Why not pay CASH? - Posted by serendipity

Posted by Terry (IN) on February 04, 2001 at 20:05:39:

Would the owner go for a lease/purchase option? Then you could repair, find a buyer and do a simultaneous close. All you would have to lay out then, would be option consideration, fix up costs and lease payments for the time you have it tied up. Not only would eliminate a mortgage or capital outlay, but you would also eliminate 1 closing cost.

Just something to ponder.


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?

Re: Why not pay CASH? - Posted by Lee Wentker

Posted by Lee Wentker on February 25, 2001 at 04:44:56:

Cash is a precious commodity in real estate investing.

Can you imagine how hard you would kick yourself if you just put down all your money on a good deal and had nothing left over to take advantage of the better deal that is sure to follow after you close on the first deal?

Re: Why not pay CASH? - Posted by Kate (VA)

Posted by Kate (VA) on February 05, 2001 at 09:32:53:

Which gives you more bang for your buck:

1 - Paying cash for one $100,000 house
2 - Putting 10% down on 10 $100,000 houses

Leverage is a wonderful thing. If you plan to sell quickly anyway, the mortgage cost shouldn’t greatly affect your profit. If it does affect profit greatly, your deal is probably too skinny anyway.

Just my $.02.

Best of luck,