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Is it Better to Nomad™ or Buy Rentals All Cash?
Manage episode 375864968 series 3486872
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Prices have gone up rapidly in the last few years. And, interest rates are much higher. And even though rents are up, they’re not up enough to counteract the much higher prices and much higher interest rates. That makes it harder to achieve good cash flow with a reasonable down payment.
One way to overcome the impact of higher interest rates is to not use loans to buy rental properties.
In this comparison mini-class James will compare the Nomad™ real estate investing strategy to taking the significantly longer extra time to save up and buy rental properties for cash.
With the Nomad™ strategy, James will have you put 5% down and buy an owner-occupant property that you live in for at least a year until you’ve saved up the next 5% down payment plus closing costs and reserves. Then, buy another 5% down payment owner-occupant property and move into the new property. Convert the previous property to a rental. Repeat this process until you’ve acquired 10 properties total—9 of them rental properties you purchased with 5% down payments.
When buying properties for cash, you’ll still buy your first property with 5% down payment and move in. But, after that, you’ll take the significantly longer time to save up 100% to buy a rental property all cash. And, free and clear properties without loans have much, much better cash flow than properties financing with 5% down. But, it takes a lot longer to save up to buy the first property. Keep saving until you buy up to 9 rentals all cash.
Which strategy will get you to financial independence fastest? Which will get you the highest net worth? Which is riskiest? We will analyze this comparison for 305 US cities.
Check out the video and interactive charts from this class here:
https://RealEstateFinancialPlanner.com/model/nomad-versus-1-oo-then-9-all-cash/
Or, see Providence specific, detailed analysis of a variety of strategies here:
https://RealEstateFinancialPlanner.com/model/RI/Providence/
Free Real Estate Deal Analysis Spreadsheet: Download a copy of the newest version of The World's Greatest Real Estate Deal Analysis Spreadsheet™ by going to:
https://RealEstateFinancialPlanner.com/spreadsheet
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