Financing vs. Cash Purchase in General..

[Jason Merchey]

If I had $200,000 in cash, would you advise taking out three mortgages that positively-cash-flow over a 30 year period at 4.5% with no prepayment penalty, or doing one all-cash purchase? I go over this in my head like a dog chasing his tail. I might have that kind of money in 2014, and I was trying to decide what is safest and wisest. My wife is a bit more conservative than I am (as in, would probably be more comfortable with the one cash purchase). The area we live in and would invest in, by the way, is Charleston, SC which has seen about 2/3 of its loss in the recession back lately, and almost all indicators are that the State is financially ok and that the population is growing annually.

[Jeff Owens]

The choice really depends on your goals and financial situation. Leveraging will create a much higher net worth long term, but won't produce as much income in the short term. I personally am in a situation where I am cash heavy, and wishing for early semi retirement, so I am buying in cash as much as I can afford, and living off the income. If I wanted to still work full time, I would be leveraging. I also prefer living debt free. It's a very personal decision and there is no right or best way to do it that fits all.