All Forum Posts by: Amir B.

 I don’t think there’s much for meaningful difference in loan costs between a cash out refinance and a 20% down mortgage loan.

Bank is still gonna get there origination fee and fees for running appraisal. If there’s a difference it’s probably bank specific.

It's cheaper to by with a loan now because your cash is worth more that way.

Option 1:  All Cash
Property Cost = $300k
Cash spent = $300k
Cash Flow = $25k/year
Cost Ratio for Property for every $1 cash spent= $300k cash buys $300k PV, so 1 to 1
Cost Ratio for Cash Flow for every $1 cash spent= $300k cash buys $25k CF, so 1 to .083.

Option 2: 20% DP
Property Cost = $300k
Cash spent = $60k
Cash Flow = $6k/year
Cost Ratio for Property for every $1 cash spent= $60k cash buys $300k PV, so 1 to 5
Cost Ratio for Cash Flow for every $1 cash spent= $60k cash buys $6k CF, so 1 to .10

...except both options are starting with the same $300k in cash, so Option 2 should read like this:
Option 2 extended: 20% DP
Property Cost = $300k
Cash spent = $300k buys 5 properties
Cash Flow = $6k/year/property times 5 properties = $30k/year
Cost Ratio for Property for every $1 cash spent= $300k cash buys $1.5M PV, so 1 to 5
Cost Ratio for Cash Flow for every $1 cash spent= $300k cash buys $30sdddddk CF, so 1 to .10

Cheapest? Not up front it is not but in the long run, yes. Refinancing is the best way to get the money that you invested, back out of the deal in my opinion. Putting down 25% now is cheaper than putting 100% down but you will probably refinance that property in a few years when rates are lower so buy cash now, refinance later and pull your equity out while still having a cash flowing property.

@Amir B.

I’ve bought 3 houses with cash offers, but to close in 3 weeks. I had a rental owned free and clear. Then when I found a deal I couldn’t pass on, I made a cash offer to close in 3 weeks with the seller. Then I would ask my lender to do a fast cash out refi on my paid off house. My lender was pretty fast and I closed within 2 1/2 weeks on them. Then close on the new one I was buying. I did this 3 times to get great deals. Kind of a weird way to do it, but I found sellers would give me really good deals for cash offers. And all 3 of them didn’t seem to care about waiting 3 weeks to close.

Talk to a local lender.

Cash out refi or HELOC

Both have fairly high rates currently so make sure the payments work for your strategy ahead of time.  

Also is this your primary residence? HELOC's on rentals/non owner occupied properties are getting rarer these days.