Cash vs. mortgages (or neither) for income investing

[Ken M.]

The goal is to earn 8+% on my nest egg year over year. Ultimately I want to invest for income, income to live on. Thus far I've researched quite a bit about investing in tax liens, NNN leases, becoming a hard money lender, and of course buying rental homes.

Been in Tampa for a few months now, and I doubt those "2% rule" properties exist. If I put bandit signs on every street corner, I could probably find one. Just not sure I'm that ambitious. At the same time, it is probably safe to say that this market has a better chance of seeing appreciation in the future than towns in upstate NY where I know for sure those 2% rule properties exist. No data to back that up, but much like stocks, I believe the harder a price has been beat down, the better chance it has for a rebound barring some sort of fundamental collapse. As far as I can tell, the beaches are still beautiful, the population is still growing, retirees still prefer warm weather, and at least as far as Tampa goes, it's a city that can support some jobs.

Tax lien investing would seem ideal, but I have no idea how I'd acquire a substantial portfolio with all of the competition. That said I am going to give it a shot in a few months when the Florida auctions come around. NNN leases are a little more interesting, and I'll probably start another thread elsewhere to ask a few more questions about those. Hard money lending...well, I'd have a lot to learn, but in some ways it seems to be the most attractive option.

But I always seem to be coming back to buying rental homes with cash. Theoretically focusing on homes that can use some work, hiring a team to do the rehab, rent and hold. I say cash only because it eliminates a huge monthly expense and increases positive cash flow immediately. Anyway, it's not as if I can go out there and acquire 20 properties all with mortgages? From what I gather there are limits to that. But with money so cheap, I imagine it makes sense to leverage up as much as possible if your goal is to acquire as many units as possible over time...which would lead to more wealth over time.

Any insights would be much appreciated.