Paying cash to buy property may sound sensible but there are certain advantages you will miss if you don’t take out a mortgage.

Generally, buying a property with cash means:

• Loss of liquidity

Buying a property outright means losing liquidity on assets in your property as you won’t be able to tap into your assets for money if you need to.

You could always take out a home equity loan but this has disadvantages, including fees and borrowing limits.

• Loss of financial leverage

When you borrow money to buy property, the potential return is much higher, provided that there is sufficient capital growth. For example if you have put down a 20% deposit on a property worth $400,000 that has had a capital growth of $100,000, your return will be around 125%.

• Tying all your cash in one asset class

If you sink all your capital into property, you may not be able to invest in other assets like shares and other forms of investments.

RealRenta is disrupting the Real Estate industry with our Self Management platform .

RealRenta is for Smart Investors, who realise that they are no longer bound to traditional property management and the associated high fees

Use RealRenta for Free for up to 2 months: https://app.realrenta.com/Signup.aspx