Author Topic: Buying an investment property the mustachian way?  (Read 1684 times)

jtmoniii

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Buying an investment property the mustachian way?
« on: April 27, 2014, 01:10:12 PM »
Hey guys,

I'm a banker and real estate investor - trying to live in a more Mustachian kind of way! 

I keep a blog on all types of ways to finance investment properties and would love your input!

Is there anybody here who has bought a property in cash?  If so, how did you save up for it?

Is it better to buy a property fully-leveraged and then pay it down?

BTW, my blog is realestatefinancehq.com

Thanks in-advance for the answers.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28248
  • Age: -999
  • Location: Seattle, WA
Re: Buying an investment property the mustachian way?
« Reply #1 on: April 27, 2014, 04:04:40 PM »
Is there anybody here who has bought a property in cash?  If so, how did you save up for it?

Yes.  Saving my surplus every month.  How else do you save?

Is it better to buy a property fully-leveraged and then pay it down?

Depends on your goal, situation, etc.

Personally I'd choose neither: leverage and don't pay it down (besides the minimum).

The math says pay it down if you can invest it to where you can earn higher than the rate you're paying.  People have different opinions on debt though, it's an emotional thing.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

jtmoniii

  • 5 O'Clock Shadow
  • *
  • Posts: 5
Re: Buying an investment property the mustachian way?
« Reply #2 on: April 28, 2014, 04:58:16 AM »
Thanks for the response.

Fishingmn

  • Bristles
  • ***
  • Posts: 335
  • Location: Twin Cities
  • You never have to recover from a good start
Re: Buying an investment property the mustachian way?
« Reply #3 on: April 28, 2014, 01:13:14 PM »
Yes - I have purchased with cash.

Some I bought using exercised stock options. The rest I purchased when we bought a new house - we had previously owned outright but financed our new primary residence at 3% (15 years) so I could get more cash to buy houses yielding 9%+.

The numbers say you can often get a much better return using leverage but for me I had the cash available and I viewed the alternative uses of my cash (stocks, bonds, MM) as less attractive considering how cheap real estate was 3-4 years ago when I started buying. Also, in theory I could have purchased 4x the number of places if I had paid only 25% down but in reality I would have had issues finding that many deals, managing that many properties (I self manage) and would have run into lending problems trying to actually get regular loans once I got past 4-10 places.