The Pros and Cons of Paying Cash for a House

I've bought two houses by saving up until I could pay cash for them. I'm hardly rich; good looking in a mature sort of way, maybe, but not rich. My parents live in one house and my spouse and I live in the other. Obviously I had to have the patience to wait until I could pay "100% down," but this was really the way to go for me.

Your example of a 7% mortgage being the same as a guaranteed 7% interest return risk free actually understates the advantage of paying cash. The 7% return is untaxed; for me, avoiding a 7% mortgage is more like a guaranteed, risk-free 11% interest before federal, state and local income taxes. That's a stock market return risk free!

Also by paying cash, I avoided many fees and charges, such as escrow accounts that pay 1%, mortgage application fees, mortgage origination fees, mortgage "points," appraisal fees, credit report fees, lender's title insurance fees, and such dubious charges as the underwriting fees, document preparation fees, loan-review fees, warehousing fees, etc.

The "tax advantage" of a mortgage is highly overstated. I don't itemize and any deduaction for mortgage interest has to exceed the standard deduction to be worth anything to me.

Many people I know have also told me of the "mistakes" in how their mortgage costs are calculated, errors which seem to always favor the lenders. :(

If you want to refinance to get a lower mortgage rate, there are more fees for that, too.

Those up-front fees total thousands of dollars saved by paying cash. On the last house I bought, I saved well over $3000 by not paying mortgage fees to get a $200,000 house.

In addition to the interest part of your mortgage, there's the principle you pay, only a little at first but more as the years pass. That's extra money I have available to spend or invest each month.

Leverage is a two-edged sword. It's a gamble, a risk that might or might not pay off. I'll stick with the guaranteed risk free high return, thousands saved in fees and extra monthly free cash flow. And I love the "no paperwork" and not dealing with banks, mortgage companies, credit agencies, etc.

Debt, it's the spirit killer!

If I could afford to pay cash for a house then a definately would. The stress you go through managing a mortgage can be incredible.
To remove that stress completely so you NEVER have to think about your mortgage repayments would be amazing! So I definately would do it.
I still live at home with my parents and will probably move out next year and rent for a little bit while I save up to buy a house.

Also on that note I think it is better to buy a house with a loan so you can pay off the loan rather than paying rent to someone else and helping pay off their mortgage. Rent money is dead money

I agree with paying cash if you can, however, regarding the mortgage fees

You should get an appraisal regardless
You still need to purchase owners title insurance, which is about 90% of the title insurance costs

If you are considering a mortgage from a reputable broker, the fees saved are much less than $3,000 cited above.

The actual costs saved are closer to only $500-$800, for credit report and underwriting charges.

The other mortgage charges, such as flood certification, appraisal you should get regardless for your own protection.

Additionally, other charges, such as closing fees from the title company and recording fees are charged regardless of how you pay for the home.

One other point. Refinancing a home, when less than 70% of the value, is the same interest rate as purchasing.

Thanks to Guest for Comment #8. I really can't say if the lenders and agents I spoke with were reputable or not, but that raises the question of how an ordinary home buyer can easily tell whether or not they are working with reputable institutions and people. Most of us don't buy that many houses -- and if we do it's because we've moved to another area, hence new institutions and people -- that we never develop the experience to spot the disreputable.

Guest is absolutely right that many closing costs are the same with or without a mortgage.

Bankrate has an article that is relevant: http://www.bankrate.com/brm/news/mortgages/ccmain2006a1.asp

I'm in one of the areas identified in the piece as having higher closing costs. They only surveyed lender fees (owed only by those getting a mortgage) and title and settlement fees (owed whether you get a mortgage or not), but excluded taxes and prepaid items (again, owed whether you get a mortgage or not). Loan fees ranged from New Hampshire's low $1401 to Hawaii's high $1902 for a $200,000 house.

The figure I cited was about twice as high as those cited in the survey, but in my description I noted that the figure I cited in my case included a "point," 1% of the value of the loan. I was quoted a lower interest rate if I was willing to pay a point. My terminology could be wrong here and it could be that the point should not be counted as a lender fee (that's what my spouse tells me, anyway), but since I was going to be paying it to the lender, that's what it seemed like to me! Yes, it is possible to get a loan with no points, but the interest rate and monthly payments are higher.

Thanks, too, to Xin Lu for the reference to "forced savings" in Comment #6. Rather than the forced savings of a mortgage I did mine through automatic bank transfers to a "home ownership fund" account every paycheck. I had a goal and I tracked the fund as my savings accumulated. It was something I took a great deal of satisfaction in, rather than dreading the big bill every month, fearing I might fall behind and lose everything I'd worked and saved for.

Finally, thanks to Sam for Comment #9. The peace of mind that comes with no mortgage has nothing I can compare it with. I heard a program on the radio a few weeks ago that featured people screaming that they were debt free. The announcer quickly added, "...except for their mortgage." I wonder how much louder the shouts would have been from those who owed no mortgage, either!

Luck to all of you, mortgaged or not.

Debt, it's the mind killer!

Being mortgage free is great as it gives a greater sense of financial freedom, allowing you to be more selective about work assignments. Being able to do this from day 1 is something only a few people can achieve.

Whether it's a good idea depends on the house you can afford versus the house you want, how much spare cash this will leave you with and if there are any better homes for your money.

I would've definately paid cash for my house if I had the $$$.

Like the others have said, as long as you have additional funds set aside in an emergency fund and have made reasonable progress towards funding your retirement accounts considering your current age, by all means pay cash for a house.

People often over estimate the value of deducting mortgage interest. First, you must have over the standard deduction rate (non-itemized)to even begin deducting interest, and you typically end up paying $1.00 to the bank for every $.25 you save in income taxes!

I did the 30 year route myself but have recently begun accelerating my payments now that I have paid off all other non-consumer debt.

VERY GOOD summary of the issues!

We've owned our home for over a decade now with no mortgage and for us, it's the only way to go.

I've learned many facts from the posts on this forum and I appreciate all of them. I've often wondered if we'd be better off mortgage free. I've asked my CFA and CPA for their advice regarding making the payoff on my home mortgage (17 years remaining). Their advice differed, however the common point to which they both agreed was, the security that the home was yours free and clear regardless of the constant economic swings was invaluable. I've decided not to pay off the mortgage and continue to execute the plan that has me in this favorable financial situation. I will say that having financial security in tough economic times provides peace of mind that is unrivaled.

Xin: You also free up quite a bit of income because you will have no rent or mortgage.

I like to think of it as freeing up cash flow. You're reducing your requirement for month-to-month living.

As to Ryan McLean (#6) (Rent money is dead money). NO, it's not dead, you have to spend money to have a place to live, even when you "own outright". The numbers are highly variable and do not support your thesis. Delving in to the blogosphere and asking the regular writers will confirm my point. Renting is a low-risk and efficient method of mitigating this cost of living.

Fred Lee (#18) nails it: ...money spent on rent is money gone, but the hidden costs of home ownership are huge,.... In fact, I'd go as far as to say there are no "hidden" costs to home ownership, just costs that people refuse to accept as part of the package.

Ever hear a home-owner complain about not having money because of "such-and-such" a home repair? (i.e.: the hot water tank needed replacement, the shingles needed fixing) The truth is, that hot water tank was going to need replacement, it was just a matter of when. Not having money in the bank when it goes just shows a lack of foresight and financial planning.

But honestly, it's the common disease. People are equally bad about tracking ther cost of their cars, the general populace has simply proven "very bad at math" when it comes to seeing the "big picture" on financial decisions. It's easy to think that renting = "paying someone else's mortgage", but this is just a small part of the picture and grossly inaccurate.

Back to the point. At best, home ownership is a highly personal decision filled with risks that must be considered. Paying for a house in cash is equally personal and a really good case can be made either way. Thank you Xin for providing a neutral view.

My wife and I would love to buy a house with cash, but unfortunately we don't have a big pile of it sitting around at the moment! Still, it is a stretch goal for us. 

Any tax advantages missed could be made up by simply making a deductible gift to charity--the net effect is the same.

We bought an invesment property last December in cash. This month we are closing two more deals - both also paid in cash. The amount involved were significant but we were able to lower the purchase price way below the market value of the property.

Any information you have on the subject would be much appreciated. I've recently been browsing the foreclosure listings on various websites and am looking to pay cash for a bank-owned/REO home in foreclosure. I wonder, does the process work the same as paying cash for a non-foreclosure property? (I'm aware of the risks involved such as the need for repairs and renovations). What I'm wondering is whether the process is otherwise hassle-free? I mean, as long as I have the cash, can I purchase the house from the bank? No special condition, no credit checks, etc?

I was not in a position to pay cash 15 years ago. Now by selling some stock that is not paying anything near what the investment people(selling investments would have your believe).

If some one can show me a guaranteed 540.00 a month cash flow after I have bougt back a remaining debt of 93,655.00 for 70,377.00 and have a paid off asset worth over 150,000.00 I will snap it up.

The 540.00 cash flow coming in my planned retirement years, amounts to over 9% of my current income and will be close to 20 percent of estimated retirement income.

I will have about half of this money left as disposable after paying the taxes on my asset.

It will keep me from piece meal selling of stock as I need income in my remaining years. I know exactly what I will get in this down market where waiting is likely higher but not for sure.

If I continue on the mortgage the 93,655.00 is 13,655.00 more than the original loan even though I have paid it down over 15 years.

As I see it....

27,000.00 roughly in interest savings over 15 years.
540.00 per month cash flow
150,000.00 asset instead of about a 75,000.00 or so equity with a 540.00 payment from taxable funds.

No loss of any tax advantage since I do not Itemize.

The payoff money will come in a down market now, with the possibility of it going lower as well as going up in the next 15 years. The money will be from sell off of IRA and some other poor performing stocks. I will pay 15% tax on cash in IRA, I will pay that tax anyway if I wait and take it at the required withdrawel rate. I will have a small tax offset with sale of other net loss stocks.

Am I dreaming.

Zime

Hello,

My question is now that the housing market is on a downturn is it wise to pay cash? I have saved about 350k and would like to buy a house outright without a loan. Are there and tax problems or problems with Uncle Sam? my money is in a CD and savings account and I would be paying with a bank check. I am looking at houses up to 275k I have no credit as I have never bought anything that I could not pay for at the time of purchase.

There is nothing more rewarding than owning a home MORTGAGE FREE. No stress of fees, crazy mortgage bills every month, or praying to god that you have enough money to pay that bill every month. Forget all the taxes and mombo jumbo that you would get back, and this other "money back" mess i've been reading from some of these posts. Everytime I read that i'm thinking to myself "these poor ppl are just money hungry and greedy". FYI if some of you didn't know, in the end you will actually be paying back way over the value of the house when/if you ever finish paying off your mortgage. When you pay cash, you actually have more of an advantage in trying to negotiate a lower price for the home! So if you have the money to pay for the house in full DO IT! It'll be worth it in the end.

At the time of writing this I am 23 years old. Personally I have moved away from the great credit score hype and went the ways of CASH. I see many of you noted a benefit of having a mortgage is more cash for emergencies, college, ect. Shouldn’t all of those be in different savings/investing accounts anyways. At this time I have a fully funded emergency fund and no debt. Paid off schools loans, I never got a hand out, just worked a lot. Now I am investing to be able to pay CASH for a home in the next 10-15 years.
This little tax break everyone keeps talking about, is it really worth it if you are paying almost double in interest rates by the time, I am betting most of your 30 year mortgages are paid anyways?
Cash is king; the borrower is slave to the lender.
Richard Kaulfers
Nuriche IND
RichardKaulfers.com

I have been living off of investments for about a year since I am lucky enough to have them and I am going to school. It's not a ton of money, but since I am pretty frugal in general, I live very comfortably. I am about to buy a condo and it occurred to me today that the money that I have sitting one of my mutual funds hasn't been doing very well over the last few years. If I look at the stats, it is making less than 5% and I only making about 2000 annually in dividends.

I think that not having to pay interest for 30 years would be worth it, and if for some reason, the value of the condo diminished over the next couple of years, it would be no more of a risk as paying rent.

Besides, I like the idea of having my cash flow fluid- I could save a lot more that way than having the money tied up with stocks- especially since it seems the real estate market, no matter how volatile- is still more concrete than the stock market. I would rather be dirt poor with a place to live than be worried about having to move out because the stock market tanked and I can no longer afford to pay my bills.

Buying in cash is the best decision you could ever make if you have the money. No, you dont have to filthy rich. I am far from being rich and I have done it.

It is a question of mentality. In the US people cannot think of purchasing without a mortage, most of the people consider it crazy. Well in other countries, mortgages are almost non-existing and the only way is to save up and pay it in cash.

It is a great excersise of self control learning how to spend less to set money aside for such an important goal such as buying your home.

I have saved for many years and took the plunge. You dont need a lot more extra money to do so. If you have a steady income to pay for a mortgage I dont see why you wouldnt have it to live once you payed for a place.

With having cash enough to sustain yourself for a couple of months -consider you wont pay a lease or a mortage fee so you dont need THAT much- is more than enough.

In these days of crisis as results of mortgages you can get a pretty good deal when you have all the cash in hand.
Most people wouldnt refuse to make a discount when they see all the money upfront right away hassle free.
And lets not even get into how much you save because you dont pay interest. If you think of much you end up paying after a 30 year mortgage, you realize how expensive your house turned out to be after all!

If you run out of cash, no big deal. You know you have a roof over your head that is totally paid for so you wont be out on the street. You put yourself in a solid position to handle an economic bump, much better positioned than being tied up to pay to a third party when we know by now how easy it is for any economy to be upside down with short notice.

If things go bad, you go frugal until you get back on your feet.
If you have spare a room, you can rent a room to tourists for example. There are myriad ways to survive if you hit a rough patch.
If things go really bad, you can always sell, get cash again and reduce by buying a cheaper property -smaller, or in a diff location-.

You are indeed free to choose what to do without anyone interfering in your decision making process, no need of getting approval of entities who simply dont care about unless you are a good deal for them.

Going in for debt is a risky deal, is like betting on a casino. You can win, but you can lose pretty hard as well.

Buying in cash is HEALTHY!
Think about the stress you spare yourself from by not having to worry about rates, crisis, owing money to anyone, possible foreclosure and such.

I am not a socialist or anything, but the credit system is pretty evil. They want you to hop on the wheel and make you believe that the more credit you ask for, better for you and it is quiet the contrary.

There is NOTHING like knowing your house is yours and yours alone.

To those who want to do it, take the plunge! YOU WONT REGRET IT!

Cheers!

I'm in the market for a house that would cost about half my savings. I'll probably make a "cash" offer but take a mortgage (cash offer meaning that there's no loan contingency and I'll bite the bullet and pay cash if I can't close a loan fast enough). The reasons I'll take the mortgage....

The tax benefit of the mortgage is equal to the tax "penalty" of an investment... At 5% interest, the mortgage costs 3.75% out of my pocket; an investment paying 5% earns 3.75% after taxes. It's a wash. But the mortgage interest is fixed - if investment returns are less than 5%, I can choose to pay off the mortgage, but if interest rates rise, I can keep the mortgage and earn a higher rate on savings.

If rates rise a lot, an assumable mortgage is an asset that can help sell the house.

A non-recourse mortgage is a form of risk-sharing with the bank. If the home value declines, I only lose my down payment and the value of any improvements - I can send the keys to the bank and walk away.

If I move or move up, I can rent the house. The mortgage interest is a business expense, and I still have my cash in hand for my next home purchase. If I owned the house outright, I couldn't buy another house until I sold the first one or got a mortgage on the second one. I KNOW I qualify for a mortgage now - in the future, who knows?

I really love all the positive comments here about buying a house in cash. One thing that this country has going for it is that enough people will always take out loans on everything to keep this country in the black for another year while the individual is in the red. Those wise enough to see past this ruse are the ones that are buying their houses in cash.

I loved Jane's story of owning two houses free and clear (a fantasy for most people) because she was disciplined enough to save. Sure, she made sacrifices to get their but look at the benefits. I've never understood why people argue in favor of a mortgage, as if tax benefits on over spending were somehow enough to offset the temporal loss of liquidity.

No one will ever be able to show me a math formula that will convince me it makes more sense to hold a mortgage for 30 years (a little under half America's life expectancy!!) and over pay for a house while at the same time living in an increasingly risk prone economy where jobs often disappear and never come back versus losing liquidity in a one shot transaction only to begin rebuilding that the following week because of some vague tax benefit.

Jane's story is really a strong motivator and inspiration for me. I hope we can all own our own home one day!

When you have a mortgage you do not "own" your home. If things turn for the worst the bank can take your house, no matter how long you paid your mortgage payment. So for example, say you have been consistent on your mortgage payments for the last twenty plus years and all the sudden you are laid off from work with no income for six months leading to inability to pay your mortgage, the bank will take your house away without guilt and will not refund you for all the interest/principle you put into it. Basically the bank has the upper hand, and is blind to human compassion. The bank operates with a psychopathic like personality with no consequence to humanity. Owning your home is taking the carrot off the "banker" string and actually eating it for once!!!

If you can afford to buy your own home in cash, then do it!!! Don't forget to live inside your means. One must factor in taxes, insurance, utilities, and home owner association fees etc. Owning your own home doesn't mean you don't have "home" expenses to consider.

I actually purchased two homes, cash, in the last year. I sold a lot of real estate in Arizona at "the top" in 2005 and 2006, and purchased a home and loft in Illinois in 2009 and 2010, both in cash. I actually paid for them with the gains from my "bubble" real estate. Afterward, I secured two HELOC loans against each respective property. I bought the first property distressed and had it re-appraised after 6 mos., so my current LOC = my original purchase price. So, between both homes I have about 91% available on my HELOC, which had no closing or appraisal costs and is currently under 4 percent. Thus, I have no mortgage, no debt, but nearly all of my equity available to me at less than 4% interest if I need it, which I don't.

With respect to the "write off," if you are high income you lose some of it and if you take a standard deduction you likewise don't get the benefit. Also, the average person in real life is a terrible investor. It is a complete fiction that the average Joe is going to out and successfully invest the savings from paying off a mortgage. What if you lose the money you could have used to pay off your mortgage? Most people lost money "investing" in junk bonds, the internet bubble and the real estate bubble (i.e. "flippers"). They will continue to lose money in the next bubble or shell game that comes along. Most people basically lose money at most investing endeavors. You do not lose paying off your mortgage. Even if your home does not appreciate greatly, or was not the perfect buy, you save hundreds of thousands of dollars in interest, live rent free and can sell down the line if inflation takes off in the future and your house appreciates greatly.

Well, Location, Location, Location...that is the key for me. I worked hard and I am young (41) and I sold my BIG house, got rid of my BIG job, HIGH truck Payment and relocated to southern Missouri. I just paid 6800 dollars on a house that sold for 43,835 dollars a year ago in forclosure. It has been passed around by broker after broker. It has been vacant and winterized for over a year. I offered them 5500 dollars and settled on SIX THOUSAND EIGHT HUNDRED for a 2 bedroom with garage, big living room and a huge bathroom. Now the whole house is only one level and about 970 square feet....but is still good enough for any couple. It has a 50 x 100 foot city lot that is has a nice flow to it. It does need only one major thing....electric panel upgrade and some carpeting and paint....good to go!! What a diamond in the rough. So, if your contemplating purchasing a home....make sure it is one you can afford in this economy and one that you dont mind putting a little elbow grease into. Good luck which ever way you decide to buy. I would rather buy it for 6800 and know that is what I paid truly for it instead of mortgaging a 250,000 dollar home that will in the end cost you over or about 500,000 by the time it gets paid off. YIKES....been there...done that...No thanks.

I'm doing my math to either get a mortgage ($350k) or go all cash. According to my calculations (looking at today's rate of return on CDs -10 years at 2.9% (no stocks for me these days)) it comes in to 11k difference in favor of paying cash. The way I did the math as follows: 350k with 4.2% mortgage $132k in interest minus 28% tax rate 36960 of tax savings-I end up paying $95000 over 10 years. If I open a CD for 10 years at 2.9% (for the same 350k) I will end up having 84600 in interest (after tax, same tax rate 28%), that means I'll pay 11k more in mortgage over the the same period of 10 years. I'm also worried about the inflation when money in the bank loose their value...
Anyone can confirm my math? Did I make a misstate somewhere?

My husband and I are in our early and mid twenties, we have one child and have been married for almost 4 years. We decided when we got married and go the mobile home route instead of renting, we do still pay minimal lot rent and taxes and insurance, but that only amounts to $295/m. Our original "goal" WAS to live here long enough to build a great credit score by getting credit cards and paying them off, same with car loans. We have had 7 credit cards and 3 car loans, we now have a great credit score and are basically debt free save for one remaining car loan (We've been debt free on and off in our marriage). We didn't make a whole lot of money and we could only purchase a house for about $75k with 20% down from the sale of our mobile home that never sold, so we went off the market. A few months later my husband recently had a huge opportunity and took a new job that pays about 33% more a year, we have decided to bank this extra income and pay cash for a house in 4 years.
I'm sitting here reading some of the comments on this blog thinking house greedy some of you sound. To us, in this economy, it is wayyy worth the piece of mind to not owe anything on a house, just like we live loan free in our mobile home now. Paying cash for a home will take almost all of our cash when that time comes, but like we have in the past, its much easier to get by when you DON'T have credit cards/loans when your in a pinch then getting loans and purchasing everything on credit.
Plus, and maybe I'm wrong here, but if you were one of those who bought during the real estate bubble, and you have a 30 year loan, and nos you need to move, your house has depreciated so now you owe more than your home value. If you had bought your home with cash during that "bubble", yes you would lose money, BUT it would be much easier to sell your home because you don't owe anything to any bank. I know a few people who are in this situation right now. They are stuck because their house is worth say $75,000 when they still owe say $115,000. Had they paid cash, they could cut their loses, sell and walk away.
I watched my parents struggle for years with money, that will not be me and I will not follow the ways of the generations before me. If I don't get a tax deduction because I own my house, so what! It's MINE. Any of the reasons listed here to get a mortgage or no where near the piece of mind knowing you own something, just like we own our modest mobile home.

Despite the fact that this is an older article, there are plenty of reasons to purchase a home with cash. My husband had a complication with a surgery. We are planning on purchasing a home with cash to help lift off the stress of my trying to work to pay rent and all the lovely bills that come with it. It will also relieve the stress of NOT having to deal with a landlord who will not make the necessary repairs! We cannot get a loan to save our lives and so we are going to purchase a home with cash. I just wish I could find more on the procedures on actually purchasing it with cash, not just pros and cons. It was still very informative! Thank you!

My first home purchase was in 2009. I built for $70 per square foot in Florida. I wanted new so I had warranty and all that.

After many discussions with my finanicial planner and accountant, we agreed that paying cash was the way to go.

I never had a mortgage. I dont think I ever will.

I am in "fail safe" mode right now. I know this bad economy turns down, and I lose my business (sad to say is close to happening) I know I can work part time at a fast food joint and live fine.

I'm 42 years old. Like many, I have lost "everything" and had to restart more than once. Its a great feeling knowing your house is paid for.

I realize I could have invested the 280K into something else and made 5 - 7 percent - but I could have lost too.

When I looked at the itemization of a mortgage I would have paid around 600K or so for my house that I paid 280 for... Not interested.

If you have the ability to pay cash, I say do it! in fact I bought a small property for cash in 2010 too...

Good Luck!

Trying to decide whether paying cash or getting a mortgage is best. If I buy a condo, it would take roughly 75% of all of my cash to do it. So, I'd be left with 25% of my cash and the condo. The condo would be in a relatively good real estate market - Manhattan, NY - so odds are good the property value will remain stable and then slowly rise in the future. Add to that one rental property (no mortgage) and a possible 2nd rental property if I can swing it (no mortgage).

Because of the threat of inflation, I would be inclined to get a 30yr., 4%-ish, fixed-rate mortgage and allow the debt to be diminished by inflation and enjoy the tax benefits of mortgage interest and property tax deductions.

The problem is I'm in transition. Going back to school full-time in the day. Planning to work a 4pm - 12pm schedule while in school. Currently unemployed. Even when I'm working, mortgage lenders seem to require a minimum of 2 years employment in the same position which means I'd have to wait at least 2 years for a loan (or am I wrong about that?). Not to mention the salary will be pretty low while I'm in school, probably around $25,000/yr. On the plus side, credit is in the 790s as of last check. So, if I do get a mortgage after a couple years of working/school, then 1) the rate will undoubtedly be higher and 2) the loan will be relatively small based on my income and will not cover anywhere near half of the cost of the condo.

So, the questions are:

1) is it at all possible to get a mortgage as a student? Even if I got a small mortgage now, that would still help a little with inflation.

2) If I can't get a mortgage at all, would it be worth it to purchase the condo in cash? I'm hesitant to lock so much cash up in one investment, but I would still have 25% of my cash left, plus salary, plus rental income.

Not to mention by paying cash, I'd avoid many fees and charges that add up big-time and of course all of the mortgage interest. Also, I'd get 75% of my cash into a tangible investment protecting it somewhat from inflation. Lastly, there is something to be said for the satisfaction and peace of mind of owning my home outright, especially during such unstable economic times.

Thoughts and advice most welcomed.

Loved the article..I am about to receive an inheritance and wanted to ask for some advice.. i want to buy tho houses with the inheritance and rent them out..any tips, advice, do's and dont's would be greatly appreciated

Morgarge is bad idea ots just fancy way of saying renting with slavery agreement it really is most people ars never able to pay it off in their life time.

I looked at a house yesterday that the bank bought back at sheriffs auction. the bank is selling it for $23,000. Tax assessors had the 100% value at $63,000 or so. If I had about $23,000 I would buy it. Doesn't need a whole lot of work. And what I would save in rent/mortgage I could put into the house. We are paying $800 in rent. So imagine putting $800 in the house for the next 1-2 years.

Research generates best deal, in any kind of market, In real estate investment - the only time to act is now. Always.

There is a fine Chinese saying: The best time to invest in real estate was five years ago.

The second best time? Now! That has been true, particularly in Vancouver, for 50 years.

In real estate investment – the only time to act is now. Always.

Most of the questions I get these days are on the following subjects:

“Is this still a good market?”

“Should I wait till it crashes?”

“Is the boom over?”

“Can I write a low offer in today’s market?”

In 38 years of experience, I have never seen the “great deal of a lifetime” advertised (or if I did, it turned out it wasn’t).

I have never seen a realtor who really liked lowball offers, including myself.

I have never read in the paper that “this is without doubt the best market ever,” when it really was. I also have never subscribed to the theory that one should defer actions to a better day.

There are no perfect markets, no perfect situations, and no 167 secrets to make that great buy. You are not buying a market, you are buying a well-researched home for your family or an investment you intend to keep for years.

In fact, often the best deals come in slower markets.

What matters are the actions that you take:

– Identify your goals. Do you want to resell at a profit? Do you want to create a passive stream of income?

– Look at the market cycle – at a high? At a low?

– Understand that timing is more important than location.

– Identify the kind of property you’d like to own.

– Identify a neighbourhood that has those properties in it.

– Look at everything that is for sale there.

– Look at everything that sold there.

– Look at all the price reductions.

– Look at all the ‘by owner’ sales.

– Get on the ace condo marketers’ lists.

– Keep reading and learning.

– Keep doing it till you find a deal.

All the deals are not gone; they are still there waiting to be found, looked over and – most of all – created. As investors, we must look for cash-flowing properties in B.C., low down payments, good ’employment’ areas, a good base of tenants.

That means that if we want certainty of return and low risk we need to find cash flow properties that are priced under $150,000. And yes, these deals are still every-where in B.C. – from Port Hardy (3 bedroom, 3 baths fixed upper – $55,900), to Kimberley (ski condo $72,900), to Nanaimo (four-plex for $489,000).

Of course, what investing in real estate really needs is – work! It takes work to find the deals, and work to get your investment-oriented realtors, qualified mortgage brokers, bankers and home inspectors lined up.

All good deals are created and negotiated. So, storm the net, hit hard, and keep shooting on the net. Don’t ice that puck.

Ooops I am so sorry. I didn't realize this post is years old.

I bought a house for 9K that was gutted. I put a lot into it to remodel it I used my 401K and some credit cards. I figure I can pay it off in two years. I no longer have rent or a mortgage. I tried to get a home equity to pay down high interest credit cards. I was denied the loan because I had a foreclosure three years ago. My house is worth 80k everything is new and up to code on the books. This country kills me. Hud said get a cash out for 100k and pay it back sooner. I really didn't want to owe anyone and not wanting to have a mortgage.
Call me crazy.