Buying house with cash vs using loan (here me out)
So I’m currently in the market to purchase my first rental property, and I’ve been brainstorming for good ideas and I remember Dave Ramsey saying that he buys all his properties with cash which allows him to offer way less than market value and people are more willing to accept because the closing is so much quicker and easier.
So if I could borrow the cash from my parents to purchase out right then turn around and refinance after the deal is closed then give them the money back would that be a smarter option than obtaining the loan before I make the deal?
Most Popular Reply
#5 All Forums Contributor
- Plymouth, MI
Except that DR isn't right. Those properties where cash gets you a lower asking price are few.
Now the real bad news. The total cost of a rental property to you is what comes out of your pocket...as in your cash.
Assuming you have $100k to spend. Answer the following 3 questions
Question #1: You have two options to make an offer on a property (or properties) where the AP is $100k. Which use of funds option costs you more money?
A - Pay all cash and get the AP down to $90k. Cash Flow = $10k/year
B - Pay using 20% down payment. Cash Flow = $20k/year
Question #2: Which use if funds option returns your cost the fastest?
Question #3: Which use of funds option is the most profitable?