Q&A: Should I Use Cash or Leverage? – Episode 705

If you’ve got cash on hand, should you use it to buy a rental property outright? Or is it better to utilize leverage and keep your money in the bank? That’s the first question I’m answering on today’s show!

On this Q&A edition of Investing in Real Estate, I’m tackling three of your questions about leverage, paying off debt while investing, and the best way to put an existing investment to work. Press play to hear my answers to your real estate questions!

On this episode you’ll learn:

• What you need to know about cash vs. leverage.
• If you should prioritize paying off debt or investing.
• The best way to put a paid off rental to work.
• And more!

What You Need to Know About Cash vs. Leverage

Right now, interest rates are at a historic low, so if you’re considering whether or not to use leverage, I’d say do it! Interest rates are hovering around 3%, so now is a great time to use the bank’s money. Use some cash as a down payment, and then keep the rest of it in a high-yield savings account.

If You Should Prioritize Paying Off Debt or Investing

I like to think that you can pay off debt and invest at the same time. If you’re working on paying off your mortgage, you can also use the available equity to start investing in real estate. I say don’t wait to invest because you have debt. Do both and invest in your future as soon as possible.

The Best Way to Put a Paid Off Rental to Work

If you have a paid off rental, there are a few options available to you. Depending on the property value and ROI, you might consider a 1031 exchange. If you’re not interested in that, you can tap into the equity with a HELOC and grow your portfolio.

Ask Me a Question at morrisinvest.com/clayton

Episode Resources
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The Ultimate Guide to 1031 Exchanges
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