Re: Real Estate Basics
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wouldn't it make sense to buy outright and not pay interest?
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No. The simple answer is "leverage".
Say you have $100,000 to invest, and pay cash for a $100,000 dollar duplex. Assume that in your first year of ownership, your duplex appreciates 4% in value. Well, congrats, you just made $4000, a 4% ROI (Return on Investment) on your large investment. Not exactly a banner year.
Now assume that you split your money into 5 $20,000 down payments, which you use to buy 5 duplexes, which all appreciate 4% during the first year you own them.
I'll let you do the math.
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