What are some of the benefits I will miss out by paying cash as a 1st time homebuyer?

[Peter Chan]

I will need to find a small place for myself and rent out additional room if necessary. 

Taking out a mortgage may not be easy since I don't currently have a 9-5 job. Plus, the mortgage rate is still high and I am not kin to pay the high interest either. 

I understand there are benefits to a 1st time homebuyers but it seems like most are related to down payment assistance. Is there other benefits I will miss out as a 1st time homebuyer if paying all cash? Plan to purchase in northern Virginia or Maryland. Thanks. 

[Rick Albert]

I completely disagree, paying cash is a horrible idea unless you plan on taking out a mortgage in the next 6-12 months. Here's why:

1. The entire point of real estate is leverage. If a property appreciates at 3%, it is on the entire property, not just the cash invested. For example on a million dollar property, 3% is $30,000. If you put 20% down ($200K), then that's a 15% cash on cash return. You 5x your money. Otherwise, you have high interest savings accounts giving 4% interest. Do that and you eliminate the risk of bad tenants, maintenance, etc.

2. The whole point of tenants is not only cash flow, but to buy down the mortgage. For example, the tenants in my house hack pay the equivalent of the interest on the mortgage. Conceptually I have a 0% mortgage.

3. You miss out on some of the mortgage tax benefits. 

4. If you have that much cash, buy rentals with a DSCR loan, and then use that income to qualify for the primary residence. Definitely easier said that done but I'm talking concepts.

5. If you take a look at mortgage rates over the last 30 years, we are actually on par with the "norm." Plus if rates drop, then it just creates a potential buying frenzy, thus raising prices and the payments don't change much.