Hello, what would you do? Buying a great new property with a mortgage ...
Hello, what would you do? Buying a new large property with a mortgage Sky Down 60 A thousand dollars in order to get 500-600 dollars each month, or buying a cheaper and older property in 100 thousand dollars without a mortgage in order to get a total rent on 1000 dollars before tax? I have been debating this question for months
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Compare cash flows, expenses, and net profit after taxes (because loan expenses are tax deductible).
As for old vs. new, this is a question of risk management. Recommends that you check the status of the property with a professional so that there will be no surprises.
The buyers buy older properties and take into account the cost of repairs.
I would like to get specific answers from the creator, I want to buy a property built in 2014, a single family, 4 rooms in Vegas at a cost of 280 thousand with a 20 percent down payment, with closing it is about 60 thousand, a monthly mortgage of 1300 will be rented in 2000 (I made the same combination for 4 properties already) on the other hand, I am considering purchasing a single family property without a mortgage, year of construction 1980, after renovation the cost will be 100 thousand and it will be rented for 1100 so the question is what would you prefer? I will add that for properties in Vegas I have no management expenses or expenses at all
The rule of thumb says that you should leverage (in order to buy more assets). However, there is a lack of data on the question, so there is no definite answer to my opinion
Usually in a transaction with your cash on cash, you will be higher.
But with long-term financing you are exposed to other things like interest, variable loan, etc.
Everything is personal preference
Thanks sounds very logical
As the rest of the respondents wrote, it depends on the state of the property, the environment and the level of risk that suits you.
But statistically it will usually create a situation where the more expensive asset will enjoy more future capital gain and less cash flow in the short run, and vice versa for the cheaper asset. Now decide what works best for you. There is also another option and that is to buy 2 properties in 100K with a mortgage and then you will most likely improve the yield.
In addition to what Giora asked, what is the purchase price compared to the market for each property? Is the area Low Income in the old property? And many other questions
Missing Data: What is Cash Flow? Quality of properties and tenants, etc.
Depending on your risk preferences