Who are the buyers in this market and economy?

[an]

[quote=jpinpb]SDE – The 2000 price for this complex was about 200k. If it even came down to 280-300k, I’d probably do it and I think when the dust settles, it may go that low.

I know almost everyone still uses the 20% down when evaluating rents. But I’d speculate that over the past 9 years, very few purchases were made w/20% down. Yet we still use that value. I think that value was good to use b/c historically that’s what people did, was put 20% down. But I think nowadays that is archaic, IMO. But I understand that is the formula. I just think it should be updated to reality.[/quote]
Reality for who? I just bought and I put down 20%. I know a few people who just bought and one put as much down as 40% and they’re first time home buyers.

[SDEngineer]

[quote=jpinpb]SDE – The 2000 price for this complex was about 200k. If it even came down to 280-300k, I’d probably do it and I think when the dust settles, it may go that low.

I know almost everyone still uses the 20% down when evaluating rents. But I’d speculate that over the past 9 years, very few purchases were made w/20% down. Yet we still use that value. I think that value was good to use b/c historically that’s what people did, was put 20% down. But I think nowadays that is archaic, IMO. But I understand that is the formula. I just think it should be updated to reality.[/quote]

The reason why 20% down is used is that, historically, long term RE investors use 20% down at a minimum (recent bubble spectators excepted) since that was pretty much the minimum for a non owner occupied investment unit. When rental rates drop significantly below that threshold carrying cost, it becomes cash flow positive for investors to step in, and so they usually generate a floor not too far below that level.

[SDEngineer]

[quote=jpinpb]SDE – The 2000 price for this complex was about 200k. If it even came down to 280-300k, I’d probably do it and I think when the dust settles, it may go that low.

I know almost everyone still uses the 20% down when evaluating rents. But I’d speculate that over the past 9 years, very few purchases were made w/20% down. Yet we still use that value. I think that value was good to use b/c historically that’s what people did, was put 20% down. But I think nowadays that is archaic, IMO. But I understand that is the formula. I just think it should be updated to reality.[/quote]

The reason why 20% down is used is that, historically, long term RE investors use 20% down at a minimum (recent bubble spectators excepted) since that was pretty much the minimum for a non owner occupied investment unit. When rental rates drop significantly below that threshold carrying cost, it becomes cash flow positive for investors to step in, and so they usually generate a floor not too far below that level.

[SDEngineer]

[quote=jpinpb]SDE – The 2000 price for this complex was about 200k. If it even came down to 280-300k, I’d probably do it and I think when the dust settles, it may go that low.

I know almost everyone still uses the 20% down when evaluating rents. But I’d speculate that over the past 9 years, very few purchases were made w/20% down. Yet we still use that value. I think that value was good to use b/c historically that’s what people did, was put 20% down. But I think nowadays that is archaic, IMO. But I understand that is the formula. I just think it should be updated to reality.[/quote]

The reason why 20% down is used is that, historically, long term RE investors use 20% down at a minimum (recent bubble spectators excepted) since that was pretty much the minimum for a non owner occupied investment unit. When rental rates drop significantly below that threshold carrying cost, it becomes cash flow positive for investors to step in, and so they usually generate a floor not too far below that level.

[SDEngineer]

[quote=jpinpb]SDE – The 2000 price for this complex was about 200k. If it even came down to 280-300k, I’d probably do it and I think when the dust settles, it may go that low.

I know almost everyone still uses the 20% down when evaluating rents. But I’d speculate that over the past 9 years, very few purchases were made w/20% down. Yet we still use that value. I think that value was good to use b/c historically that’s what people did, was put 20% down. But I think nowadays that is archaic, IMO. But I understand that is the formula. I just think it should be updated to reality.[/quote]

The reason why 20% down is used is that, historically, long term RE investors use 20% down at a minimum (recent bubble spectators excepted) since that was pretty much the minimum for a non owner occupied investment unit. When rental rates drop significantly below that threshold carrying cost, it becomes cash flow positive for investors to step in, and so they usually generate a floor not too far below that level.

[SDEngineer]

[quote=jpinpb]SDE – The 2000 price for this complex was about 200k. If it even came down to 280-300k, I’d probably do it and I think when the dust settles, it may go that low.

I know almost everyone still uses the 20% down when evaluating rents. But I’d speculate that over the past 9 years, very few purchases were made w/20% down. Yet we still use that value. I think that value was good to use b/c historically that’s what people did, was put 20% down. But I think nowadays that is archaic, IMO. But I understand that is the formula. I just think it should be updated to reality.[/quote]

The reason why 20% down is used is that, historically, long term RE investors use 20% down at a minimum (recent bubble spectators excepted) since that was pretty much the minimum for a non owner occupied investment unit. When rental rates drop significantly below that threshold carrying cost, it becomes cash flow positive for investors to step in, and so they usually generate a floor not too far below that level.

[jpinpb]

[quote=AN]Reality for who? I just bought and I put down 20%. I know a few people who just bought and one put as much down as 40% and they’re first time home buyers.[/quote]

AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW.

[jpinpb]

[quote=AN]Reality for who? I just bought and I put down 20%. I know a few people who just bought and one put as much down as 40% and they’re first time home buyers.[/quote]

AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW.

[jpinpb]

[quote=AN]Reality for who? I just bought and I put down 20%. I know a few people who just bought and one put as much down as 40% and they’re first time home buyers.[/quote]

AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW.

[jpinpb]

[quote=AN]Reality for who? I just bought and I put down 20%. I know a few people who just bought and one put as much down as 40% and they’re first time home buyers.[/quote]

AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW.

[jpinpb]

[quote=AN]Reality for who? I just bought and I put down 20%. I know a few people who just bought and one put as much down as 40% and they’re first time home buyers.[/quote]

AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW.

[an]

[quote=jpinpb]
AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW. [/quote]
But SDE just explained to you why some of us still use 20% down to compare rent vs buy. If you don’t put down 20%, you’ll have additional cost such as higher rates and PMI that doesn’t NEED to be there for a fair comparison. That’s almost like taking rental rate of month-to-month rent vs 1 year lease rent rate. It’s unnecessary. When we use buy vs rent, we want to know the best number for both side. If you want worse case number, then you use worse case for both side.

BTW, I don’t think you can get a non-owner occupied loan with less than 20% down. You might be able to put down less than 20% down, but you’ll be paying for it in the rates department. Savvy investors (not flipper) will want to put down as much as they have to, to get the best rates and not have to pay PMI to yield the best ROI.

[an]

[quote=jpinpb]
AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW. [/quote]
But SDE just explained to you why some of us still use 20% down to compare rent vs buy. If you don’t put down 20%, you’ll have additional cost such as higher rates and PMI that doesn’t NEED to be there for a fair comparison. That’s almost like taking rental rate of month-to-month rent vs 1 year lease rent rate. It’s unnecessary. When we use buy vs rent, we want to know the best number for both side. If you want worse case number, then you use worse case for both side.

BTW, I don’t think you can get a non-owner occupied loan with less than 20% down. You might be able to put down less than 20% down, but you’ll be paying for it in the rates department. Savvy investors (not flipper) will want to put down as much as they have to, to get the best rates and not have to pay PMI to yield the best ROI.

[an]

[quote=jpinpb]
AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW. [/quote]
But SDE just explained to you why some of us still use 20% down to compare rent vs buy. If you don’t put down 20%, you’ll have additional cost such as higher rates and PMI that doesn’t NEED to be there for a fair comparison. That’s almost like taking rental rate of month-to-month rent vs 1 year lease rent rate. It’s unnecessary. When we use buy vs rent, we want to know the best number for both side. If you want worse case number, then you use worse case for both side.

BTW, I don’t think you can get a non-owner occupied loan with less than 20% down. You might be able to put down less than 20% down, but you’ll be paying for it in the rates department. Savvy investors (not flipper) will want to put down as much as they have to, to get the best rates and not have to pay PMI to yield the best ROI.

[an]

[quote=jpinpb]
AN – that’s great. I think you and a handful of others are an exception. Judging from all the people upside down and looking at NODs, very clearly a very high percentage were doing 100% financing for almost a decade.

Even today, there’s little skin in the game. You can do a 3.5% FHA and then get 8k from the gov and 10k from the state.

I’m just saying that the easy money is still there and few people do 20%. I did when I bought (and later sold) but that is old values and today that is rare, JMO FWIW. [/quote]
But SDE just explained to you why some of us still use 20% down to compare rent vs buy. If you don’t put down 20%, you’ll have additional cost such as higher rates and PMI that doesn’t NEED to be there for a fair comparison. That’s almost like taking rental rate of month-to-month rent vs 1 year lease rent rate. It’s unnecessary. When we use buy vs rent, we want to know the best number for both side. If you want worse case number, then you use worse case for both side.

BTW, I don’t think you can get a non-owner occupied loan with less than 20% down. You might be able to put down less than 20% down, but you’ll be paying for it in the rates department. Savvy investors (not flipper) will want to put down as much as they have to, to get the best rates and not have to pay PMI to yield the best ROI.

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