Your points are well taken. in my mind, the benefit of an all cash deal is the immediate cashflow as well as the ability to jump on great deals as they present themselves. Instead of partnering with the bank, I am partnering with other investors. Obvious downside is giving up equity. Upside is immediate cashflow and shared responsibility for the work involved. This arrangement also protects me from having to outlay cash for mortgage payments if the property does not rent for an extended period or if rents dip in the area. Your point about liquidity is a good one and something I'd have to put some thought into. An exit plan would definitely need to be considered prior to purchasing anything and written into a contract between investors. Getting 3-5 people to agree might prove difficult.
If you can't get to immediate cashflow positive in your area with a mortgage then RE is overpriced. Walk away and invest in something else. You have to remember that you're tying up a
very large amount of capital - it must yield sufficient returns or it's simply not worth the risk. And the risk is very real - you will sink a significant percentage of your net worth in a depreciating structure with high fixed costs (taxes, maintenance) with the hope that the overall property appreciation (land/permits) and rental income overcome this. The more you put down, the more it must yield to be worth it. And a stretch of low rental income will impact your FIRE plans just as much as a dip in the markets. Mortgage rates are still super low and the interest is deductible from the rental income.
IMO partnering with a bank is easier than partnering with N other investors. The investors, rightfully, are going to want a say in decisions. Where to buy, what type of property, which specific properties, how much to offer, etc. Don't for a minute think that people are going to invest in this thing and defer to you to call the shots, doesn't work that way. In the end you will move more slowly compared to just you and a bank. Same problem with sharing work responsibilities... you can't fire an investor so resign yourself to potentially doing all the work and others freeloading. At least make sure that your initial agreement provides for management fees or similar pay for those actually doing the work, and stipulate how this pay and assignments are determined (vote of the board or whatever).
I'm skeptical by nature, which is why I'm replying to your thread asking for skeptical POVs ;-) I worry you've been bitten by the RE bug. Perhaps you've seen huge property appreciation in your area and/or friends/family who are sitting pretty with their the RE investments, and you're looking to get in on the action. This is not meant to be a personal attack, but I worry because it almost never ends well. And yes, I could be wrong here, but the fact that you've omitted all comparisons to other investment options suggests this is the case. I think you have to seriously consider if your desire for RE is causing you to underestimate the downsides and overestimate the upsides.
I should disclose that I have rental property, but I bought it during the housing bust and got a great deal. The time to buy RE is when everyone is doom-and gloom. Lots of articles about how it's better to rent than own in those days (anyone remember all the "smart" hipsters saying this back then?). It has appreciated a lot and rent income has increased as well, so it's paying off for us. But I'm still somewhat ambivalent about it...it's not doing any better than my other investments. In fact, we are looking to reduce our RE holdings in the near term. When I see people (not you necessarily, but in the wider world) desperately trying to get into RE by whatever means possible, and at almost any price well, let's just say my spidey sense is tingling.
