Should I Pay Cash or Leverage My Real Estate Investments? [#AskBP 027]

Ah... the classic debate. Cash vs. leverage. Which is better? In this episode of the BiggerPockets #AskBP Podcast, Brandon shares his thoughts on the debate and provides some interesting commentary that will help you decide the best path for your investing. Stay tuned! http://www.biggerpockets.com/renewsblog/2015/05/26/askbp-027-should-i-pay-cash-or-leverage-my-real-estate-investments/

Comments

1. Can you not first buy one from a private lender as personal home and then get more morgages using your own property as practice to what to expect?
2. If you're just starting out it's better to start with the lower-risk option. Better to learn to walk first
3. why would you tie up 100k for over 16 years when you can invest that money on a flip. Get your initial investment plus your profit faster. In your scenario, you would have to wait 16 years and not spend a dime to get the 100k back in your pocket and then see a profit. Is my thinking correct or am I missing something. Please help me out on this one. Thank you
4. How are you coming up with enough income on paper to support the 5-$100,000 mortgages?
5. The only reason id buy cash would be to get the cash right back out and then by 5 more with mortgages.
6. Great video I appreciate the perspective. I think the only way the 5 property scenario works is nothing can go wrong. Increase risk and it may work but you're really going all in. I believe in pay cash and let it cash flow like crazy. 1 tenant, 1 set of repairs, and not as much time spent. If you're new to real estate I wouldn't jump in on 5 properties as you don't know what you're doing and will most likely be miserable.
7. I was in this exact situation. my first property 6 years ago was a 68k quad with section 8 tenants. it was a DUMP. I put my 50k down took a 3 year loan with a payoff bubble at the end. rent was 2000k a month total. i hired a tough black lady to be my property manager. over the next 2 years we got off section 8 transformed the building and improved the whole street. I hired a guy to redo the Masonite siding that had peeled away and put up new vynal siding with new windows. we gradually gutted each apartment and then put on a new roof. we made it the best building around and had it free and clear in 3 years. with 130 thousand spent we net 15k a year for past 3 years. saving now for next opportunity.
8. 5 Roofs, 5 water heaters, 5 X the repairs. Make sure the properties wont need much maintenance in order for these assumptions to work. Older distressed homes that you buy at a discount usually need some repairs . Keep that in mind.
9. Finding 5 creditworthy tenants can be quite tricky and a lot to manage especially if you are just starting out. Every property can have different issues and those issues have to be addressed and will cost money and start with one townhouse out there newbies. I'm not sure where Brandon gets his figures from but in most of middle America, $100,000 gets you hardly anything.
10. Hi Brandon, thanks for another good, sensible and balanced video. Wondering how much discount a cash buyer normally gets vs the down payment buyer? If a cash buyer normally can buy for between 15% ~ 20% lower than mortgage buyer, would it not be immensely more beneficial to buy one property with cash down and later get a mortgage on it? This process can be repeated over and over.
11. those numbers were way off. you will get alot morw then 500 dollars a month from a fourplex property
12. I have same question as Jason Rowlett. Please answer.
13. Looking through videos on real estate investing, this one stood out and made me rethink my possible strategies. I am about to jump into this world and your podcasts and Bigger Pockets are awesome, thanks!!!
14. I Love your videos so clear cut and straight to the point
15. when you paid cash for a house, later you can take loan against it, collateral, and what else? can you go into more detail thanks
16. Good video!  I love learning from you guys.