ways to do everything. So in the interest of providing a simple answer for a beginner, my suggestion is to finance the properties and I say this for a few reasons. 

1) If you qualify for conventional financing the money is very cheap still, so take advantage of that. 

2) The loan underwriting, inspection and appraisal process can help a newbie catch problems with the house they might not see themselves, saving you some headaches later on. 

3) If you want to rent the property, it needs to be in good shape to attract and keep good paying tenants. That means you will likely need to put some money into rehabbing the property, if you pay all cash, will have the extra money to fix the place up and make it a desirable rental?

4) Using loans should allow you to stretch your 50K into multiple properties. 

I used conventional financing on my first 4 properties, and I would gladly use it again so long as rates are as low as they are now. Yes, there are low and no down payment strategies out there, but I wasn't ready for all that. Its worked out well for me. Good luck to you.  

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