I don't say much; more of a "put my head down and do" when RE is involved. And what I put my head down and did was take my cash saved over a 15-year career and purchase two houses, no mortgage.
I'm new in RE, new in parenting, and middle in my career. I am not interested in a full-time job filling out forms to obtain and manage debt, nor am I the kind who can sleep at night with large negatives hanging over his head. (Cashflowing as they may be.) I knew myself and was willing to endure a risky first year where it was possible that even with no mortgages the expenses might exceed the rents, and I was prepared to cover that with my job income if necessary. It turned out great. Both properties now have emergency cash reserves for large repairs or taxes.
Then Covid 19 hit the entire planet. The people who leveraged and were no longer receiving rents were in a very bad situation. My property manager who makes money on collected rent was in a bad situation. And I said I would take care of them if need be. They took care of me so well my properties built up emergency funds. It's an emergency.
Not having mortgages turned out to be a really good idea. What I get isn't much, but it's mine.
Finally, some calculations. I've been meaning to do these anyway.
Case 1: $100,000 mortgage for 30 years, profit and expenses over 40 years, assume $200 average cash flow per month and $700 monthly payment.
You pay: 360 months x $700 = $252,000.
You get: 360 x $200 + 120 x $900 = $180,000.
It will take 80 more months, a total of 46 years and 8 months, to actually earn more than you've paid.
Case 2: Pay $125,000 for the property now. Total after expenses is the same $900 per month.
Breakeven: $125,000/$900 = 139 months = 13 years 7 months (of living with an extra $900 to spend each month)
After 30 years: 360 x $900 = $324,000
After 40 years: 480 x $900 = $432,000
After 46 years 8 months: 560 x $900 = $504,000
All those figures are PER 100,000 SPENT. You can use leverage and get 100% FIRE very quickly, but the banks will earn more than you do and your "freedom" is unstable. If there are riots or plagues or natural disasters or just bad tenants it all comes crumbling down. You might even have to do something inhumane to protect your Debt Repayment Empire. (Let's not go into how in the Social Media Age such acts could save you but besmirch the good name all landlords have *snark*)
I'm going to at least buy my first five houses without mortgages. It'll be slow but what I build will be sturdy, honest, MINE, and complete by the time I need to rely on social security or even a pension that won't be there for me as promised. And if necessary I will be able to afford the humanity and compassion involved in waiting for a tenant to get back on their feet.
