What am I missing on the advantages of financing? (buy and hold)

[Amir Navabpour]

I know the conventional wisdom says you make a higher COC return when using debt, but I don't see it. Here are the numbers

Purchase price: 125k

Rent: 1% (1250/month)

Monthly costs:

Prop taxes: 160

Capex (10%): 125

Repairs (10%): 125

PM fee (10%): 125

Mortgage (assuming I finance 81k) at 3.9%: 383

closing costs to refi will be around 2500, I blended that cost in over 24 months: 104

In this scenario, my COC if I keep this as an all cash purchase is 5%. If I finance it at the numbers above my COC is 1%.

Can anyone please let me know what you think I am doing wrong? I am willing to refi to pull cash out to buy more if my COC is higher, but if its not I don't see the point.