Financing or Cash (Houston: real estate, apartment complexes, foreclosures)

[bds539]

Which is better for buying a new home, do financing or pay cash?

[v2four]

Originally Posted by bds539

Which is better for buying a new home, do financing or pay cash?

a new home, built from the ground up, never lived in, in a decent area? you are going to have to pony up some cash for it....thats why most people finance...the average american family doesnt have enough money to pay a house in full at closing

[eric3781]

Originally Posted by bds539

Which is better for buying a new home, do financing or pay cash?

Even if you have the ability to pay all cash for a home, save the cash and finance. Then use the rest of the cash and buy up as many rental properties as you can.

Houston is one of the best places to buy rental homes, small apartments, and if you can afford it, larger apartment complexes. Money is so cheap right now I wouldn't tie up huge sums of cash in one property.

Get that money to work making more money for you.

[mtgmike]

Depends on the rest of your finances. Lets say you have a windfall, but job skills and experience only for normal paying jobs...pay cash all day long.

But if you are a guy pulling 250k, have 250k cash laying around, and want to get into the game, sure, it's not an insane risk to buy some real estate(IF YOU DO IT RIGHT).

My money is on the former, pay cash. Why do these strange, hey Im a baller posts always come from new posters???

[kreeyax]

Put at least 20% down to avoid PMI is my recommendation.

[eric3781]

Originally Posted by mtgmike

Depends on the rest of your finances. Lets say you have a windfall, but job skills and experience only for normal paying jobs...pay cash all day long.

But if you are a guy pulling 250k, have 250k cash laying around, and want to get into the game, sure, it's not an insane risk to buy some real estate(IF YOU DO IT RIGHT).

My money is on the former, pay cash. Why do these strange, hey Im a baller posts always come from new posters???

Not sure if your passive-aggressive comments are directed toward me, but I assume they are.

I never said "I am a baller". Nor am I an accountant that has seen the man's books, or financial advisor that is privy to his asset portfolio.

Speaking generally, tying up a huge sum of cash by paying for a house entirely out of pocket is not wise IMHO. Interest rates are the lowest they have ever been and money is cheap. Real estate prices are deflated right now and there is a large estimated glut of more foreclosures coming in 2012.

What exactly do you find "strange" or "baller" about a recommendation to take advantage of one of the most favorable real estate buying climates in history?

Assume a $100,000 mortgage at 6% for 30 years, which is a $600 payment. Pay all cash for your residence out of pocket and save yourself $600 a month. Or, speaking conservatively, buy 7 rental properties at $70,000 each, put 20% down, and in today's market, realistically cashflow $250 per month after PITI (those deals are out there folks). $250 times 7 homes is $1,750 minus $600 primary residence mortgage equals $1,150/month in positive cash flow. Be sure to save some of that back for reserves/maintenance.

Just an example of what can be done, and not far-fetched. Real estate investing isn't for everyone and yes there are pit-falls. But I was only giving my opinion as to what I would do. Wouldn't exactly call anything I just said "strange" or "baller". It is up to the OP to decide if they want to put that money to work, or get the warm-and-fuzzies living in a "paid off" home.

[chris_ut]

Better to finance 80% only because money is so cheap right now. If you can find something that gives a 5% or better return put your money there.

[HoustonRonnie]

Or, if you plan on living in the house for a LONG time, then paying cash keeps foreclosure at bay and frees up cash flow for other things.

Just sayin'...

Ronnie

[desertsun41]

Anyone who has a quarter million in the bank usually did not accumulate that kind of money by being stupid. That said, why don't you know the answer to this question? Ever hear of the word leverage?

The honest answer to your question is that it is just not smart to buy a home right now. Why buy a depreciating asset? Unless of course you can buy at a deep discount but you're not, you're buying a brand new over priced home in an over priced neighborhood.

I'm not going to change your mind with logic, you are going to do what you want to do anyway. You go ahead and believe what your Govt and what Realtors tell you and you will lose in the end.

[HoustonRonnie]

Originally Posted by desertsun41

Anyone who has a quarter million in the bank usually did not accumulate that kind of money by being stupid. That said, why don't you know the answer to this question? Ever hear of the word leverage?

The honest answer to your question is that it is just not smart to buy a home right now. Why buy a depreciating asset? Unless of course you can buy at a deep discount but you're not, you're buying a brand new over priced home in an over priced neighborhood.

I'm not going to change your mind with logic, you are going to do what you want to do anyway. You go ahead and believe what your Govt and what Realtors tell you and you will lose in the end.

Again, like with most (and I don't disagree with you), you assume the OP wants to use the home as an investment. Not everyone views it that way. Some, like me, buy the home, pay cash, plan on living there for a LONG time and, in the end, can be buried in the back yard. We're talking about a 30+ year asset here, not a car that depreciates as you drive it off the lot. In 30 years, generally, a house will appreciate, not depreciate.



Just sayin'...

ron