Buying rental properties all cash

[Dino Diaz]

Hi everyone.  All I have heard preached is to leverage your financing when it comes to investments. My mindset is telling me that if I can make large amounts of money through wholesaling and eventually flipping, I could reach my $5000 rental cash flow goal faster if I buy my rentals cash instead of leveraging with banks.  I would rather pay a lot more money upfront now to get my bigger rental spreads and reach my goal faster then leverage and make a fraction of the spread. What do you guys think about this? I would love to hear from you experienced investors. Have a great day and thank you! 

[Joe Villeneuve]

Originally posted by @Dino Diaz:

Hi everyone.  All I have heard preached is to leverage your financing when it comes to investments. My mindset is telling me that if I can make large amounts of money through wholesaling and eventually flipping, I could reach my $5000 rental cash flow goal faster if I buy my rentals cash instead of leveraging with banks.  I would rather pay a lot more money upfront now to get my bigger rental spreads and reach my goal faster then leverage and make a fraction of the spread. What do you guys think about this? I would love to hear from you experienced investors. Have a great day and thank you! 

 Do the math.  

Example #1:  $50k Cost all cash; $800/month CF ($9,600/yr)

Cash in = $50,000
Cash back/year = $9,600
Time to break even = ~5.2 years
New Cash Needed for next deal = $50,000
Source for New Funds = ??????
Time to acquire needed New Funds = ??????
# of Deals to get $5k/mo = 6.25
Total New money needed = $312,500

Example #2: $50k 20% cash DP = $10,000; $800/month CF without Loan ($9,600/yr)>>>$585/mo w/ loan

Cash in = $10,000; $40k financed
Loan payments = $215/mo; $2,500/yr
Cash back/year = $9,600 - $2,500 (loan) = $7,100
Time to break even = ~1.4 years
New Cash Needed for next deal = $10,000
Source for New Funds = ??????
Time to acquire needed New Funds = ?????? (much faster than $50k)
# of Deals to get $5k/mo = 8.55
Total New money needed = $85,500