#AskBP 027: Should I Pay Cash or Leverage My Real Estate Investments?


Ah… the classic debate. Cash vs. leverage. Which is better? In this episode of the BiggerPockets #AskBP Podcast, Brandon shares his thoughts on the debate and provides some interesting commentary that will help you decide the best path for your investing. Stay tuned!

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About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.


    • Kent Harris

      Typically when I pay cash for a house and do a cash out Refi. I leave 25% for the down payment. If your net rent is $500 per month your cash return would be 24%. This is based on $25,000 down payment on a $100,000 home and a $6,000 profit per year. Excel =6000/25000.

  1. Kent Harris

    I have been into Real Estate since September of last year and currently own 9 houses which 7 our occupied 1 is currently on the market as a rental and 1 is still under renovations. What I did was pay cash for the houses and then rolled them into a conventional mortgage getting me the best deal. After my tenth house I plan to do fix and flip and pay down on the current mortgages. Starting with the ones that have the highest interest rate.

    After the tenth house the Mortgage rates are from predatory lenders. Currently I am paying $492 per month per $100,000. After the tenth house that rate goes up to $844 per $100,000 borrowed. Leaving a very thin margin for rent houses. If you do it right you should be making at least $500 net per month per rental. Leaving $60,000 per year. If you don’t have a Mortgage the $60,000 a year goes up $119,040 per year based on 10 houses. Since I am in my 50s this is an excellent strategy. If you are younger this would also be a good strategy since you would have a base income every month.

    • Chau Cao

      I actually just bought another rental last year at 25% down, so I basically did what you did minus one step. I am curious as to why buy cash then refinancing later, leaving you with 2 closing costs as opposed to my 1? Great job on your portfolio.

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