Poll: overall RE LTV

Here’s a poll on the overall RE LTV. If there’s enough sample, we can try stock margin usage as well.

We can use this to get a reading on how stretch the investors are. It can provide some anecdotal evidence for market timing


Out of 8 votes, 7 <= 50%. Only 1 at 70%.

4 at 50%, 1 10%, 1 20% and 1 40%.

So most people here have an overall LTV under 50%. People are not stretched, still a lot of buying power.

Market has a low risk of price decline

I don’t think the people on this forum are reflective of the general population of homebuyers tho’ :sweat_smile:

I think primary buyers are less likely to default than investors. If you default on a primary, you still need a place to live. If we default on an investment property, we damaged our credit score and lose rental income. That’s less damaging than needing a place to live.

According to this survey, 89% of the people here have a low LTV of 50% or less. 33% with an extremely low LTV of 20% or less.

It begs the question whether RE investment is still worthwhile when it loses leverage. Say your rental properties are all paid off and free and clear, should you be congratulated? Or should you be reminded that stocks might be better than a paid off house?

The beauty of RE investing is the leverage. You use the leverage to amplify your return. However when LTV drops to 20% or less, your overall return might be less than stocks so why bother with RE which requires hard work and comes with more risk?

It’s inevitable that your LTV will keep dropping and someday your mortgage will be paid off. No question about it. Should you keep doing cash out refinance and acquire more and more real estate?

You just wake up to ask this question? Thought I was telling you about this issue so many times. The return is not as lucrative as you might think. You can get the answer from the table on detailed cost computation of owning a house that I have posted in this thread.


A simple rule of thumb would be, so long…
the annualized appreciation of the house is greater than annualized return of the investment less cap rate
is worthwhile holding on to the house when house is fully paid or for full cash purchase of house.

Assuming the investment vehicle is S&P (historical annualized return of 7-11%),

For SV, cap rate is about 1%
Annualized appreciation of the house should be 7-11 less 1 = 6-10%.
Historical appreciation for houses in SFBA is 6-8% :grin:

For Austin, cap rate is about 5%
Annualized appreciation of the house should be 7-11 less 5 = 2-6%.
Historical appreciation for houses in Austin is 2-3% :grin:

Guess market is fairly efficient. Always arbitraging :wink:

To achieve <20% LTV, you’d have to buy at the rock bottom with 50% down and have the home double in value. To maintain it, you wouldn’t be able to borrow against the gain in equity. Call me skeptical on that one. Maybe people are counting a paid off primary which skews the numbers lower vs. the LTV of only rentals.

Take the survey results with a pinch of salt. In general I ignore computation of returns and ratio like that. Too many ways to compute depending on assumptions.

I can approximate the overall debt vs. assets of my overall portfolio. Which stands at about 33%. I think that’s a healthy percentage… although can be higher. But no need to assume more risk.

How is that possible when you’ve said that you always borrow against equity for your down payments?

Because both stocks and real estate have appreciated by a lot in the past few years?

You obviously have to eat more eggs and steak.

Um… I might have to if I were at your level of net worth… :wink:

Once you have too much money, no need to take risks. Just sell everything and buy some sp500 and some bonds, and enjoy your FIRE

1 Like

What is the latest estimate of your networth now? Will need to ask @hanera.

Are you calculating:

RE debt / (Stock + RE Value)
RE debt / RE Value

I thought this was about RE debt / RE value, so it was the LTV of just RE assets. If it’s the first option, then sub 20% makes sense.

Yes, keep it simple :laughing:

My calculation was based off of overall debt vs. assets. If I were to do RE debt / RE value alone, then it’s about 30%… very close.

You can still form a corporation and take huge amount of risk with the corporation. When it fails, your personal asset is still intact

Ah, sub 20% makes way more sense then. I was looking at RE only and ignoring other assets.

1 Like