All Cash vs. Mortgage

[Sal G.]

I've signed on a $655,000 condo on the upper east side of Manhattan and we are set to close on Feb 1. Taxes, common charges and insurance will run about $1000 a month and I've found someone to rent it for $3200 a month. Currently, we've agreed to close all cash but given how low rates are (right now I have several banks offering me 4% on a 30 year fixed) I thought it might make sense to finance the property to save some money for our next acquisition (I also think that we will experience a great deal of inflation over the term of the loan, making my future payments relatively low, but that is an entirely separate can of worms).

I keep reading about how using leverage will increase my return, but every calculation I do actually shows me making a lower return on my initial investment if borrow any money. Is there something I'm missing?

Also, I don't have property two lined up yet and I will likely have to borrow to purchase it. Does it make sense just to wait until I find the next property before I put a mortgage on my first, or buy it subject to a mortgage and keep the cash on hand?

Thanks!