Should I Pay All Cash For A Property in Orange County, CA? | Fridays with Fred

October 17, 2014

by Fred Sed

Should I Pay All Cash For A Property?

As long time Orange County Realtors, one common question we get asked by Real Estate investors is “should I pay all cash for a home?”

Paying all cash for a home is a great idea but before spending all of your money in one place it’s important to ask yourself these questions:

Is The Home A Primary Residence?

If the home is going to be your primary residence where you will be living with your family then yes you should consider paying all cash if you can. By paying cash for a home all you will have to pay is your property taxes, homeowners insurance and homeowners association fees plus you will have the comfort of not having to pay a monthly mortgage payment. Imagine the comfort and security you can have by not owing anything to the bank!

Are You Buying An Investment Home?

Since the cost of Real Estate is still affordable in Orange County many people have bought second homes over recent years because owning an investment property means you will be able to rent the home and enjoy monthly cash flow from that rental.

Use the Power of Leverage

Before paying all cash for an investment property though ask yourself this, why not leverage your cash across multiple homes instead of using it all on one property?

For example: Let’s say you have $400,000 in cash; instead of spending all of that $400,000 on one home in Orange County you could consider using “leverage” by putting a down payment of $100,000 on 4 homes in Orange County then leveraging the banks money for mortgage loans on each property.

During our years of working in the Orange County Real Estate market we’ve helped many investors who leveraged their funds by following this example and they were able to accomplish their Real Estate goals.