Would you have done this?

[Chris Scoreboard Johnston]

Chris Johnston

I agree that he did a wise thing in putting alot down. High leverage is what got people in a bad spot to begin with. Why are people always standing in judgement of others on so many things?

[sdrealtor]

I agree with Chris. What this guy did is view his purchase as a home not a financila instrument. Most here blame speculation for alot of our problems yet advocate speculating by leveraging into RE as much as possible. personally I think owning RE free and clear is the best position to be in. My other assets are for playing the market.

[sdrealtor]

I agree with Chris. What this guy did is view his purchase as a home not a financila instrument. Most here blame speculation for alot of our problems yet advocate speculating by leveraging into RE as much as possible. personally I think owning RE free and clear is the best position to be in. My other assets are for playing the market.

[NotCranky]

sdr
You are a pretty well to do established man …Your parameter are pertty different from so many of the younger guys here. As far as being in Judgement as Chris points out I think the few are really Judgemental and the rest of us are putting stuff out there and getting feedback and learning. I think you agree sdr?

I think there are different strategies for different times as much as there are for different people.

I think in a market taking off, leverage is good so as not to tie up too much capital in one spot(for us capital deficient types. In a declining market leverage seems like a bad position to me especially on a Family Home for people who don’t have extremely deep pockets. I say this believing the RE is easy to time you pay for it with poor liquidity.I don’t think Chris thinks RE is easy to time….Or he is so wealthy he doesn’t care.Being that he is such an expert on other markets maybe it’s a little of both?

[NotCranky]

sdr
You are a pretty well to do established man …Your parameter are pertty different from so many of the younger guys here. As far as being in Judgement as Chris points out I think the few are really Judgemental and the rest of us are putting stuff out there and getting feedback and learning. I think you agree sdr?

I think there are different strategies for different times as much as there are for different people.

I think in a market taking off, leverage is good so as not to tie up too much capital in one spot(for us capital deficient types. In a declining market leverage seems like a bad position to me especially on a Family Home for people who don’t have extremely deep pockets. I say this believing the RE is easy to time you pay for it with poor liquidity.I don’t think Chris thinks RE is easy to time….Or he is so wealthy he doesn’t care.Being that he is such an expert on other markets maybe it’s a little of both?

[sdrealtor]

While leverage is a good thing in an up market, I would save the leverage for investment properties. To me, a home is the foundation of a family and I dont like to f@*K with it. There are plenty of places to make money in this world besides one’s primary residence. I’m just a very conservative guy in that regard.

[sdrealtor]

While leverage is a good thing in an up market, I would save the leverage for investment properties. To me, a home is the foundation of a family and I dont like to f@*K with it. There are plenty of places to make money in this world besides one’s primary residence. I’m just a very conservative guy in that regard.

[recordsclerk]

I would put down the $400K as long as there is rainy day money. You should have 6 months reserves. For the people that think you should invest that $400K in something else, you are basically saying that everyone should pull thier equity out and invest that money. We have seen what that has done to those poor folks that pulled money out of the primary residences to invest in real estate. There is risk in any type of investment without a guaranteed return. You might as well pay yourself the guaranteed 6-7% and lower your monthly payment. If you have extra money monthly after that, you can invest that into whatever you want. I know a alot of people who lost half of their retirement money in the late 90’s-early 2000’s from their 401k. Since they were too close to retirement they could not recoup their money. The person that put down $400K seams to have done just fine. He bought a condo in 2000 for 200K and sold for 600k. He probably put down 20-40K. For an investment of 40K to get 400K in 7 years seems to be a lot better then a 10% return.

[recordsclerk]

I would put down the $400K as long as there is rainy day money. You should have 6 months reserves. For the people that think you should invest that $400K in something else, you are basically saying that everyone should pull thier equity out and invest that money. We have seen what that has done to those poor folks that pulled money out of the primary residences to invest in real estate. There is risk in any type of investment without a guaranteed return. You might as well pay yourself the guaranteed 6-7% and lower your monthly payment. If you have extra money monthly after that, you can invest that into whatever you want. I know a alot of people who lost half of their retirement money in the late 90’s-early 2000’s from their 401k. Since they were too close to retirement they could not recoup their money. The person that put down $400K seams to have done just fine. He bought a condo in 2000 for 200K and sold for 600k. He probably put down 20-40K. For an investment of 40K to get 400K in 7 years seems to be a lot better then a 10% return.

[NotCranky]

I never ever believed that a family home can not or should not be an investment. In fact I am suspicious of that talk. As in “don’t worry about high prices of homes I am trying to sell you because it is not an investment.” In the rear view mirror after one’s has a house free and clear it sure is comfortable to say my home is not an investment, And I am not challenging anyone in particular on this point.But while at it I will go on.If my house changes my ability to prosper especially when I am young,it is an investment and a bad one. I still feel that my personal home’could be looked at as a dormant investment tool,even though it is paid for , because it is more than suffices for shelter and there are opportunity costs associated with not spreading the value of it out into income or equity producing avenues.So it’s either a “luxury” or a bad investment in a depreciating market.IMHO

[NotCranky]

I never ever believed that a family home can not or should not be an investment. In fact I am suspicious of that talk. As in “don’t worry about high prices of homes I am trying to sell you because it is not an investment.” In the rear view mirror after one’s has a house free and clear it sure is comfortable to say my home is not an investment, And I am not challenging anyone in particular on this point.But while at it I will go on.If my house changes my ability to prosper especially when I am young,it is an investment and a bad one. I still feel that my personal home’could be looked at as a dormant investment tool,even though it is paid for , because it is more than suffices for shelter and there are opportunity costs associated with not spreading the value of it out into income or equity producing avenues.So it’s either a “luxury” or a bad investment in a depreciating market.IMHO

[sdrealtor]

Or just a home.

[sdrealtor]

Or just a home.

[fsbo]

asianautica, how would the interest in the addition $400k mortgage @7% be about $1300/month after tax deduction?
Let’s take the tax deduction out of picture first, the interest alone will be over $2300/month (for $400k mortgage @ 7%).
To make your $1300/month after tax deduction, he would need to get tax deduction of $1000/month, it’d be a 43% tax bracket!!!
Giving he already has a loan which enjoys the tax deduction, the additional $400k mortgage will usually not fall into the highest tax bracket.

[fsbo]

asianautica, how would the interest in the addition $400k mortgage @7% be about $1300/month after tax deduction?
Let’s take the tax deduction out of picture first, the interest alone will be over $2300/month (for $400k mortgage @ 7%).
To make your $1300/month after tax deduction, he would need to get tax deduction of $1000/month, it’d be a 43% tax bracket!!!
Giving he already has a loan which enjoys the tax deduction, the additional $400k mortgage will usually not fall into the highest tax bracket.

[Author]

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