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Updated 12 months ago on . Most recent reply

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Pay cash or finance

Posted

Hi everyone. Just starting out. Thinking of buying new construction. My question: is it better to pay cash for one or put minimum down payment and finance 2-4 properties? It seems like the income is significantly reduced when there is a mortgage but as a newbie I am trying to figure this out.

Thanks!!

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Lynn McGeein
  • Real Estate Agent
  • Virginia Beach, VA
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Lynn McGeein
  • Real Estate Agent
  • Virginia Beach, VA
Replied

@Amber Littlefield for us, it has to cash flow well using estimates for a 20% down 30-yr conventional mortgage to consider it, then we’d decide cash or mortgage. We found that didn’t work with new construction. Also remember that it should earn more than you could make with less-risky alternatives. With higher interest rates, it becomes more difficult. If you’ve done the research and it’s a good growth area that’s not being overbuilt then may be worth it, but we consider if it would cash flow with the mortgage either way.

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