Paying Cash vs. Financing Investment Properties

Compare the difference between financing or paying all cash for investment properties.
Description

This simulation attempts to illustrate the difference between financing and purchasing rental properties with cash

Assumptions

All properties are identical and have the same expenses. Properties will be purchased at the appreciated value.

Repair costs are deducted out each month. No cash is held in reserve for repairs.

Vacancy is deducted out each month

Definitions
  • Cashflow

    The total amount over and above expenses collected each month.

  • Net Worth

    The total value of assets minus debts.

Investment Setup
$125/mo
$21/mo
$125/mo
$156/mo
$125/mo
Cash Only

This strategy uses only cash to buy rental properties. Cashflow and monthly contributes are saved up until a new property can be purchased in full.

$3,000
Financing Only

The financing strategy seeks to purchase properties with is little cash as possible.

Cash Finance Hybrid

This hybrid strategy begins by financing purchases up to a limit and then buys additional properties with cash from cashflow and monthly contributions

Summary

The total monthly cashflow
01234567891011121314$0$1,500$3,000$4,500$6,000$7,500$9,374
  • Cash Only
  • Financing Only
  • Cash Finance Hybrid
MonthRentHome PriceCash OnlyFinancing OnlyCash Finance Hybrid
1$1,000$100,250$598$571$571
2$1,000$100,501$598$569$569
3$1,000$100,752$597$568$568
4$1,000$101,004$597$567$567
5$1,000$101,256$597$566$566
6$1,000$101,509$596$565$565
7$1,000$101,763$596$564$564
8$1,000$102,018$596$563$563
9$1,000$102,273$595$562$562
10$1,000$102,528$595$561$561
11$1,000$102,785$595$559$559
12$1,030$103,042$616$625$625
13$1,030$103,299$616$819$819
14$1,030$103,557$616$818$818
15$1,030$103,816$615$816$816
16$1,030$104,076$615$815$815
17$1,030$104,336$615$813$813
18$1,030$104,597$614$812$812
19$1,030$104,858$614$810$810
20$1,030$105,121$613$809$809
21$1,030$105,383$613$807$807
22$1,030$105,647$613$806$806
23$1,030$105,911$612$804$804
24$1,061$106,176$635$894$894
25$1,061$106,441$634$893$893
26$1,061$106,707$634$891$891
27$1,061$106,974$634$889$889
28$1,061$107,241$633$888$888
29$1,061$107,510$633$886$886
30$1,061$107,778$633$1,079$1,079
31$1,061$108,048$632$1,077$1,077
32$1,061$108,318$632$1,075$1,075
33$1,061$108,589$631$1,073$1,073
34$1,061$108,860$631$1,071$1,071
35$1,061$109,132$631$1,069$1,069
36$1,093$109,405$654$1,185$1,185
37$1,093$109,679$653$1,183$1,183
38$1,093$109,953$653$1,181$1,181
39$1,093$110,228$653$1,179$1,179
40$1,093$110,503$652$1,177$1,177
41$1,093$110,780$652$1,175$1,175
42$1,093$111,057$652$1,173$1,173
43$1,093$111,334$651$1,171$1,171
44$1,093$111,612$651$1,169$1,169
45$1,093$111,892$650$1,167$1,167
46$1,093$112,171$650$1,358$1,358
47$1,093$112,452$650$1,355$1,355
48$1,126$112,733$673$1,499$1,499
49$1,126$113,015$673$1,496$1,496
50$1,126$113,297$673$1,494$1,494
51$1,126$113,580$672$1,491$1,491
52$1,126$113,864$672$1,489$1,489
53$1,126$114,149$671$1,486$1,486
54$1,126$114,434$671$1,484$1,484
55$1,126$114,720$671$1,481$1,481
56$1,126$115,007$670$1,479$1,479
57$1,126$115,295$670$1,476$1,476
58$1,126$115,583$669$1,474$1,474
59$1,126$115,872$669$1,471$1,471
60$1,159$116,162$694$1,839$1,839
61$1,159$116,452$693$1,836$1,836
62$1,159$116,743$693$1,833$1,833
63$1,159$117,035$692$1,830$1,830
64$1,159$117,328$692$1,827$1,827
65$1,159$117,621$691$1,824$1,824
66$1,159$117,915$691$1,821$1,821
67$1,159$118,210$691$1,818$1,818
68$1,159$118,505$690$1,815$1,815
69$1,159$118,802$1,380$1,812$1,812
70$1,159$119,099$1,379$1,809$1,809
71$1,159$119,396$1,378$1,806$1,806
72$1,194$119,695$1,429$2,210$2,210
73$1,194$119,994$1,428$2,207$2,207
74$1,194$120,294$1,427$2,203$2,203
75$1,194$120,595$1,426$2,200$2,200
76$1,194$120,896$1,425$2,196$2,196
77$1,194$121,199$1,424$2,193$2,193
78$1,194$121,502$1,423$2,189$2,189
79$1,194$121,805$1,423$2,186$2,186
80$1,194$122,110$1,422$2,182$2,182
81$1,194$122,415$1,421$2,179$2,179
82$1,194$122,721$1,420$2,175$2,175
83$1,194$123,028$1,419$2,172$2,172
84$1,230$123,335$1,471$2,614$2,614
85$1,230$123,644$1,470$2,610$2,610
86$1,230$123,953$1,470$2,606$2,606
87$1,230$124,263$1,469$2,602$2,602
88$1,230$124,573$1,468$2,597$2,597
89$1,230$124,885$1,467$2,593$2,593
90$1,230$125,197$1,466$2,589$2,589
91$1,230$125,510$1,465$2,585$2,585
92$1,230$125,824$1,464$2,581$2,581
93$1,230$126,138$1,463$2,577$2,577
94$1,230$126,454$1,462$2,789$2,789
95$1,230$126,770$1,462$2,785$2,785
96$1,267$127,087$1,515$3,053$3,053
97$1,267$127,405$1,514$3,049$3,049
98$1,267$127,723$1,513$3,044$3,044
99$1,267$128,042$1,513$3,039$3,039
100$1,267$128,362$1,512$3,035$3,035
101$1,267$128,683$1,511$3,030$3,030
102$1,267$129,005$1,510$3,025$3,025
103$1,267$129,328$1,509$3,020$3,020
104$1,267$129,651$1,508$3,242$3,016
105$1,267$129,975$1,507$3,237$3,011
106$1,267$130,300$1,506$3,232$3,006
107$1,267$130,626$1,505$3,226$3,002
108$1,305$130,952$1,561$3,531$3,278
109$1,305$131,280$1,560$3,525$3,273
110$1,305$131,608$1,559$3,520$3,268
111$1,305$131,937$1,558$3,515$3,264
112$1,305$132,267$1,557$3,509$3,259
113$1,305$132,597$1,556$3,742$3,254
114$1,305$132,929$1,555$3,737$3,249
115$1,305$133,261$1,554$3,731$3,244
116$1,305$133,594$1,553$3,725$3,239
117$1,305$133,928$1,552$3,719$3,235
118$1,305$134,263$1,551$3,713$3,230
119$1,305$134,599$1,550$3,707$3,225
120$1,344$134,935$1,607$4,049$3,510
121$1,344$135,273$1,606$4,296$3,505
122$1,344$135,611$2,408$4,289$3,500
123$1,344$135,950$2,407$4,283$3,495
124$1,344$136,290$2,405$4,277$3,490
125$1,344$136,631$2,404$4,270$3,485
126$1,344$136,972$2,402$4,264$3,480
127$1,344$137,315$2,401$4,257$3,475
128$1,344$137,658$2,399$4,251$3,470
129$1,344$138,002$2,398$4,482$3,465
130$1,344$138,347$2,396$4,475$3,460
131$1,344$138,693$2,395$4,468$3,455
132$1,384$139,040$2,483$4,878$3,748
133$1,384$139,387$2,481$4,871$3,743
134$1,384$139,736$2,480$4,864$3,738
135$1,384$140,085$2,479$4,857$3,733
136$1,384$140,435$2,477$5,104$4,553
137$1,384$140,786$2,476$5,096$4,548
138$1,384$141,138$2,474$5,088$4,542
139$1,384$141,491$2,473$5,081$4,536
140$1,384$141,845$2,471$5,073$4,531
141$1,384$142,199$2,470$5,065$4,525
142$1,384$142,555$2,468$5,057$4,519
143$1,384$142,911$2,467$5,290$4,514
144$1,426$143,269$2,557$5,774$4,846
145$1,426$143,627$2,556$5,765$4,840
146$1,426$143,986$2,554$5,757$4,835
147$1,426$144,346$2,553$5,748$4,829
148$1,426$144,707$2,551$5,740$4,823
149$1,426$145,068$2,550$5,732$4,817
150$1,426$145,431$2,548$5,981$4,811
151$1,426$145,795$2,546$5,972$4,806
152$1,426$146,159$2,545$5,963$4,800
153$1,426$146,525$2,543$5,953$4,794
154$1,426$146,891$2,542$5,944$4,788
155$1,426$147,258$2,540$5,935$4,782
156$1,469$147,626$2,634$6,741$5,125
157$1,469$147,995$2,632$6,732$5,119
158$1,469$148,365$2,631$6,722$5,113
159$1,469$148,736$2,629$6,712$5,107
160$1,469$149,108$2,627$6,702$5,101
161$1,469$149,481$2,626$6,693$5,095
162$1,469$149,854$2,624$6,948$5,089
163$1,469$150,229$2,623$6,937$5,083
164$1,469$150,605$3,495$6,927$5,077
165$1,469$150,981$3,493$6,916$5,071
166$1,469$151,359$3,490$6,906$5,937
167$1,469$151,737$3,488$7,150$5,931
168$1,513$152,116$3,617$7,791$6,315
169$1,513$152,497$3,614$7,780$6,309
170$1,513$152,878$3,612$7,769$6,302
171$1,513$153,260$3,610$7,758$6,296
172$1,513$153,643$3,608$7,746$6,289
173$1,513$154,027$3,606$8,010$6,282
174$1,513$154,412$3,604$7,998$6,275
175$1,513$154,798$3,601$7,986$6,269
176$1,513$155,185$3,599$7,974$6,262
177$1,513$155,573$3,597$7,962$6,255
178$1,513$155,962$3,595$8,214$6,248
179$1,513$156,352$3,593$8,202$6,242
180$1,558$156,743$3,725$8,928$6,638

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