How to best finance my first multifamily home Boston

[Jennifer Whalen]

Hi I am new to BP and REI and have questions about financing my first 3 Family home. Is it ever a good idea to Cash Buy a home I plan to fix up, rent out, and hold? Or does it make more sense to go with conventional financing? I'm concerned about rents coming in & being taxed with out any mortgage payment going out to balance it. If I find a distressed property can I buy cash and refinance 6 months down the line to get 75% LTV? Is it always better to start out with conventional financing to keep my other cash available for the next deal? I'm waiting to speak with a CPA about my investment goals but would also appreciate any advice from the BP community.

[Account Closed]

@Jennifer its really a question about equity or debt. Equity being your ownership and debt being the limit claim on your asset. REI aren't any different than a venture capitalist or hedge fund manager. Debt provides you with both a tax shield (taxable interest) and leverage to grow, but a risk. Equity gives you complete control, but growth and liquidity risks. If you have the funding to pay cash then couldn't you keep a reserve amount aside, in the event you have a vacancy-month. If you pay cash and have a vacancy-month you still lost money (opportunity costs), you just didn't gain any money on the borrowed tax deductions and additional rentals the other months. Talk to your CPA first and don't over leverage:)