All CASH-Buying property

[Eric Justice]

Anyone buy with all cash? I would be looking to hold the property for 30+ years. I would not be looking to buy until 2027. 

[Anderson S.]

Many have! If you're looking to buy and hold, there are a few ways to go about raising capital. How do you plan on purchasing and in what area?

[Eric Justice]

Quote from @Anderson S.:

Many have! If you're looking to buy and hold, there are a few ways to go about raising capital. How do you plan on purchasing and in what area?

I plan to save from my income for about 3 years or so. I’m looking to buy in Illinois. 

[Anderson S.]

Quote from @Eric Justice:

Quote from @Anderson S.:

Many have! If you're looking to buy and hold, there are a few ways to go about raising capital. How do you plan on purchasing and in what area?

I plan to save from my income for about 3 years or so. I’m looking to buy in Illinois. 

 When you're ready to pull the trigger hit us up! We'd love to help fund your deal.

[John Warren]

@Eric Justice there are tons of all cash purchases every year here in Chicago. The only difference when you run your numbers is that your cash-on-cash return and your cap rate are the same since there is no leverage. 

I would personally encourage you to use debt if you are looking to wait 3 years to get started though. The return on your money in a bank is miserable while you wait to get rolling. Debt is not a bad thing, and you can always use the additional cash flow from a property to pay it down quickly if that is part of your goal. 

[Rys F.]

I second @John Warren's advice, wherever you buy. A wealth-building move could be to borrow against your brokerage account.

[Bob Stevens]

Quote from @Eric Justice:

Anyone buy with all cash? I would be looking to hold the property for 30+ years. I would not be looking to buy until 2027. 

 WHAT is the question ?

[Chris Martin]

Disclosures: this post is an anecdote about a Raleigh NC property for illustration purposes; the numbers presented are actual numbers from my Quickbooks report; the Rent-O-Meter price, T-Bill rates (in the links), taxes, insurance, and PM fees will change over time. 

For the past many months, I don't know anyone with more than, say, $5,000 in idle cash who isn't using Treasury Direct to get 5%+ on idle money; pick your term - short (4 weeks) or longer (52 weeks). 

Today, and a similar rate for the last several months, the yield (annualized) on a 4-week T-Bill is 5.22%. T-Bills are the safest investment in the world. I looked at the best-case scenario for a rental that I am selling (it's under contract) if a cash buyer bought it and placed it into service at a Rent-O-Meter average price, and the annual yield is 6.33%. That's not very compelling. The scenario: $295,000 purchase price (my list was $299,000), 100% occupancy, $1,900 monthly rent, with taxes ($1,856), insurance ($768), and property management (7%) the only expenses.  

We had 64 showings in a little over two weeks. I asked the listing agent how many investors viewed the property, but she didn't have a clear answer. She speculated "a couple." 

My point is that in a market where overall demand is unbelievably strong, the opportunity-cost numbers are not that strong for an all-cash, or any for that matter, acquisition relative to past history. 

The answer to the OP question: Yes. I thought everyone bought with cash. LOL!  And holding for 30 years? Maybe 27.5 is a better answer. 

PS: the buyer of my company's property is an owner-occupant. They got a good deal; I wish them well. 

[V.G Jason]

Quote from @Chris Martin:

Disclosures: this post is an anecdote about a Raleigh NC property for illustration purposes; the numbers presented are actual numbers from my Quickbooks report; the Rent-O-Meter price, T-Bill rates (in the links), taxes, insurance, and PM fees will change over time. 

For the past many months, I don't know anyone with more than, say, $5,000 in idle cash who isn't using Treasury Direct to get 5%+ on idle money; pick your term - short (4 weeks) or longer (52 weeks). 

Today, and a similar rate for the last several months, the yield (annualized) on a 4-week T-Bill is 5.22%. T-Bills are the safest investment in the world. I looked at the best-case scenario for a rental that I am selling (it's under contract) if a cash buyer bought it and placed it into service at a Rent-O-Meter average price, and the annual yield is 6.33%. That's not very compelling. The scenario: $295,000 purchase price (my list was $299,000), 100% occupancy, $1,900 monthly rent, with taxes ($1,856), insurance ($768), and property management (7%) the only expenses.  

We had 64 showings in a little over two weeks. I asked the listing agent how many investors viewed the property, but she didn't have a clear answer. She speculated "a couple." 

My point is that in a market where overall demand is unbelievably strong, the opportunity-cost numbers are not that strong for an all-cash, or any for that matter, acquisition relative to past history. 

The answer to the OP question: Yes. I thought everyone bought with cash. LOL!  And holding for 30 years? Maybe 27.5 is a better answer. 

PS: the buyer of my company's property is an owner-occupant. They got a good deal; I wish them well. 

I buy all cash in raleigh, durham, cary all the time. I DSCR out though. But full cash offers have won me out. The only hiccups in Raleigh have been the gatekeeper agents, who run up the DD. The investor pool here is non-existent cause it's arguably the worst RTP(no pun intended) of any relatively big or known area. And investors simply are too narrow to buy if RTP doesn't strike. I think if there was more attractive rentals here, the same dogs in charlotte would come here and create a lot of chaos. That time will come where RTP will tighten here.

[John Clark]

Quote from @Eric Justice:

Anyone buy with all cash? I would be looking to hold the property for 30+ years. I would not be looking to buy until 2027. 

How much experience do you have? Both Chicago and Illinois are losing population and are both beyond bankrupt, with tenant friendly laws. Not for the inexperienced. Better to consider northwest Indiana.


If you are set on buying in Chicago, follow the L lines and check out the South and southwest sides.

[Carini Rochester]

"Anyone buy with all cash?"

I do. I buy my retirement funds (Wall Street) all cash. I buy my groceries all cash.

I buy real estate with 20% down and let my tenants pay the interest and the other 80% of the cost of the house. It's like an 80% off sale. Why wouldn't I do that?

[Jonathan Klemm]

Hey @Eric Justice - Wow you are projecting a ways out....how come you aren't planning to buy until 2027?  What's your end goal vision using real estate?

You can definitely buy in all cash here in Chicago or anywhere, however, one of the biggest advantages (in my opinion) in real estate is using leverage.  

Now, I think each person has to evaluate their level of risk comfort because being highly leveraged can also create problems if there are significant market shifts.

[April Patterson]

Quote from @Jonathan Klemm:

Hey @Eric Justice - Wow you are projecting a ways out....how come you aren't planning to buy until 2027?

 I am curious about this as well. How much are you earning on your savings? Is it comparable to the equity growth in the area you want to purchase? Saving money is a great plan, but debt is NOT a dirty word! People build wealth when they start to understand how to leverage debt in a responsible way. 

[Jimmy Rojas]

Quote from @Carini Rochester:

"Anyone buy with all cash?"

I do. I buy my retirement funds (Wall Street) all cash. I buy my groceries all cash.

I buy real estate with 20% down and let my tenants pay the interest and the other 80% of the cost of the house. It's like an 80% off sale. Why wouldn't I do that?

 You buy groceries with cash, that is really old school huh, I believe if you can afford it its best to invest in REA in cash, most times seller by owner homes are a much better deal especially when paying in cash.