Updated over 11 years ago on . Most recent reply
pay cash or finance
Considering to purchase property for rental purpose : Is it best to pay cash or to finance? The Rich Dad series in in favor of using bank financing to purchase a property. I was thinking that instead of paying 5% interest to the bank , it is best to pay cash if possible. The rental income is only 0.65% as compared to the purchase cost even after paying cash. Are most of the BP members paying with cash if they can afford it or do they finance even though they might have cash in the bank earning low interest or minimum % in the stock market. Thanks.
Raj Parwani
Most Popular Reply
No offense but if you put 35% down and are still looking at negative cash flow you need to buy a different house. You will not make money that way. If you are buying the house hoping it will appreciate then you need to look at it like an investment not a rental. You can make more money the 7% investing in the stock market without nearly as much work. Not many real estate investors would accept less than a 10% return on their money. Don't get me wrong 7% is better then the less than 1% the bank pays, but you can do a lot better. You could make 12% doing hard money lending, or even more.