When investing in a buy to let property, people generally believe that paying cash for that property is the right way to go. Is that really so, though? Do cash buyers really have it better than mortgage ones when this kind of shopping is in question? That’s exactly what we are here to find out. It’s time to get to the bottom of this once and for all.
If you are new to this whole world of investing in buy to let properties, it’s best if you read a cash buyer article or two, so that you get properly informed about everything. Entering the real estate world is always a good idea, but you definitely need some level of knowledge in order to enter it the right way. I’m guessing you don’t want your investments to turn out to be failures.
We shouldn’t get off topic, though. We are here to find out if paying cash for these types of properties is a good idea. In order to determine that, we will need to look into the two different options that you have. You need to get at least a little bit familiar with those options in order to ultimately make the right choice. Let us quickly go through those two options that I have mentioned.
After you start thinking about shopping for a house, or an apartment, you will have a lot of people around you advising you on the best way to do that. There is one common saying that you’ll hear a lot of those people repeat. “Cash is king”, they will say and they definitely won’t be wrong. There really are a lot of advantages that come with doing things this way.
For starters, when sellers hear that you are paying in cash, your position as a buyer will definitely be significantly strengthened. Everyone will take you seriously, because everyone loves hearing that you have your money ready and, most importantly, that you are ready to give that money away. That means that you might be able to make your purchase much quicker.
Here are some more advantages of purchasing this way: https://www.thebalance.com/what-are-the-benefits-to-paying-cash-for-a-home-1798721
In addition to gaining that advantage over the people who might be looking at the same property but need to borrow their money, you will also really like the idea of not having to deal with lenders. That process can really get frustrating and there are, frankly, a lot of things that you probably won’t understand. Those things you don’t understand will give the lender an opportunity to offer you a deal that’s not so good for you.
Finally, there’s another important factor that speaks in favor of purchasing this way. You know that the property is 100% yours from the very start and you don’t have to deal with monthly mortgage payments. When buy to let properties are in question, though, the biggest thing you are concerned about is your ROI and we’ll quickly see whether cash buyers have it better than mortgage ones regarding ROI.
Things really do work differently when it comes to buy to let investments. While paying cash for the house you are planning to live in might be your best option, it doesn’t necessarily mean that it is the best option for the property you are thinking of renting out or selling afterwards. Let’s take a quick look at how this works.
Before going any further, I suggest you learn more about buy to let mortgages. If you sit down and do the math very carefully, you will actually be surprised with the results. Even though cash might be the king in a certain way, it appears that your ROI will be at least a percentage or two higher if you opt for being a mortgage shopper.
People have started to realize that this is a better idea because they get to keep the cash they have, while also getting the mortgage money back by simply renting out the house or the apartment that they have bought. The ROI is the most important thing to take into account here and if you do your calculations right, you’ll always get a higher ROI on a mortgage purchase. It seems that cash is not always the king.