Cash on Cash or Cash Flow?

[Shane H.]

I understand the math behind it, so I'm seeking opinions more than anything.

I the general consensus in real estate investing is to leverage yourself into greater wealth. While I understand that, I would say it's definitely the long game... having 5 properties valued at 100k each instead of 1 at 100k with the same money in. You won't however, have the same time in. You'll be spending much more time keeping after 5 properties. And your monthly cash flow doesn't seem to be all that much better until you start paying then off.

So using generalities let's say I can leverage myself to get 12 units at 100/door. Or I can buy a small multi outright for the same cash in, but net the same 1200.

Who believes the risk of leveraging and the interest paid on the loan is worthwhile for the end result of a ton of equity in 25 to 30 years. Who thinks buying outright and gaining the immediate Cash flow is the way to go?

[Jason D.]

@Shane H. When buying a lesser valued property with cash, you lose 2 major things...

1) Depreciation. Because that value is less, you dont get the same tax savings

2) Interest income writeoff. With no mortgage, you lose the tax benefit of writing off mortgage interest.

So even though the two properties "cashflow" the same, you keep significantly more money if you leverage multiple properties with the same cash.