Holding costs when paying all cash? Other concerns?

[JM Edward]

For experienced investors, using leverage -- borrowing at a lower rate than what you are earning on that money through your real estate flips and BRRRRs seems like a good way to magnify your returns.

For someone new to the game, does it make sense to execute one's first project all-cash? The idea is that you give yourself more time to learn the process, make mistakes and avoid stress. You still have holding costs such as property taxes, insurance and utility bills (what else?), but I'm not thinking greedy on my first project. It could take a whole year and as long as it can return better than 10% that would be a winner to me (ignores the value of my time and stress).

Market swings are a concern for longer holds too. What other factors are there in this regard? Is it sensible or is there a big gotcha I'm missing?

Thank you!

[JD Martin]

Quote from @JM Edward:

For experienced investors, using leverage -- borrowing at a lower rate than what you are earning on that money through your real estate flips and BRRRRs seems like a good way to magnify your returns.

For someone new to the game, does it make sense to execute one's first project all-cash? The idea is that you give yourself more time to learn the process, make mistakes and avoid stress. You still have holding costs such as property taxes, insurance and utility bills (what else?), but I'm not thinking greedy on my first project. It could take a whole year and as long as it can return better than 10% that would be a winner to me (ignores the value of my time and stress).

Market swings are a concern for longer holds too. What other factors are there in this regard? Is it sensible or is there a big gotcha I'm missing?

Thank you!

 I started off all-cash because I had taken a big loss before, so when I got back in I was gunshy about using any kind of credit. Eventually I hit a wall on being able to invest and came around to the idea of leverage. Looking back I missed a lot of opportunities at a golden time of buying (2010 onward) because of my insistence on all cash, including the rehabs. I would have probably had double the portfolio I have now, if I had used leverage from the beginning.

There's also another benefit of leverage - the bank becomes your partner, and puts another set of eyes on the project. Because they don't want to lose money, they're going to scrutinize the project for you almost for free, and are going to (probably) refuse to lend you money on poor projects. That right there limits your risk of going it alone and buying something that just ends up being a money pit. 

I get the attraction of all cash, and I still have houses that I own outright, but if you are trying to grow you will be light years ahead with smart leverage. The acceleration of cash slows down considerably when it's trapped in a house.