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Are You Planning to Buy Your Next Investment Property with Cash?

Man Holding Cash and Handing Over KeysAcquiring a Dana Point investment property with cash comes with a range of benefits. But remember, there are other essential things to look into just before paying cash for your next rental property. Not having a mortgage payment is greatly inviting. Your rental income could grow to be very rewarding almost easily without needing to factor in the mortgage payment. However, paying cash for a rental property doesn’t mean you can avoid paying other expenses related to buying and owning an investment property. Read on to learn more about these and other important things to consider when buying a property with cash.

Benefits to Consider

First, the advantages. Apart from having no mortgage payment, there are further favorable benefits to buying a rental property with cash. Take one example, sellers may be more agreeable to negotiate with a cash buyer, even accepting a lower price if you can guarantee immediate payment in full. With no mortgage approval process most likely delaying the sale, a cash buyer can move through the purchase more competently and eliminate the risk of loan denial.

Certain benefits to take into consideration involve paying less over the long term for the property due to the fact that you won’t have any mortgage interest to feel anxious about. You may be able to save certain money on fees related to the appraisal, title insurance, and lender-imposed closing costs. And, because you will own the property outright from day one, cash buyers gain full, instant equity in the property that can be borrowed against or cashed out when the time is ripe. The thrill of a cash purchase is an adequate reason for the majority of investors to opt-in.

Costs to Consider

Conceding that possessing a rental property with cash has many advantages, there are also costs you will still be responsible for, though you opted not to finance your purchase with a mortgage. For instance, while you may avoid certain loan-related fees, there will still be closing costs on a cash sale that you will need to pay out-of-pocket. These costs can equal as much as 3% of the property’s purchase price and include things like real estate transfer taxes, processing, and filing fees levied by the County Recorder, a home inspection fee, and so on.

Property taxes will further always be an expenditure that owners will need to pay, one way or another. There would be property taxes due at the time of the sale, and then there may perhaps be ongoing expenses that will need to be paid every year or twice a year consequently. In many locations, you can go to see a property’s tax bill online through a city or county website.

Various ongoing expenses that you can presume to pay related to your investment property include insurance, maintenance and repairs, utilities, and in some cases, homeowner’s association dues. Not to mention professional Dana Point property management to maximize ROI. These and all other outlays of owning a property should be meticulously researched and included when estimating your monthly cash flow.

To reap the benefits of buying a rental property with cash, bear in mind that you’ll need more than just the property’s purchase price on hand. You’ll equally need enough cash for closing costs, taxes, insurance, and the repairs you’ll need to make to get the property ready to rent.


At Real Property Management Agile, we help out rent property buyers get nice deals and off-market properties. Whether you hope to pay cash or finance your next rental, we can definitely help! Contact us online to learn how.

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