[Newbie] Cash vs Mortgage for Rental Property in Boston Area?

[Malvik Shah]

Here's my scenario I need your help with. I am looking to buy a 2 bedroom apartment for $450k. I have the cash to buy it. Is it wise to pay full cash or take a mortgage and pay 20% down and invest the rest in the stock market? What all should I be considering in making this decision? I could either live in this new apartment for a year and then rent it out or rent out from day 1 and find a rental apartment for myself to live in. 

If I paid full cash, my idea is to rent it out. Then save enough money and buy another apartment in 2/3 years with 20% down and use the rental income from 1st apartment to pay the mortgage for the second one. 

The other option is to buy two apartments for around $450k at 20% down and live in one and rent the other. When you buy a rental property, let's say the principal, interest, taxes, HOA plus everything else comes to $2000/mo. What is the minimum you'd rent it out for?

Thank you!

[Mark H. Porter]

Most people in here will tell you you are crazy not to use leverage because rates are so low.  $450K can be leveraged, with closing costs involved, in purchasing $1.65M in rental real estate.  Even if you keep some in reserves you’re far ahead of buying a single property.

As to rent, you just need to check craigslist and others to see what you can rent them for.  What you can charge for rents has nothing to do with your costs.  Nothing.