Do anybody buy using cash ?

Question

It seem like paying cash for a property and keeping is free & clear isn’t good. But does anyone has a free & clear portfolio ? What are the benefits of being free & clear. I have 2 free & clear rentals and feels good but I am tempted to use leverage to scale. On the other hand, I feel like it better to save up the cash again n buy other free n clear rental. What u think ?

Jon McCarron · Answer

@Isiah Ferguson

I think it all depends on your strategy. I think the free and clear strategy would take too long (for me). Saving up to buy a 3 family in my area would require at least 600k, then probably need money for repairs after that. If your price point is much lower than that, maybe it only takes a few months of savings to buy free and clear, then it could definitely make sense to stay free and clear.

Using leverage can speed up the building of your portfolio, if that is your goal! If not, slow and steady income might not be a bad alternative.

Jon McCarron · Answer

Hi @Isiah Ferguson

I believe you are on the start to the BRRRR method. With you 2 free and clear homes, you can pull equity out and purchase another home "free and clear". After seasoning period, take your out your equity and buy another home, free and clear. And "R"epeat!

After a while, or whenever you think you have your ideal sized portfolio, you can start paying off your loans. That last property that you bought will have been free and clear, so that's a good start to having your free and clear portfolio.

I think waiting to save up could really slow you down, if scale and speed is apart of your objective.

Good luck, hope that helps!