All cash purchase / Prior Foreclosure

[John Hisghman]

I have a friend who had a “difference of opinion” with a mortgage lender a few years ago. This resulted in a foreclosure on her primary residence. 

She currently has saved enough cash to purchase properties upto $150k. 

There is a particularly nice new-construction that will rent for $1300–1400 monthly. After expenses should cashflow ~$900/mo. 

After one more year, the foreclosure “falls off” her record and lenders have said they will have no issues lending to her after that time.

After the remaining 12 mos expires, she can get 75% ($93k) out of the property,  leaving 32k in the investment. 

- What are the tax advantages of all cash (can you still claim depreciation if you pay cal cash)?

- Other than the SHORT TERM tying up of the money, what are the disadvantages of this route?

- Lastly, maybe buying a rental propety isn’t the best use of this nest egg until the 12 mos period expires.

- What says you? What would you do?