Cash-Only Deals the new way???

Question

Hello investors!

The average mortgage rate for a 30-year fixed is 6.58%, more than double its 3.22% level at the start of 2022. Do you guys think that cash-only deals is the new way to invest?

Sara Frank · Answer

6.58% is not high by historical standards, I think buyers are going through a period of sticker shock but it will wane. Cash isnt feasible in all markets (Im in DC) and the ability to leverage is crucial even if the rates were to increase further. Investors need to adjust their expectations on cash flow, especially in high cost markets,  but the long term benefits to buying and holding will always be there.

Tim Bee · Answer

Cash is one of many.  There are lots of ways to acquire a property.  Keep an open mind always.  Don't say I can't afford it say "how can I afford it".

Eliott Elias · Answer

Subto is the new way to invest. Buy these properties that all these fake investors overpaid for.

Kevin Sobilo · Answer

@Alex Migotto, absolutely not!

Interest rates have spiked rapidly upwards but are NOT high by any means. Right around historical norms.

Loans are referred to as "leverage" for a reason. Like a lever, they allow you to accomplish MORE with LESS effort or in this case less money. So, if you can make a deal work with a loan it will allow you to buy maybe 5x as many similar deals. That's how you build wealth.

Also, financing isn't permanent. You can choose an adjustable rate loan. You can refinance in a few years. If you are working with a local lender you could even work with them on a loan modification in a few years to bring the rate down when things change. Even if rates stay the same you could refinance down the road and simple stretch the payments out again to improve cashflow.

Simply put, you have the opportunity to improve a deal over time by the choices you make.