Why not pay CASH? - Posted by serendipity
Posted by serendipity on February 04, 2001 at 18:50:21:
We have $100,000 to put into real estate investments, and an excellent credit rating. We have found a single family home for $90,000 that, with approximately $7,000 - $8,000 worth of paint and new carpet (and dog-smell elimination) should sell for between $125,000 and $135,000 (based on recent neighborhood comps). Plan is to buy, fix-up and resell this property for a quick profit to use for more real estate investing. House is located in a desirable neighborhood, close to a major DC/N. VA commuting route.
We could finance with 10% down, 30 yr. fixed rate loan at 7.25% w/one point, using our cash to do the fix up. OR we could pay cash for the whole she-bang - thus avoiding many of those pesky closing costs and the cost of mortgage payments while the property is on the market. If we tie up all our investment capital in this one house, we may miss other opportunities - but we’ll also make more on this deal by avoiding the costs of a mortgage. So, why should we finance the property rather than just purchasing it for Cash? Any comments/advice?