Most of the answers I read here do not include that dirty four letter word RISK. Me and my wife work day jobs, live well below our means and save up cash to buy houses one at a time. Not borrowing the money provides security and peace of mind. If I don't have a renter in a couple of my houses then it's not the end of the world. When you owe a mortgage it is very stressful when the houses are empty or a renter stops paying and is squatting on the property. Depending on your state it can take months to get them out.
Is it possible to get a mortgage at 4% and make 12% on your money somewhere else? Yes, absolutely. Is there risk involved? Again yes.
I can tell you this Jennifer. A lot of sellers want to close fast and will give you a better price than those borrowing. Get investment properties at a price well below market value. Don't pay full price for anything. Only look at homes built out of brick, block or stone. Makes insurance cheaper almost by half. Check out the best school districts. Those houses always appreciate steadily. The other thing I look at is percent of unemployment. Buy in areas where people have jobs. Don't buy in areas with high unemployment. It takes some work to do all this, but do it anyway. Well worth the time and effort.
Doing this has provided a strong monthly income for us. I am 33 years old and will retire soon because the income from the houses is taking the place of our day jobs. Money coming in every month without getting up every morning to go to a job. That is what we have always wanted. This idea of investing is old fashined but it has worked well for us. Good luck Jennifer.
If your goal is to sell later and use the money for college tuition, retirement, etc., you are hoping that the income from the sale property will help with those items, plus hopefully you will be able to receive a rent payment that allows you to get a solid return on your investment. Good luck!
The advantage to investing your money in real estate is that you can leverage your cash and invest in more than just what cash you have on hand. What I mean is if you have $100,000 you can own three properties worth $100,000 by just putting the required 20% down (although you will probably need to put closer to 30% down on an investment property). You will want to keep some cash on hand for maintenance or repairs if you are flipping.
Residential Real Estate Investment Specialist
Your plans for the property will determine what kind of a down payment will net you the highest return on your initial investment. Will you rehab and sell, or rent and sell in 2,4,7 years? If you would like to discuss this further contact me at email@example.com.
So much of the answer is based on your situation, I would also reccomend speaking with a financial advisor or at the very least a loan specialist and see what they can offer, it may make more sense to use the cash in another investment while using the rent to pay for your investment property or possibly purchase more than one. If you contact me via my website I will be happy to get answers to any questions you might have. Thanks, Michael
I agree with the previous answers. You should consult w/ a financial advisor. He/she will be able to let you know if this option is the most suitable for your short/long term goals.
Once you have this information you'll be better positioned to make an offer.
I have one that I could recommend if necessary.
It's great to hear that you've saved enough money to endeavor into this project. Good for you and happy hunting!
To really know the answer Jennifer I'd need to know what your goals are. What are you attempting to accomplish by purchasing property? Are you looking to sell the property in 2 years or 20? Are you intending to rent it? Lease/option? If you clarify the goal it will be easier to provide a meaningful response...
There are plusses and minuses to using cash.
You can leverage cash to hold more properties. As a Realtor, that is where I make more money, when you buy more properties.
But this is about YOU! Not ME!
I like cash. Cash IS king.
You can buy great cash flow from an investment property by having little or no debt. Little or no debt is not a bad position, as far as I am concerned.
Both approaches have their supporters and detractors.
You should discuss this topic with a trusted financial advisor who knows your personal circumstances, goals, and risk tolerances.
If you are in a position to make a large downpayment, or cash purpose, I suggest you first connect with a skilled financial planner whom you will pay a flat rate, who is not selling any investment vehicles, and form an overall long-term wealth management plan.
See how real estate investment fits into that plan.