Suffern, NY · Member since 2017 · 9 posts · 0 votes
I am a new investor in the real estate market, and I invested in a real estate opportunity. The manager of the investment informed me that the property will be refinanced and i will receive back a large portion of my investment, while maintaining my equity share. I do not understand the benefit of this approach. Although the return on my investment is fantastic, is it not more prudent to take the refinanced money and pay off the mortgage and own the property outright and sell in the future for a larger profit?
Rental Property Investor · Miami, FL · Member since 2017 · 2k+ posts · 911 votes
8y
Ben.
It is better to use financial leverage to increase your Cash on Cash Return. Since you will have very little money in the deal then your returns will be much higher and you can buy multiple properties instead of putting your cash into one deal.
Suffern, NY · Member since 2017 · 9 posts · 0 votes
8y
So its better to get my "principle" money out, keep hold of my equity, and now use this money to invest in another property. Thats better than a larger payout in the future if we owned the building completely? I understand the logic. Thanks