Quote:
Originally Posted by Realtor 1
Buy property based on value and not falling in love with 5% down. Live for a year and you are real close to having 20% equity in payments and appreciation. Move on and buy another based on the same criteria. You only need 5% again. Ffwd to today and you could have a few properties in your portfolio before the age of 30. Not a bad start to retirement.
Of course you could have saved up for 20% on the first property but the extra time it took to develop that 20% would set most people behind the ball.
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Yeah but that assumes that:
1) Interest rates don't rise
2) Property values go upwards, not downwards.
3) Economy stays good enough that finding good tenants will not be a problem.
If these 3 things crater, a cash strapped guy is FUBAR. Over levered in debt as they can't service debt payments.
Better they leave a of margin of error in their budgeting. Doesn't mean they need to put 10% down vs 5%, but they really ought to factor in 6-8 months of not having rental income. Or if rates increase by 1%. Or if there's a 10% special assessment.