Use Cash or Financing?

[Clayton Miller]

What are the pros and cons to selling my first rehab? So we purchased a place for $25,000 and put $25,000 into it. We currently owe people and a bank $50,000 on this house that appraised for $120k. The end goal is for my partner and I to accumulate as much rental property as possible for the passive income. Here are the two options.... With the market being hot for this price range would it be a better idea to keep the property for rent, $1,300/mo, take a mortgage out on the house to buy and pay for the 2nd home? Or Do we sell this place, pay off the people we owe, pay off the bank, and buy/fix up our new 1st rental($50-60K). Now it is paid in cash, we spend the rest of our sales $'s and take out a mortgage on this new home to buy and fix #2? Does it make a difference? I don't know how to figure this one out. Please and thank you for your responses. If I need to explain more please just ask.

[Steve Vaughan]

There would be less costs, less pain and more efficiency keeping this one by refinancing out your partners and bank, possibly even getting some cash out for your next purchase because of your 50%ish LTV.

Maybe the same partners and bank would want to do another one with you?  This all assumes this is a good asset in a good area for quality rentals?

With your goal of acquiring additional buy and holds, it makes more sense to me to keep this one via refi.  Great rent/price ratio you have there @Clayton Miller!