Posted by Jim IL on June 22, 2001 at 20:45:02:
Matt,
Frankly, it depends on how I bought the place.
My last residence was one where I had purchased it conventionally some ten years ago, so the LTV was low.
The home I am in now, which we are selling at the end of this month, has an LTV of perhaps 85%.
Not great, but I got in here for nothing, and will make something when it sells.
My next home, I think I am right at, or slightly under FMV for my price.
But, again, I am in for nothing, no payments for a little while, AND, my term on the L/O agreement for it starts at 6 years, with some additional terms available to me.
Don’t you think this home will be worth more in 6 years?
I do.
So, the LTV is not really all that important to me.
See, it is not “How much?” you pay for a home necessarily, buy “How?” you pay it.
I often try to explain what I do to family members and friends. They all seem to think that since I am an ivestor, I MUST be buying homes for dirt cheap, fixing them up, and then reselling them. Otherwise, in their minds, there is no way to make money investing in RE.
I of course point out there error, like this.
I buy homes, and I buy them either on my terms, or my price, and sometimes both.
I’d be willing to pay $1,000,000,000.00 for a home worth only $100k now, IF the seller would take that $1,000,000,000.00 at $1/month until the balance is paid.
I know, this is extreme, but you get my point.
Why are you asking this anyway?
Do you have equity in your primary residence that you are thinking of using to invest?
Don’t!
There are better ways to make money, and many can be done with little or none.
Keep your primary residence safe, and learn to make money without any first.
Then perhaps after you’ve learned and mastered doing so, then take some money out of your home and put it to work for you.
Have a great day,
Jim IL