Buying property all cash or mortgage?

There have been some other threads about this, but wanted to start up a new one given the recent rate cut. Looking to buy a place around $500K, can pay all cash, but given the recent rate cut and rates

Comments (24)

3y 
EatClenTrenHard, what's your opinion? Comment below:

Likely poor advice, but IMO... I would hold out a little longer. Futures have another 200 bps of cuts priced in + housing market has been steadily climbing for far too long. Money will likely go further in the near future

3y 
Synergy_or_Syzygy, what's your opinion? Comment below:

In general I might wait unless you have a solid reason to buy (at which point if you hold over the medium term you'll be fine regardless), but you can always pay all cash and bid lower, then refi out with a loan after the fact.

Be excellent to each other, and party on, dudes.
  • 1
3y 
kakaman, what's your opinion? Comment below:

My lease is ending and the building has a lax subletting policy, so I'll hold the asset for the medium term at least. Considering rates might even dip lower, refi doesn't sound like a bad idea right now...

3y 
nez, what's your opinion? Comment below:

Why not treat this like any other investment?

Just do a break down and figure out what the financials would look like had you paid in cash versus taking out a loan. The big difference with a loan is that you get to keep a large chunk of the cash you have now to use for better investment opportunities that may come up. What was said about rates and house values changing is certainly something to consider but just factor that into your analysis.

3y 
Funx2192, what's your opinion? Comment below:

Question, what would the exact interest rate be from the bank be if you took out and for how long? You can basically screw the bank over if you took the loan out early, you decide to bail, and you pay off the full mortgage.

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3y 
kakaman, what's your opinion? Comment below:

Problem is there are a lot of headwinds upcoming that there are very few assets out there yielding 8%. Stocks are a crapshoot these days, fixed income yields have come down as well (which is why mortgages are so cheap)

  • 1
10mo 
SafariJoe, what's your opinion? Comment below:

Dupont29

Put 20% down and invest the $400k in higher yielding stocks, real estate or fixed income that you expect to earn 8%+. Look at the $400k as a 3% loan from the bank...the difference between expected return and interest is your profit $$$$

Better to put 5% down instead of 20%. Understanding how these work to make more $$ is key.

SafariJoe, wins again!
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3y 
Ricky Rosay, what's your opinion? Comment below:

I would take advantage of where markets are right now. Provided the property is in a strong market where you don't see property values going upside down, IMO borrow as much as you can afford right now, the money is so cheap.

I was having this same conversation with my dad about locking a rate on a mortgage I am currently floating. His message was basically, "dude rates are at 3% and change, don't get greedy, that is insanely low. When I got a mortgage 30 years ago it was 18%".

3y 
Funx2192, what's your opinion? Comment below:

Listen to this fine person here. Ricky Rosay knows what it is. #Leverage

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1y 
Isaiah_53_5 πŸ’ŽπŸ™ŒπŸ’ŽπŸ™ŒπŸ’Ž, what's your opinion? Comment below:

lol

"If you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus, and you must not stay there, you must go beyond them." - Bruce Lee

3y 
teddythebear, what's your opinion? Comment below:

The sad part is the world has changed. Interest rates are not just tied to the US economy, but the global markets now. Look at Europe, so many countries with negative yields. Look at Japan. US actually has higher rates than other countries and unless the global markets get stronger, we are going to see either low or declining rates. Very unlikely that rates will go to the levels seen by generations before us.

Array

  • 1
10mo 
leahhem, what's your opinion? Comment below:
[Comment removed by mod team]
10mo 
SafariJoe, what's your opinion? Comment below:

kakaman

There have been some other threads about this, but wanted to start up a new one given the recent rate cut. Looking to buy a place around $500K, can pay all cash, but given the recent rate cut and rates <3%, should I be taking on a mortgage to capture some of that sweet sweet leverage?

Depends on your long term plans, I do not believe in using my $$$ to buy an asset like real estate, or should I say a small amount of my $$$

SafariJoe, wins again!
9mo 
leahhem, what's your opinion? Comment below:
[Comment removed by mod team]
9mo 
Ozymandia, what's your opinion? Comment below:
leahhem

In each question, I am used to considering the pros and cons of each option. The advantages of accumulation: you do not overpay interest but, on the contrary, receive it and do not become a debtor of the bank for many years. Cons of accumulation: it takes a very long time to wait, and in case of economic shocks, your savings may become worthless. The advantages of a mortgage: you fix the price of an apartment and its costs for many years to come. The rise in real estate prices will not affect you, and inflation will not reduce the savings that you have already made. Cons of the mortgage: a significant overpayment to the bank and ""life on loan"" for several years. Therefore, it is necessary to understand all the risks and consult with Mortgage Broker London.

If this is your idea of a pro and con list, no one should ever take your recommendation on who to talk to regarding a mortgage.Β  As likely to wake up in a bath tub full of ice, missing organs, than to get good advice on whether or not to buy a home, let alone finance it with debt.

9mo 
canterlot, what's your opinion? Comment below:
[Comment removed by mod team]
7mo 
ronicapieper, what's your opinion? Comment below:

To buy real estate for cash, you have to have a huge amount of money, my friend

5mo 
canterlot, what's your opinion? Comment below:
[Comment removed by mod team]
5mo 
Lassion, what's your opinion? Comment below:
[Comment removed by mod team]
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4mo 

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4mo 
ImALawyer, what's your opinion? Comment below:

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