Cash Purchase vs Conventional Financing

[Ryan Pozzi]

Good evening from the Midwest!  I've come to ask for feedback while acknowledging that I'm early enough in my journey that I can't yet offer much in return other than gratitude and it's hard to pay the bills with gratitude, I know.  I'm building skills so I'll have more to offer soon!

I'm a new pro member and I will be making my first deal this year.  One of the issues I've been pouring over forum posts to try to learn about are the advantages and disadvantages of cash purchases vs conventional financing for a buy and hold investor.  I have the resources to proceed with way, but I'm having trouble being decisive about what will be best for my business.

A cash purchase feels like a better negotiating position for my offer and like a more compartmentalized risk if there are problems (as in, you can lose the cash without damaging your credit if the worst happens.)  Conventional financing seems like a good way to get more leverage/cash flow benefit out of less liquid capital, but a poor result could have a more lasting impact.  And around and around I go.

Would any more experienced hands out there be willing to offer a bit of guidance to help with my financing paralysis?

[Chris Mason]

If you can be a cash buyer, always be a cash buyer. Period. Then slap a mortgage on the property after the fact to recoup your capital.

This way you get the best of both worlds.