Pay cash or Finance a turn key duplex?

Question

Hi all,

I found a turnkey duplex that I will be making an offer on soon, and was wondering if it would be smarter to finance the deal conventionally or find a lender and pay cash for it. This is an off the market property the owner had no intention of selling until I approached him about it. I assume a cash offer and a quick sale would further entice him to sell it, but what would the smarter route be for a bigger return on investment?

My thoughts are to finance the property with a conventional mortgage with the minimum amount down and use leverage so I can keep my cash available for other deals that I may find. i don't believe I can add much more value to the property, so paying cash and refinancing may not have much of an advantage except for maybe enticing the seller to sell to me.

Thank you,

Brandon Chandler

Brandon Chandler · Answer

@Tyler Rowland

Noted. Thank you so much.

Brandon Chandler · Answer

@Derrick Craig

Thank you so much.

Brandon Chandler · Answer

@Curt Davis

Thank you so much.

Derrick Craig · Answer

@Brandon Chandler

Definitely use your leverage with bank financing also see if you can get some seller concessions to help help your closing cost if the home appraises for more than contracted list price usually banks allow 2% seller concessions based on lender and loan amount. I actually just did this for one of my investors and the lender/bank was coll with us doing this. Use your leverage and these low rates as much as you can.

Tyler Rowland · Answer

I would second Curt Davis.  Also, if there is no value to add to the property and you pay cash for it, you run the risk of not being able to take out all of the cash for the next investment.  You might as well get the best possible rate you can right off the bat, and not jeopardize that prime rate with a cash out refinance rate.

Curt Davis · Answer

Go with conventional financing. If its turnkey already it does not make sense to buy cash.

Good luck