Convince Me Why Buying All Cash Is Beneficial

[Francois G.]

Hey Guys,

The name of the game has always been leverage for me. Building wealth can absolutely be accomplished by using credit, OPM, etc.

Every now and then, I come across that investor who buys his properties all cash and I can’t help but ask, WHY!?

I’m an investor-friendly agent in NYC so some clients tell me they prefer not to have the interest as an extra expense, some clients prefer the instant equity, some clients prefer the easy liquidation, etc.

Why do YOU prefer buying all cash? Im looking more for subjective reasoning why you prefer all cash because I’m sure people in different circumstances have different reasonings.

I’ll always be a leverage guy but I would love to hear why cash is king to your investing careers. Thanks in advance for any responses!

[Joe Villeneuve]

...easy, because all cash buys:

1 - ...increases how much the property costs the investor,

2 - ...if the property is negative cf with leverage, you can pay for all of your negative cash flow upfront

3 - ...It increases the risk you have in the property

4 - ...it limits the amount of properties you can gain control over

5 - ...it reduces the value of your equity

6 - ...it eliminates all of the free equity you get from appreciation and the tenant's rent

7 - ...it eliminates the power of compounding from your REI

8 - ...it dramatically slows down your ability to quit your job and replace it with rental cash flow

9 - ...it takes you longer buy your next property

10 - ...it delays the date of profit since your accumulated cash flow has to equal what you paid for the property out of pocket bore you can record any profits

11 - ...it,...wait a minute,..., you were asking for the reasons where buying all cash was a GOOD idea.  Sorry.  Forget what I said, sorry...my bad.