Forcing cash flow in a competitive market
I'm curious to get everyone's opinion on forcing positive cash flow with large down payments or cash purchases. With high real estate prices & equity markets, it seems like a lot of people are just waiting for the other shoe to drop. I had a client tell me the other day they sold their bond positions & purchased a SFR based on a few things:
1. Concern over a potential bond-bubble https://www.forbes.com/sites/danielkruger/2017/08/...
2. Whether there's a bond bubble or not - the SFR would maintain as a conservative part of their portfolio, generating positive cash flow & all the good stuff we love about real estate. They understood the 100% cash payment dilutes their cash on cash return & is not looking at doing an immediate cash-out refi.
3. If real estate market prices decrease - having high equity in the portfolio(which could also drop along housing prices) would allow them flexibility on a potential cash-out refi later on which could be used to purchase more real estate in a down market.
Thoughts?