For those who invest in real estate do you finance a rental property or pay it with cash?

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  • #85114 Reply

      Any tips or suggestions? Thoughts on buying real estate with the current state of the economy?

      #85115 Reply

        I’ve been looking for a rental prop for over a year. The prices houses are selling for, would barely caseflow $100/month. So if something were to break down, say furnace, that would be a $5000 replacement.

        Then you’re in the hole for years.

        #85116 Reply

          The true power of real estate is 30-year fixed rate debt.

          Gaining appreciation on 4 times what we invest.

          Tenants paying off the debt.

          If I purchased all cash, I would maybe have the funds to acquire one duplex.

          Instead. I used debt.

          This allowed me to acquire 18 rental units.

          Last years cash flow (profit after all expenses and setting aside for future repairs and vacancy) was 203k. I have no housing costs since I’m still house hacking.

          Once we are financially free and no longer in “growth” phase, maybe all cash makes sense.

          But if we don’t use leverage when starting out we would add 30 years to our investing.

          I made work optional in 8 years. And retired after 12 years of investing. Because of good debt. Not over leveraged. Not under levered either.

          Don’t miss: For anyone that has experience with it: Tell me about multifamily real estate investing

          #85117 Reply

            I wouldn’t consider it right now. Prices are too high and mortgage rates are too high. You won’t make any money.

            #85118 Reply

              Usually, cash and then mortgage them. All mortgages are paid off now, but won’t be buying any more properties given the current interest rates. Now investing in stocks.

              #85119 Reply

                I bought a rental condo for cash in 2020, it was a diversification and cash flow play. Bought a rental house in 2021 with a standard traditional mortgage. Both have their benefits.

                I’m not trying to do the rich dad maximum debt thing, nor am I trying to do the Ramsey zero debt thing.

                I agree with a lot of folks here, gotta find a good deal and it has to make sense with the numbers.

                It is WAY tougher today than it was two years ago. Personally I would not buy right now unless it was a fantastic deal, and those tend to get swooped up pretty quickly.

                Good luck

                Also, check out: This question is for Texas real estate pros

                #85120 Reply

                  The best deals now are subject to. Find someone behind on their mortgage and take over the payments at their low rate of the past and with years deep into a 30 year loan. Takes lots of searching and sifting sand but great deals that can be done in Roth accounts.

                  #85121 Reply

                    I’ve used conventional mortgages in the past, but with home prices and interest rates where they are at today, my next one will be paid for in cash.

                    I can always refinance later if rates become more favorable. Otherwise, I’m happy owning a free and clear property.

                    #85122 Reply

                      I’m a real estate girl! generally it’s better for long term wealth-building to buy as much RE as you can, with as little money as you can.

                      If you couldn’t care less about long term wealth & just want the highest monthly cashflow possible, it might make sense to buy a property outright, but the return on equity might kind of suck.

                      I don’t know many investors at all who don’t want to leverage debt.

                      #85123 Reply

                        I’ve been doing it 16 years. I’ve got 70 rentals, and I’m on the 4th flip this year.

                        You have to find good deals. Houses you can buy below market value. Significantly below market, like a 30% discount.

                        It’s always a good time to buy these great deals. They are super hard to find; they won’t be on zillow.

                        Use cash to buy them fast, then get a loan to get your cash back.

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