All Forum Posts by: Kent Depwe

Hi @Kent Depwe I'm a Realtor and Property Manager in Austin and these are my thoughts on the situation. I would avoid paying for a house all cash, and use a loan to get a home. Keep building your cash and rinse and repeat. There are still secondary markets in Texas and I'm sure other states that will allow you to invest with 20% - %25 down and you can still cash flow, and bank on your appreciation + loan pay down. If you buy a house all cash you would make more in cash flow, but if you have multiple properties financed you will make cash flow + appreciation on all of them. Of course run the numbers and decide for yourself.

I help Investors buy single family and multi family properties in Killeen TX as it's still a cash flow market with similar appreciation rates to Austin.

Those are good points, what sort of cash flow are you seeing in Killeen? I’ve found a few in San Antonio area that do about $200-300 but that’s not including any big maintenance issues that arise or vacancy.

might be worth having a chat as I’m still scouting around for a property manager as well!

0 Votes

Austin, Texas

Quote from @Kent Depwe:

Quote from @Ariel K.:

@Kent Depwe the difference on a $80k loan (100k house putting 20% down) is about $98/month. You need to find/make a deal so the numbers work. My first purchase was a property in OH with a rate of 5.875% in 2018. I had a huge margin so I didn’t mind the high rate - you need to stay patient and find something that works. As you hold property longer, the cash flow increases because rent tends to go up more than property taxes/insurance (all else equal).

Right, I think the higher interest just makes finding those good cash flows more challenging but not impossible.
most of the deals I’m finding on Zillow/Roofstock/MLS even in secondary markets are cash flowing about $100-200/month not including big maintenance repairs.
Which is why it’s tempting for me to just buy the whole $100k property in cash for $1k/month pure cash flow not having to worry about mortgage or interest rates, but the obvious downside is not being able to leverage your money. Tough call.

Interesting point here, so buy $100k house all cash, then refinance out 80% of the value when I want to buy another?

0 Votes

Austin, Texas

Quote from @Ariel K.:

1 Vote

Austin, Texas

Quote from @Joe Villeneuve:

Quote from @Kent Depwe:

Quote from @Joe Villeneuve:

Option D...none of the above.

Never buy a house with all cash. The cost of a REI property is only the cash that comes out of your pocket. That means if you are paying only the DP on a property, say at 20%, your cash is worth 5 times its face value. When you pay all cash, the PV is equal to the cash paid.

Never buy a property with negative CF. As that negative CF adds (or subtracts,...depending on how you look at it) up, it adds to the cost of the property. When the property has positive CF, that positive CF pays back your cost, and when the CF has completely paid you back for your cost, you have nothing in the property anymore...and the rest of the CF is pure profit.

Option D is find a different property in a different market.

Thanks for the response, my preference would be to leverage my cash, however with interest rates being upwards of 6% it’s difficult, many of the properties I’m finding would have maybe $100-300/month cash flow and that’s without including maintenance issues so could be little to none.

Interest rates being at 4-5% make cash flowing properties a lot more common it seems. So was curious given the high interest rate environment we are in would justify going all cash.

No. Your goal isn't to collect properties...it's to collect money. None of the options you have given satisfy any positive goals...so don't do it. It's far better to walk away and make no deal, then it is to make a bad one, just for the sake of making a deal.

That’s what I was thinking, thanks for the input!

have you been able to still find good cash flowing properties even with 6%+ interest rate on loans?

0 Votes

Austin, Texas

Quote from @Joe Villeneuve:

Option D...none of the above.

Option D is find a different property in a different market.

Interest rates being at 4-5% make cash flowing properties a lot more common it seems. So was curious given the high interest rate environment we are in would justify going all cash.

1 Vote

Austin, Texas

Hey BP,

First post in here, short intro: I’m 25, Technical recruiter living in Austin Texas, just bought my first house in Austin July 2021.

I'm keen to get into REI, not necessarily in Austin or even in Texas for that matter.
I have about $70-100k cash to play around with for my first property.

Since interest rates are horrendous currently, I got quoted 6.3% on 30 year conventional with a 750 credit score and great debt to income. It would be very difficult to cash flow doing a regular 20-25% down mortgage, so I’m considering buying a $70-100k house in all cash in a secondary market to avoid the high interest. But then I wouldn’t be able to leverage my money as well.

So should I pull the trigger now and buy a $100k house in cash, or get a $250-300k house using mortgage loan risk low or no cash flow, and refinance when rates go down, or just wait until rates go down before buying?

I appreciate any input, thanks!

0 Votes

Austin, Texas

All Forum Posts by: Kent Depwe

Kent Depwe has started 3 posts and replied 16 times.

Post: All cash or conventional loan?

Post: All cash or conventional loan?

Post: All cash or conventional loan?

Post: All cash or conventional loan?

Post: All cash or conventional loan?

Post: All cash or conventional loan?