Is there any disadvantage to buying a house outright?
A lot of young poker players are making a crap load of money, probably enough for some people to just buy a house/apt/condo with cash... so I've been wondering is there any disadvantage of just buying a place outright instead of taking out a mortgage?
Say on average you pay 300k for a place, the money that you use for your house would on average make 8%-10% a year properly invested. So you would lose about 24K a year in portfolio earnings. However you would save money on rent/mortgage payments, say 1500 a month, 18K a year. So now the difference is around 6K a year on that 300K (2% loss on that money). On top of that you would save 5-6% a year on interest charges on any mortgage you would have had. Factor in other things like Taxes on that 24K you make and the amount your property appreciates on average a year and I would think that you would actually make more money on your big 300K investment then investing it in a well diversified portfollio.
I can think of a couple of negatives like property taxes and maintenance, and of course having to have saved up 300K but I cant think of anything else.
So question is, is there any disadvantage to just paying cash for a house/apt/condo?
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