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Great Feedback everybody..thank you...this forum is awsome.

allcash, I like that, I am usually the aggresive type and that sometimes can turn into Greed..and the fact that I would actually tie up more of free cash that will slow me down..is a value in itself...this is the way I feel about it ....unnecessary expense that could be eliminated.

The tax deduction is a very good point that had not took in account.

I am in it for the long run...I had flipped 3 houses in the past with couple of other partners, and I may continue to do so (different line, whole different strategy..... cash really is king when it come to that...if you have it ofcourse!)

but this is a long term for me and my wife, and my wife is against the flipping thing anyways for our own deals..which keeps me grounded and focused when the eagerly part of me say emmmm..what if ...

I am in kansas, which as you all know is a steady market... appreciaction is 3% on average on house like that...5% in a very good year... but I feel is a fair deal ..since I am paying $54,720 + 2% concessions from seller and with 2 to 3K in repair expenses a minimum fair market value would be $65....could really be listed for $69K and sold quickly.

I guess the only thing that bothers me. is the Cash on Cash calculation and RoR...I was given the impression from a lender that I could get a 100% loan a couple of weeks ago.... which turned to be b.s. as you all know for investment property this a thing of the past (maybe couple a month ago was available).... I guess I always like one extreme or another... either 100% loan minimize cash out of pocket and create less but positive decent net income...or pay 20% and minimize expenses and maximize monthly net income.... does this make sense or am I being silly!!

I plan to hold into the property for long term...at least 5 years maybe even longer...

every $ hurts out of pocket :) lol, however I guess, the extra money will not strap me for cash but thereotically I will be able to acquire less propeprties with my available funds, theroicatically in the operative word, becuase practically I will need at least 3 to 4 month between each acquistion to do it right (find a deal, close , fix it a bit and rent it out)..

Trying to acquire a house for rental purposes, long term strategy is to rapidly build a rental porfolio

Purhcase Price is about $55,000 two financing options available:

1. 90% loan which will be at %7.25 interest and tie up $5500 down payment..will also cost and additional $468 in private mortgage insurance(PMI).

2. 80% loan, @ %7 interest, will tie up $11,000 down payment, but will save the PMI ($468 a year) and a %0.25 in interest and ofcourse financing less which will lead lesser payments and lower interest paid.. the total savings of interest saved, PMI, and cost of barrowed less funds will come out to about $90 a month which is about $1080 a year savings over finance plan #1..

which way is better to go? doesn't make sense to save the $1080 by paying an additional $5500 upfront (thats 20% return vs a 5% I would get from interest earned on a $5500 siting in the bank, so I am ahead 15% a year)..

lets assume I will have enough funds to keep with the possible business pace to rapidly build my porfolio of rentals...

please experts ...help me out.

Thank You

juzamjedi and everybody

Thank You for your quality info. I have been using the analysis tool for couple of days, and this thread had answered most of my questions about it.

I guess my only question, which I have seen asked but with no answer.

on the ROR and particulary Cash On Cash return, there are few thing this doesn't take in account:

1. Money you spend on a property to get it ready for rent (a cost that you are not going to necessary spend every year) but only when you firstt get it

2. Closing costs, is it factored on the total out of pocket expense.

3. what if you buy a property that is below market value, right off the bat you would have an equity in the property (apart from the equity accmulated with a down payment.

does anybody know, how can you factor these numbers in...is there a another analysis tool out there that will take these in account?

My second comment, has to do with getting the highest leverage on a property. if your plan is to build up RE rental portfolio quickly..then cash on cash is crucial. even if have reasonable amounts of liquid cash reserves.

first, I thought I had to do a 10% downpayment, then I spoke to a mortgage broker that told me he can do a 100% loan. I was very excited, I though these kind of loans are gone in the past couple of month (after the lending panic!!!)....and after few days and a I put a contract on a property, he tells me he can't do 100%, must be 90%...thank goodness...my desire to get the 100% loan is not for the lack of cash (otherwise I would have been in deep $#@#)...but now all my ROR and Cash on Cash analysis is significantly different...at least now I don't have to worry about the "Infinity" values coming up due to the $0 down payment...lol

I guess, I don't have an exact question, when it comes to the second point. other than that I feel dissapointed about my upped front out of pocket...should I be even dissapointed or should I look at it as saving on interest since a loan interest rate is higher than any guranteed return Money market or savings account and I still have the equity rather than Cash...but then again my risk factor is higher now.ughhh

any thoughts..comments mostly appreciated.

thank you all for such a great website, forums, and tools!!