Anyone purchase houses with cash?

[Starsky]

At my age, buying investment property for cash is really the only way to get a reasonable return and the free cash flow to use now. I'm not interested in investing for later in property. It's not liquid enough for me. Profits are made at the purchase. Buying smart is 90%+ of success in real estate investing.

 

[Katoslake]

Yep. Sold one for cash and bought one with cash all within a 6 week time frame. I was nervous throughout .

 

[teetee]

With rates as low as they are, I don't know why you would pay cash for a home. You can lock a 30y fixed rate for like 3.5%? You can almost certainly average better returns than that with your cash over that long of a time horizon, and effectively arbitrage the difference.

Admittedly, I have a bias in favor of strategically using debt to grow my asset base more aggressively. I would probably edge toward eliminating debt once I'm close to done accumulating wealth, vs. consuming it. So I guess my opinion depends on where you are on that curve. Suffice it to say, I could pay off all of my mortgages today if I wanted to, but I intentionally do not.

It is all about avoiding risks. "Better return" strategy only works if I can afford the mortgage payment. I invest aggressively but I don't use debt as leverage.

 

[levindb]

I just bought a home with 2.8% 30 year mortgage. I you took the cash you were to pay for the home, and place it in a brokerage account earning a very conservative 5%, then have checks written automatically from that account to your mortgage lender, you will see 2% free money compounded monthly, and a lower tax bill due to interest deduction...

To me, today's mortgage interest rates no longer support paying cash for a house.

 

[Beachcomber]

We purchased land and built a new home with cash. Interesting that there is very few public records on the value of our home. Property taxes have been assigned by what the neighborhood is and sq footage. Which is good and bad. Taxes are lower but when we go to sell that undervalued tax appraisal may make it difficult to justify our actual cost. IDK, maybe ..maybe not. I like the privacy it has offered, your life is on the internet thanks to public records. Recently our home insurance went up over $200.00 for the year. Having paid cash allows us to say no. We can insure at whatever level we want. I still have an issue with all the personal property they insist must be covered with a house value. Again, that seems weird. I just want fire and liability insurance, with no content, but can't find a policy like that. We sold our last home to a cash buyer. We both used real estate companies. I am glad we did because the buyer got upset when her remodel didn't go as she wanted and tried to blame us. We had to hire a lawyer to respond to her lawyer, blah..blah blah, ended with nothing happening except having to pay approx $500 in letter and phone call fees to lawyer. Using the RE company ensured all documents had been signed and inspection and disclosures had been offered.

We did the same thing. When you sell, they will appraise the listing price by what has sold in the neighborhood.

 

[2177V]

>> This is my retirement house until I die unless I decide to leave for other reasons (which I might!). Nothing is cast in stone.

Depends on your age. Do remember when you get older 70% of the population need some kind of Long Term Care. - at home, assisted living, nursing home, Dementia ward etc. Most of the LTCi would not pay more than $!25K between a couple for 3 years. Insurance is expensive and gets expensive every year.
You may have to start thinking about the CCRC option!

Personally I will not move into a nursing home because you end up in a small private room, eating food that they cook for you and COVID-19 has made nursing home a death trap.

Better option: Hire a live-in maid or care giver. Have the maid or care-giver live in a separate bedroom or a separate granny house on your property, rent-free. This allow you to pay them a lower salary and you will likely get better care. Assume you pay them $5 an hour plus their rent is free. This will translate to $200 a week while a nursing home can cost you much more. You get the food you want (naturally the maid or care giver will cook for you) and plus the maid or care giver will cater to your needs. Pay for their training in CPR and as a nursing aid. In an emergency, they can drive you to the hospital.

An even better option: Marry someone who is 20 years younger. I have.... so I have to be really nice to my young wife. I also instructed my young wife to live with a close friend or our children after I kick the bucket. This is because I do not want to have my young wife to grow old alone.

 

[Dash man]

Better option: Hire a live-in maid or care giver. Have the maid or care-giver live in a separate bedroom or a separate granny house on your property, rent-free. This allow you to pay them a lower salary and you will likely get better care. Assume you pay them $5 an hour plus their rent is free. This will translate to $200 a week while a nursing home can cost you much more. You get the food you want (naturally the maid or care giver will cook for you) and plus the maid or care giver will cater to your needs. Pay for their training in CPR and as a nursing aid. In an emergency, they can drive you to the hospital.

Good luck with that!

 

[teejayevans]

Retirement should involve a three legged stool: (1) SS (2) IRA or pension (3) cash or house equity. You cannot use SS, IRA or a pension to buy a house ....

Not true, SS/pension counts as income and asset depletion mortgage* uses your IRA as income.

It’s a non conforming loan so rates are not as attractive.

 

[old medic]

Sold our home, took some cash and bought our old house we rented, and the abandoned house next door.... currently remodeling as we can...
love having no mortgage.

 

[LARS]

A reason to consider a mortgage as a first time buyer (absent discussion of competitiveness of offer) is that by having a mortgage lender there is effectively someone looking over your shoulder and will ensure mistakes in the process aren’t made (hopefully anyways). And, of course, you can always pay down loan as soon as you like.

An example. A lender will require an appraisal of the property; something you might not have thought to pay for on your own.

All my cash deals I have made contingent on property appraising. However, just sold our own house in an all cash deal and the buyers did not do an appraisal (whether intentional or not I haven’t a clue).

 

[ERD50]

I'm thinking about paying cash, and then looking for a low rate fixed mortgage. I can get a LOC at ~ 3% (variable of course), from my broker.

My thought is it simplifies the closing, then I can take my time to shop for the best long term fixed rate. That seems better to me than trying to do it all at once. The RE agent we talked to said not needing the appraisal would help us.

Any negatives?

eta: we will have an inspection done

-ERD50

 

[WhenIsItTime]

I'm thinking about paying cash, and then looking for a low rate fixed mortgage. I can get a LOC at ~ 3% (variable of course), from my broker.

My thought is it simplifies the closing, then I can take my time to shop for the best long term fixed rate. That seems better to me than trying to do it all at once. The RE agent we talked to said not needing the appraisal would help us.

Any negatives?

eta: we will have an inspection done

-ERD50

Seems Appraisal only has two downfalls for seller: (1) time to complete, (2) selling price > valuation. Which one is your realtor worried about?

 

[ERD50]

Seems Appraisal only has two downfalls for seller: (1) time to complete, (2) selling price > valuation. Which one is your realtor worried about?

Either could be a problem. Takes time to get an appraisal (housing market is crazy hot here right now - nice homes are getting multiple offers by the next day). I bet the appraisal services are back-logged.

And if the buyer needs a mortgage, that can get hosed up if the appraisal comes in lower than what the mortgage company requires.

-ERD50

 

[EdL3]

We’ve purchased 2 houses with cash. Our all cash offers beat higher offers and resulted in 30 days or less closing. Always have an inspection done. The peace of mind that comes with true ownership is priceless.

 

[LARS]

I'm thinking about paying cash, and then looking for a low rate fixed mortgage. I can get a LOC at ~ 3% (variable of course), from my broker.

My thought is it simplifies the closing, then I can take my time to shop for the best long term fixed rate. That seems better to me than trying to do it all at once. The RE agent we talked to said not needing the appraisal would help us.

Any negatives?

eta: we will have an inspection done

-ERD50

Yeah, you overpay relative to the appraisal and it complicates at best getting a mortgage (more money to the table for you), or worse, makes a mortgage more difficult to obtain.

 

[NateW]

We bought our current house with cash. This made me think about what the real estate agent asked us when we met to see some properties. She asked, "Have you been pre-approved and if so, for how much?" I said, "No we haven't" and I did not say anything else for a few seconds because I wanted to see what her reaction was. She seemed a litte disappointed and was getting ready to say something (probably about the need to be pre-approved before seeing properties), and I said, "It will be a cash sale." Her face then lit up and she said, "Great, let's go look at houses."

With cash the two big hassles we avoided were the property appraisal and loan approval process. We were also able to move and then sell our old house after we moved out.

 

[teetee]

We bought our current house with cash. This made me think about what the real estate agent asked us when we met to see some properties. She asked, "Have you been pre-approved and if so, for how much?" I said, "No we haven't" and I did not say anything else for a few seconds because I wanted to see what her reaction was. She seemed a litte disappointed and was getting ready to say something (probably about the need to be pre-approved before seeing properties), and I said, "It will be a cash sale." Her face then lit up and she said, "Great, let's go look at houses."

With cash the two big hassles we avoided were the property appraisal and loan approval process. We were also able to move and then sell our old house after we moved out.

I am planning to remove the buyer agent from my future house purchase process but it is good to know they think cash is king as well (they can close deal faster).

 

[RenoJay]

I’ve bought several homes, including my primary residence for cash. Today, though, I’d likely get a loan. With interest rates around 3% and the money supply increasing faster than that, is think there’s a reasonable chance that appreciation essentially pays the mortgage.

 

[Alderman]

I’ve purchased four properties for cash. I had the advantage of knowing the histories of the properties going back to before I was born so I think that helped some. One of the properties we had a real estate agent involved who got money for basically directing us to the title company. For the other three we just had the title company do the required checking and paperwork.

 

[Sunset]

Personally I will not move into a nursing home because you end up in a small private room, eating food that they cook for you and COVID-19 has made nursing home a death trap.

Better option: Hire a live-in maid or care giver. Have the maid or care-giver live in a separate bedroom or a separate granny house on your property, rent-free. This allow you to pay them a lower salary and you will likely get better care. Assume you pay them $5 an hour plus their rent is free. This will translate to $200 a week while a nursing home can cost you much more. You get the food you want (naturally the maid or care giver will cook for you) and plus the maid or care giver will cater to your needs. Pay for their training in CPR and as a nursing aid. In an emergency, they can drive you to the hospital.

....

In Bangladesh I could see that working, or parts of India..

Not in USA/Canada, you would be lucky to get the person for $20/hr, with free room & board, and they will only work 40hrs per week.
With 2 weeks holidays/yr.
So you are on your own nights and weekends.

 

[Dash man]

In Bangladesh I could see that working, or parts of India..

Not in USA/Canada, you would be lucky to get the person for $20/hr, with free room & board, and they will only work 40hrs per week.
With 2 weeks holidays/yr.
So you are on your own nights and weekends.

Yes, funny thing about nursing home care, you never know what time of day you’ll need their help!