I'm only 23 and I'm trying to figure out a strategy for investing in real estate for the long haul.
Is there a distinct advantage of buying properties for all cash, if you're in real estate for the long run? I know that the four sources of money from property come from income, capital appreciation, tax deductions, and principle reduction. Without any debt you wouldn't see any advantages from principle reduction, and, if you're an owner-occupant on say, a multifamily, you wouldn't be able to deduct interest on your personal residence either.
I was told that a few local guys got started this way. After WWII, they came back and bought a house for say $10,000 and then saved money for the next, then kept leapfrogging until they had 10 to 15 units, which only at that point would they incur debt. Now these families are worth $400-500 million. There could be many different reasons for this continued success but I thought it was interesting because I always thought that incurring debt would probably be the fastest way to accumulate wealth in real estate, especially given that interest rates are at record lows.
If you're in for the long haul and you have a lot of time on your hands, and most importantly, you have the means, is it a good idea to buy say a property for $150,000 cash or buy three properties with mortgages and put down $50,000 on each? I'm just using these numbers for simplicity's sake.
