Purchase Building for cash?

Question

Answer

Purchasing a Building for Cash

Buying a building with cash has its advantages and disadvantages. Before making such a decision, it is essential to consider the following:

Advantages of Purchasing a Building for Cash

Quick and easy transaction: Purchasing a building with cash avoids the lengthy process of getting approved for a mortgage or loan.

No interest payments: Without a mortgage or loan, there are no interest payments to make, which can save a significant amount of money in the long run.

Bargaining power: Cash buyers have more bargaining power since they do not require financing, making it easier to negotiate a lower price with the seller.

No risk of foreclosure: With no mortgage or loan, there is no risk of foreclosure, which can give the buyer peace of mind.

Disadvantages of Purchasing a Building for Cash

Tying up cash flow: Purchasing a building for cash can tie up a significant amount of cash, which could be used for other investments or emergencies.

No tax benefits: Without a mortgage, there are no tax benefits to take advantage of, such as deducting interest payments from taxable income.

No opportunity for leverage: Purchasing a building with cash means missing out on the opportunity for leverage, which could potentially increase the return on investment.

No credit history improvement: Without a mortgage or loan, there is no opportunity to improve credit history or credit score.

Considerations Before Purchasing a Building for Cash

Assess financial situation: Before making such a significant investment, it is essential to assess current financial situation and determine if tying up cash flow is the best decision.

Get professional advice: Consulting with a financial advisor or real estate agent can help make an informed decision and ensure all aspects are considered.

Research the property: Proper research on the property, including its history, condition, and potential for appreciation, can help ensure a successful investment.

Have a contingency plan: In case of emergencies or unexpected expenses, it is essential to have a contingency plan in place to avoid financial strain.

Purchasing a building for cash can be a smart financial decision, but it is essential to weigh the advantages and disadvantages and consider all aspects before making a final decision.

Answer

Building  A/C. dr.      To cash A/C

Answer

Building a/c dr. To. Cash a/c

Similar Commerce Doubts

What will be reaction in cash flow statement building costing rs 75000 was purchase ?

Prakash commenced business with cash rs50000,purchased furniture re 20000 and building rs80000 journalise?

Gopal purchased 4 cars from Telco Co.on hire-purchase system.The cash price of each car was Rs.2 00 000 .He was to pay 25% immediately?

Identify the type of error on the basis of the following narrations: 1 Purchase A/c Dr 25000 To Cash 25000 (Being the furniture purchased for cash) 2 Boban's A/c Dr 4000 To Cash 4000 (Cash received from Boban) 3 Bank A/c Dr 2500 To Interest 2500 (Interest received and credited to bank 250)?

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