what is more profitable, all cash or cash out refi?
the math suggests to me that leverage makes you more profitable using cash out refi method where you buy all in at 75% arv then cash out in 6 mo. That versus buying all cash.
Myself and a friend have been debating it for weeks. He believes using no leverage makes you most profitable. I keep rrunning the math and its just not making sense.
We both start 60k cash. Buy 60k house arv 80. He flows 8400 a year, i flow 5500 with debt. Cash out 6 months later, get second one, now i flow 11000 a year. The end. He never catches up if we both stop here. What am i missing? Say it takes him just 2 years to save 60k. By then id have 4 going on 5 houses all flowing 5500x4=22000, versus 11000 all cash. And used the same 60k 4 times with it right back in my hands.
All things equal. I don't get what I'm not seeing that he is. Maybe he considers all the interest as less profit taking.