Should I pay all cash or take an expensive loan?
I am buying a rental property as Tenancy in Common (TIC) at Bay Area and getting a 250K Fractional TIC loan. The close cost of the loan is close to $6500 including everything which is look high to me and the rate is 4.25% 5/1 ARM with cap of 9.25% ( they do not offer 15 or 30 years fixed for such type loan). I have the cash to do cash but that will leave me with no down payment to buy next one (I am still looking for a place for myself as My family just moved here) for some time. The question is should I pay all cash to save cost or take the loan? Since the loan will balloon in 5 years, I plan to pay off it when 5 years comes due any way.
A bonus question, I have other rental properties with large equity in them, can I apply HELOC now (for backup) while applying the TIC loan (suppose to close escrow in 30 days from now)? Will the process negatively affect the TIC loan process? Thanks a lot for you time to give advice.
Most Popular Reply
@Joe Xie I do like the way you are thinking and I ask you to consider this.
Paying cash and having a HELOC ready for your next purchase. This way you eliminate paying interest and bank fees etc.. until you need it to purchase another investment.
Thats what i teach my students and partners to do here in Pittsburgh and I am buying 3-5 properties a month using the same strategy.