patrick.net

Amazing how many people in this thread use emotion to make financial decisions rather than reason.

drew_eckhardt says

Do you consider 150k at 27 to be LOW? If not why would your friend be pressed for time?

It took me 70-80 hours a week to make executives ecstatic and get big raises when I was a young lad. There's not enough time left after that to both do enough hobbies to stay sane and fit and start a business.

Ah you meant not enough time in the day, not left in one's career

Homeboy says

Because it's possible to make MORE money than the amount of interest you are paying by having the cash on hand.

Exactly. Because nobody loses money on stocks , its all up and up.

Idiot says

You know anything about practicing law in Big Law in your first couple of years?

yes I know a decent amount regarding biglaw, but the hypo isnt about biglaw attorneys. also, as i said in the hypo, SL debt and stability of career is not an issue, even if it is not true for the majority of the population.

i just wanted to see what the options are available that i havent thought of and what areas to research further.

mell says

Well it is, but lets take CA for example: If you paid cash or took out a mortgage and your house appreciated during your marriage by let's say $200K, then you owe your spouse 100K on the appreciation since it became a marital asset. If you take out a mortgage you have to consider that even if the house does not appreciate in value you will owe the reduction in principal by 50% since you joined forces. If you think that's fair than it's all good, if you think that any appreciation/reduction in principal should be yours you have to have an ironclad prenup.

interesting. divorce laws vary by state though.

Idiot says

There's a great blog to read for attorneys and law students. It's called The Legal Dollar. This post (from 2010) sums it all up. http://thelegaldollar.blogspot.com/2010/09/not-rich-at-250k-its-how-you-live-not.html

thanks

KILLERJANE says

If you buy a house cash and rent it, more cash flow ROI!!!!

Thinking saying and doing need to line up.

You are assuming too many things - perfect tenant,no vacancy,no maintenance......

This depends on the prediction on your crystal ball.

I did the caculation myself since I invest in residential real estate.

If you believe we can muddle through the recession (or even recover) without a deflation collapse, mortgage COULD be better since it could gives you higher return rate (from an investment POV) assuming it makes no difference in selling price (but usually cash gives you better negotiate position, esp. for REOs.)

However, if you believe the deflation collapse is coming, DO NOT buy ANY house. Save the cash and buy whatever you want AFTER the collapse (this will use some patience.)

Mobi says

However, if you believe the deflation collapse is coming, DO NOT buy ANY house.

Oh how I wished more thought deflation were a real risk. Then I'd have fewer offers to compete with to buy real estate!

Just keep in mind that if your money isn't earning money, then you're losing money. Since a true deflationary spiral would take years to fully develop with out a major catalyst, how much will you lose before you gain? Right now I am earning $6000/yr on each of my $50,000 condos. If rents plunge by 25%, then I'm still making $4000.

Mick Russom says

Exactly. Because nobody loses money on stocks , its all up and up.

Right. Your only choice for the next 15 years is going to be risky stocks, because CDs will pay historically low rates for the rest of time.

A decade ago you could get 5% with your money just sitting in a savings account. But you're right, you should pass up the opportunity to get a loan at 2.75% interest, because rates will never go up again.

"Finance frightens and confuses me"

Only thing I can add that hasn’t been said already. If this person buys with a cash offer - would they have sufficient reserve? If they drain their savings close to zero and then something unexpected comes up - then what?

Call it Crazy says

Ha Ha Ha... so true... and many don't seen to know how to use a calculator either...

Yeah, and its Amazning how loud people are when they wine (however rare), and how completely silent they are when they lose.

robertoaribas says

Just a few years ago, I was getting 6% return on online checking accounts... How good would you feel getting over 6% on money you are only paying 3.5% for?

Yeah, thats sustainable. Exactly where will this magical money spread come from. Ahh, the printing press. Inflation on food, gas, tuition, rent and commodities and everything made from them will really help the average guy out.

Homeboy says

Right. Your only choice for the next 15 years is going to be risky stocks, because CDs will pay historically low rates for the rest of time.

Pretty much we are all just trying to beat inflation. Only the obscenely wealthy will be able to expand their principle.

EastCoastBubbleBoy says

Only thing I can add that hasn’t been said already. If this person buys with a cash offer - would they have sufficient reserve? If they drain their savings close to zero and then something unexpected comes up - then what?

he wont be "house poor" and his credit is good enough to float funds on a 0%APR credit card