Should I take a loan vs cash purchase for real estate
I am considering a purchase that is several hundred thousand dollars and am wondering if I should borrow the money and stay liquid by keeping my cash money invested in bond funds, and using that income towards the loan payments. This is a real estate purchase and I assume interest may be deductible. Is it a good idea to even consider this idea?
Follow up Q: I’m not sure I can even borrow money when 100% of my income is from passive investments, SS, Bond Funds, Stock Dividends, and Mutual funds. Thank you!
Terry Says
First, if you have no “earned income” you won’t be able to get a mortgage (assuming that’s the financing you’re talking about).
So you will have no choice if you want to make this purchase. YOu’ll have to sell other assets (consider capital gains tax implications) to pay for your purchase.
You’re giving up flexibility and liquidity in a real estate purchase. However, it might be worth it if the real estate improves your lifestyle!
