Cash Out or Finance?

[Robin Larsen]

I live in California. North of the Bay Area, 3 hours. I am relatively new to real estate. Property is too expensive to invest here. I am looking to invest in out of state single-family homes.  Would it be better to Cash out on a property with interest rates so high? Or get financing? Financing frees up cash, but cashing out would generate good monthly rent. Any thoughts?

[Joshua Janus]

Quote from @Robin Larsen:

I live in California. North of the Bay Area, 3 hours. I am relatively new to real estate. Property is too expensive to invest here. I am looking to invest in out of state single-family homes.  Would it be better to Cash out on a property with interest rates so high? Or get financing? Financing frees up cash, but cashing out would generate good monthly rent. Any thoughts?

 If you wanted to cash out refinance just make sure the new debt you are taking on is being utilized on a new asset that will produce a higher return on the cash that you are borrowing against!

I would advise finding an investor friendly realtor when you choose a market. You really want someone that invests in their market themselves and understands the numbers. They should be able to determine the COC, annualized return, estimated ARV of a BRRRR, accurate rent comps and more. The valuation and market value of a multi family property differs from a single family and you want someone that understands the distinctions if you go that route. If they just represent first time single family home buyers and aren't constantly finding off market properties and reviewing deals, you'll find a better investment through someone else.

https://www.kiavi.com/blog/out-of-state-real-estate-investing

https://learn.roofstock.com/blog/out-of-state-real-estate-investing

I choose to invest in Cleveland and Columbus, Ohio. Cleveland is ideal for lower priced multi family properties with soaring cash flow. Columbus is a top five appreciating city in the US with an unexpected mix of cash flow which is backed up by a population and job growth. Breaking the One Percent Rule isn’t uncommon in either of these areas and can be applied as a baseline in situations where immense appreciation isn’t expected in B-C class neighborhoods. Whatever market you choose to put your money in, spend the time to learn it.