Littleton, CO · Member since 2018 · 26 posts · 7 votes
Hi Everyone, I am planning to scale up buying properties to rent. I have enough cash to purchase several outright, but would like to eventually pull out equity to then buy more properties.
I want to ask. Is it better to just pay cash, get them rented, then refinance? Or get a loan from the start?
@Tom J. I know you are probably looking for a more simple answer but it depends. I would think while rates are still historically low, you want to leverage while you can and save your cash. Eventually, maybe soon, rates will be at a point where it will not be as advantageous for you to finance them.
It also depends on each property. If you can get a property that is truly undervalued because of structural or safety issues that may impact financing, I would think you may want to use your cash towards those up front, fix the issues, and then get your cash back out. But if you find a property that seems pretty straightforward, just finance the purchase.
Lastly, most of the time you do a cash offer, you are really removing your mortgage contingency but can still enter verbiage allowing you to obtain financing. In order to aggressively get a property under contract, you could also offer cash, knowing you will pay cash worst case, but in the meantime start the process for loan approval.
@Tom J. I know you are probably looking for a more simple answer but it depends. I would think while rates are still historically low, you want to leverage while you can and save your cash. Eventually, maybe soon, rates will be at a point where it will not be as advantageous for you to finance them.
It also depends on each property. If you can get a property that is truly undervalued because of structural or safety issues that may impact financing, I would think you may want to use your cash towards those up front, fix the issues, and then get your cash back out. But if you find a property that seems pretty straightforward, just finance the purchase.
Lastly, most of the time you do a cash offer, you are really removing your mortgage contingency but can still enter verbiage allowing you to obtain financing. In order to aggressively get a property under contract, you could also offer cash, knowing you will pay cash worst case, but in the meantime start the process for loan approval.
Hi Everyone, I am planning to scale up buying properties to rent. I have enough cash to purchase several outright, but would like to eventually pull out equity to then buy more properties.
I want to ask. Is it better to just pay cash, get them rented, then refinance? Or get a loan from the start?
IMO always be a cash buyer, if you can. You get the cash buyer's discount, and your pick of the litter of homes.
Your discounted cash buyer's purchase price is worth waaaaaaaay more than worrying about the rate being 0.25% this way or that.
personally i like to buy cash and finance later. i do mostly brrrr so it's good for that. but in all instance you'll have more power buying cash without financing conditions.