Pay cash or finance STR?

[Karen Bolyard]

I am in a multiple offer situation and offered cash with proof of funds for a beach STR property. I told the agent I may decide to finance (depending what accountant advises tomorrow) and what information I learn here. I will not have a lot of funds remaining if I pay cash, but wanted to win this contract. What are the benefits and / or disadvantages of cash vs financing. Interest deduction, what else? It is a 525K purchase price, 25% down. My premium savings would earn about 1.5% -2% less than mortgage rate . I hope to buy another property this year, either at the beach or locally in Triad NC for either another STR, flip or mid term rental. Thanks for any advice!

[Brittany Minocchi]

If you want to make a cash offer to win a deal, you could do delayed financing - it's similar to a cash out refi, but it's based on the purchase price and loan costs, not appraised value. So you could turn around and pull out 75% right after closing, leaving 25% equity in the property.