Oh, the famous debate. Should you pay cash for your investment properties, specifically rental properties, or should you leverage them? If you are new and don’t know what leveraging means, it means using a loan or some other form of money (basically anyone’s money other than your own) to buy property. Buying a house using a mortgage is a perfect example of leveraging.
If you haven’t caught wind of this debate yet, just search for about five seconds on the BiggerPockets Forums and you should find enough entries about this to hold you over for hours! If you have seen these posts or been involved in the debate, you already know exactly what I’m talking about.
I want to start this article by making a very firm prefacing statement that I want to make sure everyone reads. And that statement is:
No matter what any analysis or argument suggests the better method to be — buying investment properties using leveraging or with all cash — the only route you should personally go is that which you are most comfortable with.
Here’s the reality of this debate. I think people get so caught up in the arguments flying back and forth that we forget to take a step back and realize that regardless of which method people prefer, we are all still incredibly awesome because unlike a lot of the rest of the world, we are buying investment properties! Buying investment properties is incredibly advantageous, a lot of people don’t have the nerve to do it, and irrespective of anyone’s methods as to how they do it, we are all investors and we have that in common. That should be acknowledged! That, and there is literally no right or wrong option for how you decide to buy your property. If one guy prefers paying all cash and another prefers leveraging, great! How another guy does it has no bearing on your investing, and neither option is bad or wrong.