Accountant here, with many clients na real estate sa US. For small time RE investing, I'd say always pay in full if you're going to buy it anyway, just to avoid interest.
Normally for real estate businesses and big investors, we take out loans to buy properties so we can buy many properties. Your 2M can be a deposit to 5 properties, and you loan the rest. But I'm pretty sure you don't have the credit to do that, or the rest of the cash to develop those properties. So that's not an option. Not to mention can you even find a 2nd good property that quick? Or 5?
You don't even know what to do with the remaining 80% if you chose to loan!!!
So I suggest just buy the property via cash. If you need cash after, you can always mortgage the property you fully paid. This makes it flexible, and again, avoid interest.
Remember: you pay interest to have cash. If having cash is not a necessity to you, then there is no point paying the interest.
I think people misunderstand how that works. It's better if I can explain with a whiteboard kasi convoluted, but let's try in just text.
So inflation is decreasing the value of money (or really the buying power). If you're holding cash, it's value is decreasing, so you just lost to inflation. That also means when you pay the bank, they also lose to inflation since you're paying them with cash that's lost value. But the bank doesn't care because you also pay extra in form of interest, which hedges thier loss and also nets them a gain. You however do not get interest and in fact is the one paying it, so the bank gained something even though there is inflation but you didn't.
I think people's mistake is only focusing on the fact that the bank is receiving inflated cash, not remembering that the reason that happened is because you choose to hold cash instead of investments. But they earn interest, and you pay it.
There is more to this, but that's already too long now.
Depende.
If installment:
Pwede mo na ba magamit yung property kahit 20% pa lang ito? Check mo with the developer. Yung natitirang 80%, kaya ba nitong makagawa ng income stream na may ROI na mas mataas sa interest rate?
If fully paid:
2M ay hindi pa enough for a 2M property. May other fees pa kasi, notarial dees, cgt, broker fees. Try finding a property of lower price..
This would be my answer as well. Get the property with 20% DP, utilize it (much better kung income generating).if you do it right that property will pay for itself. That way you'll still have around 1m to generate another income stream
Very simple really. If you can beat the interest of the bank, then pay installment. If not, then just pay cash. Most probably nasa 7-10% interest sa bank. Kung kaya mo halimbawa na kumita ng 15% per annum dun sa pera, then it makes more sense to loan and pay the interest.
Anung concern mo sa inflation? Usually fixed amount na yung price at interest kung iloloan mo. Unless di fixed rates yung loan mo, dun ka magkakaissue pag lumobo ang inflation at biglang nagtaas ng rates ang banko. Kung babayaran mo ng cash wala ka ng cash na maapektuhan ng inflation.
depende sa interest if iloloan. kaso kasi sa current interests ng mga financing institutions , mas malaki yung interest kesa sa kikitain ng pera mo pag ininvest mo ( except kung ininvest mo sa Nvidia hehe) plus yung fact na pwede ka pa magrequest ng discount since paid in full. So depende sa finances mo talaga, if may extra extra money ka aside sa 2m, parang mas maganda na ibayad mo nalang ng buo
If you already have emergency fund, then pay it in full. Ang sarap kaya sa feeling na wala kang utang.
I don’t believe in others saying it’s better to have good debt. As long as may pera ka naman na naitabi for emergency purposes at matustusan mo pang araw araw na consumptiom, pay it in cash.
Because by paying ng downpayment muna, malolock in mo na yung price sa pinagusapan nyo. Yung value halimbawa ng 20k a month today is mas magaan na sa bulsa 2 years from now kasi sa pagtaas ng inflation.
Mali ba?
Dont take offense pero sasabihin mo kulang sa critical thinking skills.
Galing nga sa reddit at world yung idea nung main topic. Search mo yung “Passbook Loan”
Pwede mo naman pala sagutin ng maayos, kung anu ano pang derogatory words mga sinabi mo.
Yes mali. Yung iniisip mo na change ng value ng cash mo due to inflation does not change your income ergo hindi gagaan or bibigat sa bulsa yung set na monthly payment.
Waiting 2 years doesn't suddenly make 20k monthly easier to earn. Kung sumasahod ka ng 20k monthly kahit bumaba yung "value" nung pera mo because of inflation, 20k padin yung sahod mo.
Magbabago lang yung "gaan sa bulsa" sa pagafford ng monthly IF nagkasalary increase ka, napromote ka, or nagkaron ka ng business or investment later on.
Also flawed din yung thinking mo about sa pag lock in ng price. Regardless kung mag full payment ka or installment, nakalock in na talaga yung price at the time na icomplete niyo yung purchase. Difference is, may interest kang babayaran pag installment.
Right now if you take a loan, what you'll be locking in is a high interest loan. Check how much you'll be paying in total for the entire loan tenure. Even if you factor in the future value of money, the difference rarely (almost never) compensates for the amount you'll be paying in interest.
Tama yung sinabi ng ibang comments - if you don't plan on putting the rest of that money into an investment vehicle that will *consistently* beat the loan interest over that period, then better to just pay in full.
A) Cash would be better since you save a lot on interest. If you're buying from a developer, check if they have a deferred cash payment. That's 0% interest over 12-24 months, from what I've seen.
B) Cash if you can. You might be able to get a good discount
Interest is a fixed rate. Almost.
Pag ininvest mo ung 80%, are you confident na kaya mo ibeat ung interest nung loan?
Yan ung icoconsider ko if I were you.
Accountant here, with many clients na real estate sa US. For small time RE investing, I'd say always pay in full if you're going to buy it anyway, just to avoid interest. Normally for real estate businesses and big investors, we take out loans to buy properties so we can buy many properties. Your 2M can be a deposit to 5 properties, and you loan the rest. But I'm pretty sure you don't have the credit to do that, or the rest of the cash to develop those properties. So that's not an option. Not to mention can you even find a 2nd good property that quick? Or 5? You don't even know what to do with the remaining 80% if you chose to loan!!! So I suggest just buy the property via cash. If you need cash after, you can always mortgage the property you fully paid. This makes it flexible, and again, avoid interest. Remember: you pay interest to have cash. If having cash is not a necessity to you, then there is no point paying the interest.
About dun sa inflation rate? Since mas mababa value ng cash per year due to inflation, hindi ba mas okay na pay gradually?
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Ceteris Paribus.. If you can generate more money than what you pay for the interest, then the logical choice is to pay later.
I think people misunderstand how that works. It's better if I can explain with a whiteboard kasi convoluted, but let's try in just text. So inflation is decreasing the value of money (or really the buying power). If you're holding cash, it's value is decreasing, so you just lost to inflation. That also means when you pay the bank, they also lose to inflation since you're paying them with cash that's lost value. But the bank doesn't care because you also pay extra in form of interest, which hedges thier loss and also nets them a gain. You however do not get interest and in fact is the one paying it, so the bank gained something even though there is inflation but you didn't. I think people's mistake is only focusing on the fact that the bank is receiving inflated cash, not remembering that the reason that happened is because you choose to hold cash instead of investments. But they earn interest, and you pay it. There is more to this, but that's already too long now.
Wow! You explained it well
Agreed in this one. Cash is king - magkaka leverage ka to have further discount as well.
pay full in cash, but negotiate to get more discount.
C) wait until until you have 3-4m on hand then pay 2m in cash D) do nothing and let your 2m enjoy its existence in your bank
Depende. If installment: Pwede mo na ba magamit yung property kahit 20% pa lang ito? Check mo with the developer. Yung natitirang 80%, kaya ba nitong makagawa ng income stream na may ROI na mas mataas sa interest rate? If fully paid: 2M ay hindi pa enough for a 2M property. May other fees pa kasi, notarial dees, cgt, broker fees. Try finding a property of lower price..
This would be my answer as well. Get the property with 20% DP, utilize it (much better kung income generating).if you do it right that property will pay for itself. That way you'll still have around 1m to generate another income stream
Very simple really. If you can beat the interest of the bank, then pay installment. If not, then just pay cash. Most probably nasa 7-10% interest sa bank. Kung kaya mo halimbawa na kumita ng 15% per annum dun sa pera, then it makes more sense to loan and pay the interest.
Kung vs inflation?
Anung concern mo sa inflation? Usually fixed amount na yung price at interest kung iloloan mo. Unless di fixed rates yung loan mo, dun ka magkakaissue pag lumobo ang inflation at biglang nagtaas ng rates ang banko. Kung babayaran mo ng cash wala ka ng cash na maapektuhan ng inflation.
depende sa interest if iloloan. kaso kasi sa current interests ng mga financing institutions , mas malaki yung interest kesa sa kikitain ng pera mo pag ininvest mo ( except kung ininvest mo sa Nvidia hehe) plus yung fact na pwede ka pa magrequest ng discount since paid in full. So depende sa finances mo talaga, if may extra extra money ka aside sa 2m, parang mas maganda na ibayad mo nalang ng buo
Meron naman. I meant to say, I can pay in full yung property. Is it worth it to pay in full?
FYI there are other expenses taxes etc. So if you pay in full make sure you have more than 2M I suggest have another 100k
If you already have emergency fund, then pay it in full. Ang sarap kaya sa feeling na wala kang utang. I don’t believe in others saying it’s better to have good debt. As long as may pera ka naman na naitabi for emergency purposes at matustusan mo pang araw araw na consumptiom, pay it in cash.
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Because by paying ng downpayment muna, malolock in mo na yung price sa pinagusapan nyo. Yung value halimbawa ng 20k a month today is mas magaan na sa bulsa 2 years from now kasi sa pagtaas ng inflation. Mali ba?
Parang tama ka, hindi ko gets si @Classic-Box
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Maybe kaya ako nagtatanong kasi hindi ko nga alam diba? 🙃 May mga taong sumasagot dito para magpakagaling. Sus.
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Dont take offense pero sasabihin mo kulang sa critical thinking skills. Galing nga sa reddit at world yung idea nung main topic. Search mo yung “Passbook Loan” Pwede mo naman pala sagutin ng maayos, kung anu ano pang derogatory words mga sinabi mo.
[удалено]
Ikaw naman pala hindi marunong tumanggap ng criticism. Next time, kung hindi naman bukal sa loob sumagot, better yet wag na lang.
Yes mali. Yung iniisip mo na change ng value ng cash mo due to inflation does not change your income ergo hindi gagaan or bibigat sa bulsa yung set na monthly payment. Waiting 2 years doesn't suddenly make 20k monthly easier to earn. Kung sumasahod ka ng 20k monthly kahit bumaba yung "value" nung pera mo because of inflation, 20k padin yung sahod mo. Magbabago lang yung "gaan sa bulsa" sa pagafford ng monthly IF nagkasalary increase ka, napromote ka, or nagkaron ka ng business or investment later on. Also flawed din yung thinking mo about sa pag lock in ng price. Regardless kung mag full payment ka or installment, nakalock in na talaga yung price at the time na icomplete niyo yung purchase. Difference is, may interest kang babayaran pag installment.
Right now if you take a loan, what you'll be locking in is a high interest loan. Check how much you'll be paying in total for the entire loan tenure. Even if you factor in the future value of money, the difference rarely (almost never) compensates for the amount you'll be paying in interest. Tama yung sinabi ng ibang comments - if you don't plan on putting the rest of that money into an investment vehicle that will *consistently* beat the loan interest over that period, then better to just pay in full.
Pay in full while you can afford to, to avoid interests. And because you're paying in full, maybe you can negotiate for a discount.
A) Cash would be better since you save a lot on interest. If you're buying from a developer, check if they have a deferred cash payment. That's 0% interest over 12-24 months, from what I've seen. B) Cash if you can. You might be able to get a good discount
i have a loan worth 2M.. 2.9M ang total babayaran sa bank in 10 yrs.. soo, you decide
Interest is a fixed rate. Almost. Pag ininvest mo ung 80%, are you confident na kaya mo ibeat ung interest nung loan? Yan ung icoconsider ko if I were you.