Rich on Money

Financial Freedom in the Military through Real Estate

Why I Pay Cash for Real Estate

Here’s my background. I paid off my $280k mortgage is six years. $32k of student loan debt in a year. I’ve purchased several rental properties with cash while serving overseas in the military.

Why don’t I use financing? Why cash? How do I afford that? (Rich Uncle? No.)

Real estate is a powerful way to make money. Debt can be a powerful tool. With a chunk of money, let’s say $200,000, you could buy one property with cash.

You could also, with that same money, buy five houses worth $200k each with mortgages and 20% down.

Leverage gets you 4 extra houses!!

Some people find ways to use no money down and buy properties. Some even find a way to take cash out of these deals. These are obviously riskier than cash or 20% down.

Everyone makes the decision to invest in real estate somewhere along this spectrum of risk. There are pros and cons at both ends.

I want to share with you why I’m at one extreme end of the spectrum, and how it’s worked for me.

It’s worked despite the fact that I’ve been serving in the military over the last 16 years, moving every few years, and mostly living overseas (including currently).

Click here to continue reading this guest blog post.

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2 Comments

  1. Newport Ned

    Well said. Cash is the way to go. I got a local REO property a few years ago at a discount in a highly-sought after neighborhood, beating out some hedge fund investors in the process. Steady, high rental income, low expenses, 6.00%+ cap rate.

    I’ve been approached by some local companies offering single-family investments in other states, such as GA and NC. For obvious reasons, I’m reluctant to invest out of the local area.

    • Newport Ned,

      That sounds awesome. Thanks for the comment. I’d be interested in hearing about what you do.

      Rich

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