Loans vs all cash deals

[Conor Livingston]

My goal is to produce $3k/month profit from rental properties while spending less than 1hr/week on management (e.g. engage a property manager).

I could buy a couple properties in cash, or buy several properties with financing. I'm leaning towards all cash deals right now because:
1. Simplify the buying process

2. Each property puts more $ in my pocket per month (no loans to pay back)

3. Simplify management (less properties to manage)

It seems like I could make more money per month if I buy more properties via financing, but it would require more work.

Am I thinking about this the right way?

[Patricia Steiner]

@Navid A.

When you purchase with cash, there is no mortgage - so there' nothing to refinance. Cash-out Refi loans come with a higher interest rate, a lower LTV, and usually require a 6-month waiting period after acquisition to obtain. A Deferred Mortgage - is a first-time mortgage - that has the same rate and cost as an origination mortgage. Again, you're not refinancing...you simply "deferred" financing by paying with cash originally. There's no waiting period either. So if you need to buy with cash for competitive reasons, go ahead by all means. But then get a Mortgage afterwards - a Deferred Mortgage - which will give you the same LTV terms and rates as a new purchase mortgage.

And, for those who claim that if you buy with cash, there's no cost - it's simply not true.  Look at the inflation cost of a US Dollar:

Year	jan	jun
2021	1.400%	5.391%

That's a decrease in spending power.

I'm a former senior wealth banker and admittedly a money geek.  There is a big difference between generating cash and building wealth. It's how the rich keep getting richer and a lot of other folks work really hard and never achieve financial independence.

Hope this helps.