Multiple mortgages or mortgage free?

Question

My partner and I have made off with a pretty good payday after selling our ON primary residence, we are looking to deploy the cash into Eastern Canada where homes are cheaper. I am just curious if anyone has insight on the idea of using our cash to buy a place outright, no mortgage and then renting it for cashflow, using the cashflow for our next place/project or if it would make more sense to split up our cash and purchase say 2 properties with significant down payments and small mortgages, rent them out and aim to be mortgage free on both within 5 years(ish). Hopefully, I've explained the question properly, I am a complete novice, any insight would be greatly appreciated.

dan pugilia

Account Closed · Answer

Hello @Daniel Puglia. Welcome to BP.  One of the key benefits of real estate as an investment vehicle is the power of leverage.  If you buy a property cash, you'll have no debt service on it, but your growth is limited to / by only having one property. If you instead buy multiple properties, your net worth will grow more rapidly, as you'll potentially gain appreciation on more / larger properties.

Alex Uman · Answer

For scalability why not go with 30 year mortgages on both, tie up less cash and buy more? Why is your strategy so debt-averse? Or, on the flipside, get something all cash you can rehab and then refinance for a higher value down the road and pull more cash out of.

Roy Cleeves · Answer

Buy as many as you can now.  Prices will probably go up for some time and make purchasing later more difficult.

Jocelyne Sema · Answer

It's an amazing feeling of being debt free, but you need to be comfortable with debt if you want to grow in Real Estate. It's not a risky debt, your neth worth will drow exponentially if you do it correctly. Use the leverage you and buy as many doors as you can, while being comfortable with it.

Multiple mortgages or mortgage free?

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