Buying second home and investment property out of state vs loan

5 Replies

Hello, I am planing to buy 2 properties in LV. I am in Los Angeles now. I don't have a primary residence right now and is renting but unfortunately looks like I can't finance house as primary residency if I don't live in LV. (if someone knows some loophole I don't please PM. If I had my own business I think I could but since I don't I was told I can't do it). Anyway, I have cash to buy both properties but read many times people say to finance if I could. Since Interest I would be getting is from 4.2-4.8 for second home and income property, is it still worth it to finance vs pay cash? Also if I anyone know a way around getting low interest rate with primary residence when it's out of state that would help too. Thank you! 

It is always best to finance. Cash is only saving/making you 4.2 - 4.8 %. That is a deplorable return on a investment. The opportunity value of cash is minimum 10% which means your property will be a liability with negative cash flow after paying the return on your dead equity. No point in owning brick and mortar that is a liability.

Originally posted by @Thomas S. :

It is always best to finance. Cash is only saving/making you 4.2 - 4.8 %. That is a deplorable return on a investment. The opportunity value of cash is minimum 10% which means your property will be a liability with negative cash flow after paying the return on your dead equity. No point in owning brick and mortar that is a liability.

 Thank you Thomas, I was saying 4.2-4.8 is the interest banks will charge me to get loans