cash in hand. is it wise to simply pay cash for a couple rental properties?

Asked by nowsgood2, Bonney Lake, WA Mon Dec 16, 2013

can I get better deals on a house paying cash making it worthwhile to tie up the cash i have 300k and want real bargains

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21
Angela Adams, Agent, Henderson, NV
Thu Jan 9, 2014
We work with investors all time. The answer to your question is it depends on what you are trying to achieve. Please contact me to discuss.
1 vote
Robert Adams, Agent, Henderson, NV
Thu Jan 9, 2014
It depends on your investment goals and exit strategies. If you would like to discuss the market, your investment goals, and how to create and investment strategy that will help you reach those goals I would love to help. Please feel free to contact me directly or fill out our buyer's form here so we can get the process started for you: http://lvrealestatehelp.weebly.com/buying-real-estate.html

I look forward to hearing from you!

Best Regards,
Robert Adams
Broker/Salesman
The Adams Team at
Rothwell Gornt Companies
C:702-349-9175
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RobertAdams@LVrealestateHELP.com
http://www.LVrealestateHELP.com

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1 vote
Diann Tonnes…, Agent, Las Vegas, NV
Tue Dec 17, 2013
With the cost of money being as low is it is right now, and with interest rates projected to rise, it may be better to leverage your funds and finance low balance loans so you can purchase three or four properties instead of two. In each scenario, you will have to look at your return on investment (ROI) to make sure the numbers make sense. We do have a preferred lender that charges no lender fees to our clients (underwriting, processing, etc.) while keeping the rates competitive which will eliminate much of the loan cost, so really you just have appraisal cost and lender title insurance to pay in addition to the costs you would normally pay with a cash purchase.

In the Las Vegas market with so many cash buyers (about 50%), you won't get much of a discount for a cash offer. The benefit of cash is, though, if there are multiple offers, you stand a better chance of getting your offer accepted if it is the highest one. However, if there are multiple offers and you have to submit the highest one to "win", you probably won't be getting a real bargain anyway, right?

So personally I feel it would be better to leverage your cash. That being said, you will probably have to be prepared for rejection on lots of offers in order to get the best deals.

Many investors say they are willing to do that, but over the past 30 years we have found that most do not have the patience it takes to do this. Or they have unrealistic expectations of what a "real deal" can be. (If you can get something 5% to 10% below market in Vegas, that is a "real deal" these days. It is not a flipper's market any longer.) These investors end up jumping from agent to agent until the frustration level sets in and they end up buying just for the sake of buying or give up altogether.

So you have to ask yourself if you are willing to put in the time it takes to get the real deals. Everyone wants one! You have to be willing to do the market research so that you recognize a deal when you find it, and be prepared to lose out on more than you win. If you think you have the right mindset, I would advise interviewing several agents until you find one that is on the same wavelength that you are, sign a buyer brokerage so they know you will remain loyal to them if they put in the work necessary to accomplish your goals properly, and then start educating yourself about our market.

To educate yourself about what is really possible, you need to get off the "big box" sites like Trulia and Zillow. They are really just advertising generators that are not bound by local regulations, and they do not take down properties after they are sold in a timely fashion! (I have seen properties listed for sale that are years old.)

Go to a local agent's site like http://www.GreatLasVegasHomes.com which, by law, must be kept current. This site is updated daily, plus you can also see what has recently been sold. And if you like what you see and are serious about buying in Vegas, we would love to be one of the agents you interview to help you achieve your goals.

Hope this helps!

Diann Tonnesen
Prudential Americana Group Realtors
sold@GreatLasVegasHomes.com
702-985-7654

The Tonnesen Team - with over 30 years of experience helping families call Las Vegas "home!"
1 vote
Matthew D'Er…, Agent, Las Vegas, NV
Tue Dec 17, 2013
You will benefit for a variety of reasons for paying cash. You'll have more success making offers, you'll be able to negotiate better deals, closing costs are much cheaper, no loan insurance and it's the smart financial move to make. I would suggest single family homes between 130 and 150k, great areas, great schools, etc. We specialize in investment, income properties, remodeling if needed, and property management if you want it. Let me know if you'd like to chat/interview us. Thanks, Matt & Kim
702.501.0973
1 vote
David Cooper, Agent, Los Angeles, CA
Fri Jan 10, 2014
When Interest Rates for Real Estate Loans Hit 7% very soon and Inflation Roars back and you could have put 25% down and qualified for a 5.5% fixed rate 30 year loan. I can hear "COULD HAVE, SHOULD HAVE, WOULD HAVE" one more time.
There are investment grade houses in good areas for $130,000 to $150,000, and the Spring Bump is just around the corner.

David Cooper Investment Group
Helping Buyers Find Incredible Deals Since 1994
Foreclosre List http://www.lasvegaswinner.org
or CALL 1.888.616.6226
0 votes
Chad Roberts, Agent, Henderson, NV
Sun Dec 29, 2013
You have the right mind set, for a better return on investment, it may be best to consider two or more properties. Cash has its advantages and you may want to keep location as a top priority with your search in regards to your rental market. To your point about bargains, you may want to seek the assistance of a Realtor to help locate properties.

Regards,
Chad Roberts
Broker/Salesperson
Realty One Group
0 votes
Phil Scheinm…, Agent, Las Vegas, NV
Thu Dec 26, 2013
The best answer is come and see what you are comfortable with to buy as an investment.

Search http://www.Las-Vegas-Real-Estate-Home.com

Regards,

Phil Scheinman, ABR, GRI, E-PRO
Broker * Sales Agent * Realtor
Realty One
2831 St. Rose ParkwaySte. 100
Las Vegas, NV 89074
Direct: 702-580-9198
Fax: 702-405-7659
E-mail:smokey25@cox.net
http://www.philScheinman.com
0 votes
Frank Liu, Agent, Las Vegas, NV
Thu Dec 26, 2013
You better to buy two house instead of one.
0 votes
Jerry Jenkins, Agent, Las Vegas, NV
Thu Dec 26, 2013
As several others have answered the basic point; yes cash is better then loans but another point not addressed is what you should be buying and where.
With 300K; you have several options from 1 SFH for $300K to 2 4-plexs or several condos. I would not recommend buying one $300K house because the rental rates are lower when compared to max income generated from 2 4-plexs and you get the added benefit of diversifying your vacancy rate. A $300K house would rent for between $1500 and $2000 a month depending on location compared to purchasing several condos at $60 to $70K that rent for $650 to $750 a month.
As with all investment property; you need to identify the community, compare gross rental rates against HOA fees, and other costs of holding the property to get a good number of net rental income versus the cost of the property. Once you know what the net numbers are you can use that to guide you to the best ROI for your investment and and which communities and types of properties to target.
Also keep in mind that a single family home will appreciate more than a condo so that needs to be factored into your decision. The local market went up over 30% in some neighborhoods in the last year and should still be good for 2014 and this is another factor that should be addressed when you put an investment plan.
These and other factors make siting down with an experienced Realtor time well spent to clarify any questions you have and to choose where to invest for the greatest return along with the least amount of risk. Buying a bargain is a good starting point but the other factors will have a bigger effect on your long term gain and should be carefully considered in any purchase.
0 votes
Phil Scheinm…, Agent, Las Vegas, NV
Wed Dec 18, 2013
Have you considered buying 2 four plexes so you can have control of 8 units for $300,000.

Search http://www.Las-Vegas-Real-Estate-Home.com

Regards,

Phil Scheinman, ABR, GRI, E-PRO
Broker * Sales Agent * Realtor
Realty One
2831 St. Rose ParkwaySte. 100
Las Vegas, NV 89074
Direct: 702-580-9198
Fax: 702-405-7659
E-mail:smokey25@cox.net

http://www.philScheinman.com
0 votes
Frank Liu, Agent, Las Vegas, NV
Tue Dec 17, 2013
If you have $300k, you better buy two single house and rent out in Las Vegas today. I believe the house price will going up after New Year. At that time, $300k may only buy 1.5 houses.
0 votes
Terry McCarl…, Agent, Cape Coral, FL
Tue Dec 17, 2013
Real estate agents aren't accountants and this is really a question you should ask your accountant or tax advisor.
0 votes
Blanca Buono…, , Henderson, NV
Tue Dec 17, 2013
its ok, but for tax reason its better some cash get a loan for the rest. I can help you with both, call me , I been in vegas since 1970 my name is blanca buonomo with Kelly Williams my cell is 702-461-4036 or email bbuonomo3@gmail.com
0 votes
Stephen Mess…, Agent, Las Vegas, NV
Tue Dec 17, 2013
Diann's response pretty much hits the nail on the head of what is going on in the Las Vegas/Henderson market.
0 votes
Beverly Bart…, Agent, Henderson, NV
Tue Dec 17, 2013
There are a great avenue for investors here in Las Vegas. I am getting a lot of cash offers on listed short sale properties. So the answer is yes there are a lot of bsrgains here now.
0 votes
Annette Law…, Agent, Palm Harbor, FL
Tue Dec 17, 2013
What is best for you depends on your situation.
For instance, how much is your cash earning now?
What are your long term plans?
Are their good real estate investment options open to you NOW?
-
Depending on the 'cost of money' and "opportunity costs' I would recommend BORROWING low cost money to buy as much with OPM as you can. THEN use cash to refurbish or buy the last property.
-
All purchase offers, to be competitive must be clean.
0 votes
Harold Richa…, Agent, Henderson, NV
Tue Dec 17, 2013
I think of simplicity in the Las Vegas Market - You own the homes outright, minus HOA Fees, if applicable, utilities, etc... You generate a larger positive Cash Flow, your properties are increasing in value, you then can acquire more properties through financing to increase more Cash Flow... It can go on and on. There naturally are some drawbacks, if you are not prepared...

Contact me to talk more...
0 votes
Hank Lauzon, Agent, Las Vegas, NV
Tue Dec 17, 2013
Hello,

Cash has advantages.. especially if you are in a competing situation against financed offers. The other offer that is being financed has to meet and pass appraisal guidelines ... especially if it is a FHA or VA Loan.

Also,... a cash offer will save you Thaousands in closing costs and can close much quicker which would be appealing for a motivated seller on time constraints.

You also have the option to refinance down the road usng the equity in the property if you have a need for the cash n the future....

If you need any help finding a home in Las Vegas or if you have any questions about the current Las Vegas Market Conditions... feel free to call or email me at anytime....

Click below to vew available homes for sale in Las Vegas...
http://www.hankslvrealestate.com/web/AR463883/ListingSearch/…


Happy Holidays,
Hank Lauzon III
Signature Real Estate Group
9525 Hillwood Drive #120
Las Vegas, NV 89134

Cell 702-449-0899
Fax 702-543-6844

Web : http://HanksLVRealestate.com
Email: HankLVRealestate@aol.com
Facebook: http://www.Facebook.com/HanksLasVegasRealEstate

Never look down on anybody...unless you're helping them up.
0 votes
Myra Gouger, Agent, Las Vegas, NV
Tue Dec 17, 2013
Most people who buy in Las Vegas pay cash, so you won't get any better bargains or any bargains at all just by paying with cash. Housing prices in Vegas have risen more than 20% from last year to this year. What you do gain is that your properties are paid for and everything that comes in (less, of course, HOA and taxes) is all profit on the property.

When you are buying, figure your ROI and see if it is better to pay for the entire home in cash or better to take a mortgage. If you think you might want a mortgage, then apply for it now before you start buying properties. Your closing costs are higher with a mortgage - so figure that in as well. Either way, it is a great time to purchase properties for rentals. The rental market is still strong and people still need homes to live in vs. living in an apartment.
0 votes
Jeff Howard, Agent, Las Vegas, NV
Tue Dec 17, 2013
I'm not sure why so many people think that paying cash for real estate get's them an amazing bargain. When you go and get a mortgage, the seller get's cash from the mortgage company, so (unless seller financing is being offered) the seller get's cash anyway. What makes cash better is when your offer is competing against a financed offer; then the seller does not have to worry about the deal potentially falling apart because you lost your job. Would you sell me your properties for a lot less just because I did not need a loan? Probably not. Having said that, Las Vegas real estate is still considered undervalued, so, much of it is a bargain.

In short, when competing against other buyers, use your cash. If you are the only offer, use the leverage that a mortgage provides! I wish you success!

Jeff Howard
Keller Williams Realty
0 votes
Edwin Castil…, , Chicago, IL
Tue Dec 17, 2013
I have been referring my clients to money managers who hold their cash in conservative investments that most often earn higher interest rates than what is available in today's mortgage market. Flex the leverage that mortgage financing offers to secure and rehabilitate those great investment opportunities!

I will provide the BEST mortgage terms as I will not be undersold.
I will offer superior service throughout.
You work with me and we will close quicker than the industry average.

Contact Me Today!!!

Edwin Castillo
Mortgage & Insurance Specialist
(773)406-6503
edwin@consultwithcastillo.com
0 votes
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