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1
WookieMan
2018 Jan 28, 2:19pm
WookieMan
2018 Jan 28, 2:19pm
willywonka says
Relo in CA or out of state? This won't necessarily answer your question, but $600-$800k is way too much for a primary house in any circumstance, and pretty much all states (NYC & Bay Area being pretty much the exceptions - even then you can live elsewhere).
If you (your cousin) needs that much house, even if they can afford it, and is asking for this advice, they may have other financial issues. Someone with this kind of cash doesn't ask other people what to do with it. If I had close to $1M in cash, not a single person in my family would or should even know about it (outside my wife). I'd be asking people with better finances then mine on what they did to get where they are. Which you may have, so maybe that's why you're asking. But I wouldn't trust advice here honestly.
That said, I'd finance it if I was silly enough to need that expensive a house. Shit hits the fan you can always dump the place in a short sale or if it got really bad bankruptcy and hide the left over cash. Cash is king. Gives you massively more flexibility to have the cash on hand as potential investment opportunities arise.
And that's kind of what I'm getting at, people with this kind of cash don't just throw it in equities. If your cousin pays cash, he/she is not going to invest monthly what the mortgage P&I would have been. This is almost universally true. For every one person that actually does it, you'll find 500 others that said they would invest it and didn't. Plus it sounds like they don't need to invest it, so they kind of answered their own question if you think about it if they're already retirement set. They don't need investments technically it sounds like.
So long story short, I'd finance and keep more cash on hand. Plus closing costs on that priced home on the buy and sell are going to eat at any equity gained in just six years. Between moving costs, commissions, etc. you're probably losing about 10-14% on the buy and sell total. So even in a high appreciation area, you're likely to do much better putting as little down as possible.
He cashed out on his CA home, and re-lo'd for a new job in an area where homes are more affordable
Relo in CA or out of state? This won't necessarily answer your question, but $600-$800k is way too much for a primary house in any circumstance, and pretty much all states (NYC & Bay Area being pretty much the exceptions - even then you can live elsewhere).
If you (your cousin) needs that much house, even if they can afford it, and is asking for this advice, they may have other financial issues. Someone with this kind of cash doesn't ask other people what to do with it. If I had close to $1M in cash, not a single person in my family would or should even know about it (outside my wife). I'd be asking people with better finances then mine on what they did to get where they are. Which you may have, so maybe that's why you're asking. But I wouldn't trust advice here honestly.
That said, I'd finance it if I was silly enough to need that expensive a house. Shit hits the fan you can always dump the place in a short sale or if it got really bad bankruptcy and hide the left over cash. Cash is king. Gives you massively more flexibility to have the cash on hand as potential investment opportunities arise.
And that's kind of what I'm getting at, people with this kind of cash don't just throw it in equities. If your cousin pays cash, he/she is not going to invest monthly what the mortgage P&I would have been. This is almost universally true. For every one person that actually does it, you'll find 500 others that said they would invest it and didn't. Plus it sounds like they don't need to invest it, so they kind of answered their own question if you think about it if they're already retirement set. They don't need investments technically it sounds like.
So long story short, I'd finance and keep more cash on hand. Plus closing costs on that priced home on the buy and sell are going to eat at any equity gained in just six years. Between moving costs, commissions, etc. you're probably losing about 10-14% on the buy and sell total. So even in a high appreciation area, you're likely to do much better putting as little down as possible.
2
rocketjoe79
2018 Jan 28, 2:27pm
rocketjoe79
2018 Jan 28, 2:27pm
Let the bank take the risk while you pay less than 4% for their money.
3
Tenpoundbass
2018 Jan 28, 2:45pm
Tenpoundbass
2018 Jan 28, 2:45pm
You would be a fool to buy a house on the RE market with Cash.
How ever the bank plays a lot of games because they count on your average Joe doesn't have enough money to buy distressed houses outright for cash.
More often than not, it was the bank that sent goons over to rip out appliances, and bathroom fixtures, so they can't conform to conventional or FHA loans.
They sit on those houses, until they have enough of them cities call blight, since they don't have buyers. They are allowed to have closed auctions for them they pretty much bid on them themselves. It would be a damn shame if you showed up with $75K $120K. You would walk away with a $350K+++ house that needs nothing more than Refrigerator and Kitchen cabinets.
It was the most frustrating thing of my house search in 2010,it seemed all of the houses I could probably afford, were considered distressed and the banks wouldn't talk about them.
Now I hear about so many around me having the same problem looking to buy a house.
Even if it's a house on the MLS listings, I would just go knock on the door and offer the homeowner a sweet cash deal before I would call the Realtor on the sign in his yard.
How ever the bank plays a lot of games because they count on your average Joe doesn't have enough money to buy distressed houses outright for cash.
More often than not, it was the bank that sent goons over to rip out appliances, and bathroom fixtures, so they can't conform to conventional or FHA loans.
They sit on those houses, until they have enough of them cities call blight, since they don't have buyers. They are allowed to have closed auctions for them they pretty much bid on them themselves. It would be a damn shame if you showed up with $75K $120K. You would walk away with a $350K+++ house that needs nothing more than Refrigerator and Kitchen cabinets.
It was the most frustrating thing of my house search in 2010,it seemed all of the houses I could probably afford, were considered distressed and the banks wouldn't talk about them.
Now I hear about so many around me having the same problem looking to buy a house.
Even if it's a house on the MLS listings, I would just go knock on the door and offer the homeowner a sweet cash deal before I would call the Realtor on the sign in his yard.
5
Strategist
2018 Jan 28, 4:42pm
Strategist
2018 Jan 28, 4:42pm
Two options:
1. Compromise and put 50% down.
2. Put all cash down if it results in a discount off the purchase price.
1. Compromise and put 50% down.
2. Put all cash down if it results in a discount off the purchase price.
6
HowdyThere
2018 Jan 28, 5:09pm
6 years before moving again? Should consider renting, especially if it's just the two of them. A comfortable low to no maintenance apartment. The right portfolio will do much more than pay the rent.
7
WookieMan
2018 Jan 28, 5:15pm
WookieMan
2018 Jan 28, 5:15pm
HowdyThere says
Spot on. Good tip. I’m too god damn long winded.
6 years before moving again? Should consider renting, especially if it's just the two of them. A comfortable low to no maintenance apartment. The right portfolio will do much more than pay the rent.
Spot on. Good tip. I’m too god damn long winded.
I am siding with him. I think it would be great to get the mortgage monkey of your back. But I can also appreciate his wife's POV considering how equities are doing.
What do the Patnet brains think? Pay in cash or finance?