I have the opportunity to buy a rental property outright but I would need to sell an existing rental property that has some equity but isn’t yielding much in monthly profit.
I’m thinking that to really start making money, having one mortgage free rental property is the way to go but I’m nervous! Especially since the new property is in Mexico, the existing mortgaged property is in Chicago and property tax increases are really eating into profits.
Property taxes on chicago are only going to go up so if you can cash in on that equity to buy something with better returns, you should go for it. Make sure you've calculated what you'll take away after listing the property for sale, lost rent and paying taxes, fees and commissions.
Property taxes on chicago are only going to go up so if you can cash in on that equity to buy something with better returns, you should go for it. Make sure you've calculated what you'll take away after listing the property for sale, lost rent and paying taxes, fees and commissions.
@Larry Turowski @Account Closed There's nothing wrong with Mexico specifically. I'd be nervous investing in any market I don't know without acquiring the knowledge first. Mexico is a foreign country so it's even more important that you have that knowledge as if you were investing in another US state.
Throwing cash at a property does not increase profits it actually delays profits since you must get back all your cash before you actually turn a profit. Not likely you can get financing in Mexico but reality is that leverage is how you increase cash flow and profits not throwing money at a rental.
A investors cash is worth more than the banks money which means cash buying is a losing proposition. There are few reasons to pay cash, low value with high rents and when a investor has more money than they have any use for. If you can get a minimum 10% return on your cash PLUS positive cash flow on a property after all expenses then it may be worth buying with cash. Anything less and you are wasting your money and it would be better invested in a in a income fund than in real estate.