Buying Property with hard cash

DTE Energy / Eng Utilities
Nov 4 326 Comments

TC: 114k
Wife TC: 98k
Savings together: 300k
+ 1 year old kid

With that given: We want to buy property for 400k-500k in a modest suburb. (currently in a suburb townhouse apartment)

But in between of: if we should get a 10yr fixed mortgage (3.2% APR) and get a house now or wait about 7-8 years so we can buy the property with full cash (save money?? don't know how much).

10yr fixed = start school in an excelent sd in K

7-8 year wait = start in an okay sd and move before 3rd grade

Don't know how much we'll save or type of upper hand if we have the cash, any real estate pros out there?

2357 VOTES SELECT ONLY ONE ANSWER
VOTE VIEW RESULT

comments

Want to comment? LOG IN or SIGN UP
TOP 326 Comments
  • Zillow Group / Product
    Big Sur

    Zillow Group Product

    PRE
    FormFree
    Big Surmore
    Studied real estate finance and work in mortgage. From a purely financial perspective, take the 30 year fixed rate we have today. There’s a ton of math behind it, but basically it’s free money. There’s no reason to buy a house cash unless you can’t put it in an investment account.
    Nov 4 17
    • Microsoft rubaduba
      @gollygee that assumes that the principal amount is the same invested in market. You cannot take a 100k loan and put 20k in market and say X% rate can be beat.
      Nov 4
    • Microsoft rubaduba
      @Nudibranch good point but being debt free and with no liability creates liquidity faster
      Nov 4
    • Twitch / Biz Dev #squidward
      It'd a gamble right? Rubaduba. My mom bought real estate in Vancouver back in 2000. 300k house with 100k down. She just sold that house 20 years later for 2 mil. Gg, she made 1.9m with 100k equity. Being in debt really helped her out there
      Nov 4
    • Zillow Group tsamofo
      @rubaduba. Investing is all about compounding. More time in market == significantly higher returns. Rushing to pay off your mortgage with an interest rate below 4% isn’t the optimal strategy.

      This chart is a pretty good example of how compounding can be extremely powerful.
      Nov 5
    • Credit Karma MeatClub
      Agree. Take a fixed with 25% down and start to put the rest of the money in Bonds/Stocks (gradually so you dollar cost average. Market is too hot right now to dump it all in). Make your money and credit do the work for you. Congrats on the 1 year old by the way
      Nov 7
  • American Express JFR87
    damn where do you live where 400k can get you a nice house.
    Nov 4 11
    • WeWork Anon3443
      Umm... pretty much anywhere but the Bay Area or NYC.
      Nov 4
    • EPAM Systems gifnYebd
      Haha Bay Area and NYC are both unlivable. You're either a multimillionaire or a poor schmuck
      Nov 4
    • Deloitte / Consultant Makiavelli
      “fresno pretty easy commute” said no one ever haha
      Nov 4
    • Pandora / Eng joystick
      Easy commute to LA.
      Nov 4
    • Apple heyfefe
      at 400k for a house you have at least 1M left for a nice helicopter for that easy commute
      Nov 5
  • Palo Alto Networks Fupatroopa
    Start hiding money for the divorce in about 10 years. You will remember this post if you dont. Good luck
    Nov 4 10
    • Pivotal Axe Cap
      How do you go about this?
      Nov 5
    • Mitel
      BigHearted

      Mitel

      PRE
      Black Box Network Services
      BigHeartedmore
      Ask him. He will tell you what he likes.
      Nov 5
    • RichRelevance Zodian
      What I'd do is route the funds through cryptos into a business account opened in a trustees name. Then once I had enough money in the business account I would buy a large plot of land somewhere remote. Every month following I'd draw from the account and head over to Home Depot to purchase $1,000 worth of seeds to plant trees on the plot. Now when my wife divorces me I'll only need to wait a few years before harvesting the lumber and totally recover my losses, build a log cabin on the land, and live out the rest of my life as a mountain man fighting bears and doing other manly shit.
      Nov 5
    • New cries
      @Zodian you've certainly put a lot of thought into this!
      Nov 5
    • Google pPpPpPh
      If you hide your money then the government will steal it via inflation.
      Nov 5
  • SAP olva73
    It is STUPID to get a loan other than a 30-year loan. Why? Simple, tax law. Put 25% down and take out a 30-year fixed.

    Invest your 500k into 4-houses. Retire from day job in 15-years with rental income that relaxes your current 300k/year household.
    Nov 4 9
    • SAP olva73
      I’m lazy. I’d rather make millions borrowing someone else’s money to pay for houses someone else pays rent for.
      Nov 4
    • Bank of America / Product Quacky
      Sarcasm is only good when its funny
      Nov 5
    • Google fugacity
      @Facebook.. you're thinking a 1000X too small. Why make a billion dollar company when you can make a trillion dollar company?
      Nov 5
    • Travelport / Eng buttnpushr
      Look at all these plebians with their $10^9 dreams while I'm here founding a $10^420 galactic empire with my 5 yeetcodes a day
      Nov 6
    • Google fugacity
      Bahah
      Nov 6
  • Amazon SDE3Hire
    I love how everyone in this thread is worried about real estate correction yet they believe 10% mutual fund growth is guaranteed.
    Nov 4 4
    • Zillow Group tsamofo
      Real estate corrections are short term. Long term they are still stable investments. Same goes with stock.

      Real estate corrections just hurt more because it can destroy mobility (unable to move to a new home of underwater), while a temporary dip in your 401k doesn’t change shit in the short term.
      Nov 5
    • Lyft ihtfP!
      I think the difference is that real estate takes on some local risk, which in extreme case doesn't self correct. For example Detroit.
      Nov 5
    • Amazon SDE3Hire
      Google Japan lost decade. Google hyperinflation. Great depression...

      We are lucky in the US, but the advice here is happy day mostly.
      Nov 5
    • Zillow Group tsamofo
      Lyft I am always thinking that! Like did engineers at GM buying houses in 1985 foresee the decline of Detroit?

      Would we if the American tech industry goes the way of the American auto industry?
      Nov 5
  • Twitter crackerja
    This the comprehensive list of reasons that you should buy a house in cash
    1 - you are laundering illegal money
    2 - you are in a highly competitive market and want to close the deal at any cost
    3 - you are stupid rich for no reason
    4 - somehow your credit sucks so much you won’t get a mortgage
    End of list.
    Nov 4 9
    • Microsoft bigsixhero
      Theres one more reason. If you fully own your primary residence it cannot be taken away from you due to lawsuit, loans, bankruptcy, etc. This protection does not apply if you own a mortgage on it.
      Nov 5
    • Oracle while(1);
      There is significant downside in stock market and high inflation is going to devalue your cash. Why wouldn't cash asset purchase make sense?
      Nov 5
    • Google louc
      Oracle, that argument would perhaps apply for your *net* cash position. In fact if you believe money is cheap you should get loans and buy more assets.
      Nov 5
    • This basically describes the Chinese housing market in LA, BC and Irvine...
      Nov 5
    • Apple / Eng 🍏2️⃣🍎
      Here is why you don't:
      * you enjoy paying a mortgage.
      * You'd like that house to cost you double.
      * You are willing to risk all your money in the stock market.
      Nov 5
  • Amazon / Eng
    fishstick

    Amazon Eng

    PRE
    Amazon
    fishstickmore
    Don’t buy property, it’s a waste of money, buy equity...
    Nov 4 19
    • Google fugacity
      LOL
      Nov 6
    • Amazon / Eng
      fishstick

      Amazon Eng

      PRE
      Amazon
      fishstickmore
      Coding in Excel lmaooooo buttnpushr is a true boomer 😂😂😂
      Nov 6
    • Amazon / Eng
      fishstick

      Amazon Eng

      PRE
      Amazon
      fishstickmore
      Ok boomer 🙄
      Nov 6
    • Travelport / Eng buttnpushr
      The true boomer thing is to make fun of different paradigms than you use
      Nov 7
    • Amazon / Other rururu
      Was fishstick and insult or someone’s username?
      Nov 8
  • Brightcove moosepuck
    Is the cash cold as well?
    Nov 4 4
    • SAP
      Man

      SAP

      BIO
      F
      Manmore
      Yeah, OP, this is important
      Nov 4
    • DTE Energy / Eng Utilities
      OP
      Just went to Mexico, so no. Just a different kind of ice.
      Nov 4
    • Amazon Strong☕️
      I was wondering what hard cash is too. Isn’t cash just cash?
      Nov 4
    • Microsoft hrcagb
      This cash has seen some stuff... Transactions no cash has business being part of.
      Nov 4
  • Facebook bl@ckmamba
    Don’t do it. Do the 30 yr and invest the rest in an index fund.
    Nov 4 0
  • New BupL14
    Buying a house all cash is dumb. Mortgages are cheap and you can beat rates in the market. Also no real reason not to get a 30 year — you can pay it off like a 10 year but you retain flexibility if you need it.
    Nov 4 0
  • Symantec spidrman
    Why are you impacting your future opportunities by sticking to one place? You need to be mobile. Remember a house for self use is an expense it’s not an investment!
    Nov 4 5
    • DTE Energy / Eng Utilities
      OP
      Not 21 years old anymore, also + kid + wife is an asoc prof. going for that tenure. Graduating with MBA that my company paid for, pretty much a guarantee that I'll work for corporate officers (that I know well) this december. W my experience I can move to HydroQuebec or Texas (no family nearby, no thanks)
      Nov 4
    • Symantec spidrman
      I thought you are in mid 20s looking at your TC. You are right, age makes a difference in such decisions.
      Nov 4
    • DTE Energy / Eng Utilities
      OP
      Utilities and academics don't make a lot of money :/
      Nov 4
    • Microsoft / Eng
      KRtA21

      Microsoft Eng

      PRE
      Google
      KRtA21more
      Your household income still still make you guys 1%ers globally. Just to give some perspective :)
      Nov 4
    • Facebook zuckburger
      A house for self use is an expense, but so is renting an apartment... often the house is a lot less expense when you think about the fact that you’re paying down principal as well.
      Nov 5
  • Microsoft redflagged
    You’d be foolish to invest that much in a single property. You’d be house rich, cash poor, and giving up opportunities elsewhere. Instead put 25% down on your primary residence, and then 20% down on a rental property that’s much cheaper than your home. Maybe get a second rental. Put the rest in an index fund. The next step is Profit!

    I own my residence and five rental properties. It works. Tenants are a hassle though.
    Nov 4 2
    • Microsoft xergzies
      Going through a couple of bust cycles can fundamentally alter a person's risk tolerance.
      Nov 4
    • Microsoft redflagged
      I went through recessions in 1991, 2001, 2007. So that’s three.
      Nov 6
  • Amazon IDrS71
    You should get a 30 years fixed. Home loans are cheap so you should but invest more than the minimum down payment. Put rest of the money which gets you more than 4% returns. Investment 101.
    Nov 4 6
    • Cisco
      🦙 Alpaca

      Cisco

      BIO
      I am the Alpaca. DM me if you want to cuddle.
      🦙 Alpacamore
      Any total index fund
      Nov 4
    • Amazon IDrS71
      Checkout ETFs. You can find relatively stable and giving 10% yoy returns for last 10 years
      Nov 4
    • Amazon yzjjay
      Past performance is not an indication of future performance. Those ETFs could easily lose half their value in the upcoming recession.

      10% per year growth every year is a wildly unreasonable expectation. Even the most experienced investment experts wouldn’t expect that.

      3% is a realistic expectation if you have a well balanced portfolio that isn’t going to run the risk of completely wiping you out in bad times. It’s been so long since the last recession that people forget what it is like to lose half their savings overnight.

      You don’t want to be that guy but you will be if you invest in risky stocks that give short term high gains.
      Nov 4
    • Voya / Finance
      Blind867

      Voya Finance

      PRE
      Voya Financial
      Blind867more
      If you look at market dips and the liklihood of it, loosing half their value isn't likely.

      3 % is so conservative you may as well be in only bonds
      Nov 5
    • Cisco
      🦙 Alpaca

      Cisco

      BIO
      I am the Alpaca. DM me if you want to cuddle.
      🦙 Alpacamore
      People say 8% is reasonable
      Nov 5
  • Amazon / IT h@g
    Make a cash offer to get cash offer discount and later get 30 year fixed mortgage against your home and cash out 80% of total value of the home.
    Nov 4 0
  • DoorDash uNoS26
    Buy cash don’t listen to all this
    1- You don’t know the future.
    2- The stock market is over inflated a 50+% correction is near so your money will lose its half if in market.
    3- Your house if rented will give you guaranteed income equal to 10% of your cash + the house appreciation which around 4% so total gain is 14% + peace of mind, compared to 10% in stock + sleeplessness nights.
    Nov 5 7
    • Voya / Finance
      Blind867

      Voya Finance

      PRE
      Voya Financial
      Blind867more
      This 1931 market prediction brought to you by doordash.

      Also you're not going to earn 10% rental income if you fully own the house with cash. That's why you lever it with a mortgage and increase your gains, calculating the earnings over the principal.

      But a 50% loss has never happened, the highest was 47% in 1931. Even then if you have a 70/30 portfolio it only has like a 1% fail rate during market downturn.

      Do some research.
      Nov 5
    • Travelport / Eng buttnpushr
      This is plain gambler's fallacy. Sure the market boom took longer than people were used to but that doesn't mean recession predictions today are inaccurate because predictions 8 years ago were shown to be false. We're simply on a streak
      Nov 5
    • New meme9
      Buy with a 10 or 30 year fixed loan, live in the house for at least 10 years. Paying cash is such a bad idea unless you're optimizing for a potential short term decline that you can't ride out because you'll move in under 10 years. And if you're doing that, you should reconsider your financial strategy.
      Nov 5
    • I get 15% average, on my rentals and they are 100% unleveraged. You make your money on the purchase vs the rental market. I buy houses that rent for $1500/mo for $50k and assume I'm loosing 50% to cost of home ownership.
      Nov 5
    • Asurion wooooow
      How do you get 10% return in California? Are you factoring in taxes and fees?
      Nov 7
  • Amazon RfuS85
    Weird flex but okay
    Nov 4 0
  • Reltio / Eng gologi
    How long did it take you guys to save $300k? Just trying to figure out what the fuck I am doing wrong that I can't even get close to that number - 1) probably living in Bay area
    Nov 4 4
    • DTE Energy / Eng Utilities
      OP
      8-9 years, Michigan + renting an apartment in the midwest is cheaper than our car insurance (also thanks MI laws). But Im in my 30s. With buying cars and a kid, it took us that long
      Nov 5
    • Tumblr plgjrvcor
      You bought a kid? Bad investment, shouldve bought bees instead for that sweet honey money man!
      Nov 5
    • DTE Energy / Eng Utilities
      OP
      With wife's connections as a prof. to prestigious universities, we plan to take the returns after our kid starts humblebragging >$1m+ TC on this app.
      Nov 6
    • New
      96%sure

      New

      PRE
      NASA
      96%suremore
      In that case buying kids can be considered.
      Nov 6
  • Google fugacity
    Save your cash and invest it in the stock market. Go for something tried and true like the SPY ETF. I've been investing since since 2007 and my overall annualized return is ~9% and that's through the 2008 recession and the 2014 oil recession.

    If you buy the house outright you will be losing 6-7% in upside opportunity. (10% annualized minus 3% mortgage rate)

    1/3 of my networth today is through capital gains because of this.

    Also using the rule of 72.. 10% annualized will double your money in just over 7 years. You will not achieve this with a house.
    Nov 4 8
    • Google fugacity
      Classic "I provide an alternative to your point and I don't understand the topic". Come on, you're better than that.
      Nov 6
    • Google fugacity
      Basic point is the market has its swings but tends to recover faster than a real estate market. Yes, you can get leveraged gains, but if you get a real estate market that crashes or holds stagnant it may stay that way a lot longer than an equity market. A city's or state's landscape can change drastically over 30 years (look at Michigan, for example).
      Nov 6
    • Google fugacity
      And FYI Olva73, I also hold two rental properties. When times are good, everything makes sense with a rental. When the market shifts and housing prices drop along with rental prices you leveraged gains quickly diminish.
      Nov 6
    • Google fugacity
      #themoreyouknow

      You should learn more about equities. Maybe you could have made more money 😜👌
      Nov 6
    • SAP olva73
      @ fugacity excellent! Apologies, I run into people in the real-world all the time who don’t understand real-estate investing.

      Yes, you’ve been around long enough to see the boom and bust cycles. Most of us are actively de-leveraging and realizing real estate profits to be in a better position for the next storm.

      Invest on the numbers, not speculation.

      For the average joe, real-estate has larger returns and easier to understand profit & loss. Even an all-cash purchase often has more predictable returns than a specific stock purchase. That being said, the simplest investment is simply an index fund held long-term.
      Nov 8
  • Bloomberg AMI<GO>
    30 year mortgage if this your final home, ARM if not
    Nov 4 3
    • Capital One / Eng alltech
      This is the worst advice ever.
      Nov 4
    • Coupa / Eng NJFw38
      I’d max out the mortgage and taken best available rate. Even arm 7-8-10/1 to maximize tax deductions and invest money safely. After 7 years even pay out the house or refi if better rate available
      Nov 4
    • Amazon jafrbfi
      This is good advice. Fixed rate loans are overpriced because the banks take a lot of interest rate risk and prepayment risk. ARMs are only bad if you don't underwrite your loan to the max rate.
      Nov 5
  • AdsWizz / Eng flowering
    Seems like we are near a housing crash no? But even if we weren't... A historically 1.1% yoy value increase with a 3-4% cost of the loan... Plus the additional taxes, fees, and maintenance.... It seems pretty expensive compared to renting - which provides more flexibility should your life need to change while also allowing you to invest or save your cash. Just my 2 cents. Best of luck!
    Nov 4 6
    • SAP olva73
      This. As the “owner” all you’re paying is the interest, insurance and taxes. The principal is forced savings.

      Plus as the owner, your costs go up slower than rents go up. Oh yeah, also, if more people want to live in your area, then you can sell your house later for MORE money than you originally paid.

      Owning is by far the generally better option for anyone who isn’t a professional investor.
      Nov 4
    • Washington DSHS JWdM78
      With the last crash home prices went down, rent prices stayed fairly stable or went up.
      Nov 5
    • SAP olva73
      Exactly.
      Nov 5
    • New
      96%sure

      New

      PRE
      NASA
      96%suremore
      What really matters is that these "forced savings" can easily be better invested somewhere else.
      Nov 6
    • SAP olva73
      Hardly. Human psychology. For 99% of society, they are simply not disciplined enough to “better invest” the forced savings elsewhere.

      For that 1%, yeah, they’re rich because they have the discipline to reinvest rather than inflate lifestyle beyond means.
      Nov 7

Salary
Comparison

    Real time salary information from verified employees