All-Cash - Paid In Full with No Financing
Pros:
- Faster, cleaner closings: No underwriting, appraisals, or lender delays
- Stronger negotiation power: Sellers often prefer cash offers in competitive markets
- No financing costs: Avoids interest, origination fees, and lender requirements
- Flexibility: Ideal for investors or high-net-worth buyers targeting high-demand or luxury properties
Cons:
- Capital tied up: Large amount of cash is locked into the property
- Opportunity cost: Money could potentially earn higher returns elsewhere
- No leverage benefits: Limits ability to control multiple properties with less upfront capital
Financed - Purchased Using a Mortgage
Pros:
- Leverage: Allows buyers to purchase more expensive properties with less upfront cash
- Potential tax benefits: Mortgage interest may be deductible
- Flexibility in cash flow: Preserves liquidity for other investments or expenses
Cons:
- Longer, more complex closings: Lender requirements, appraisals, and underwriting slow the process
- Interest costs: Adds significant cost over time, especially on high-value NYC properties
- Risk of financing falling through: Appraisal issues or credit changes can jeopardize the purchase
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
