Paying Cash for Real Estate

Hey everyone; welcome back to my video real estate blog! Today, I wanted to talk to you about the benefits of paying cash for a rental property. This is the third part in our five part series. Please consult your financial advisor for actual numbers.

Let’s say you buy a $100,000 rental and it rents for $1,000 per month. Now, if you pay cash, that’s $12,000 of income a year. Now, take into account $1,200 for taxes, $600 for insurance and $600 for repairs.  So, roughly that’s $9,600 a year of profit. That’s a 9.6% return on your investment.

Cash is the safest and most conservative way to go about this. Now if you have a CD or a money market account that is drawing 1%-2% interest, a 9.6% back is still pretty good.

On top of 9.6% return you also do have some depreciation benefits on your taxes. Consult your tax adviser on more details.

Thanks for watching!