If you only buy houses that meet a ration analysis, you'll miss out on making alot more money!

Closer to home for us is the fact that those of us who bought houses we can afford (for the moment, at least), and bought using rational loans, get the reward of continuing to have a decent credit score AND continuing to be allowed to pay our mortgages.

Some are concerned that you'd have to mark the assets down to purchase them, but I think it could help provide some rational pricing, actually, for the market in some of these assets, because we don't have really any rational pricing right now for some of these asset categories."

Show the pro rations for taxes and insurance on your HUD, this will evidence the requirements mentioned above.

It’s easy to rationalize a purchase by saying that you can’t buy for less in this area.

The building would still survive in this fictitious dire world ... but would not be the best use of your capital if the opportunity cost is 8% -;   The ROI would be only 4%, the CoC 5.5%, but your debt coverage would still be 1.55 (good) and the Break even ration 72%.  

In my area I see a trend of 8% selling costs. 5% commission and an estimated 3% for closing costs like title insurance, attorney fees, tax pro-rations etc.

iid=HP_LNIn theory, housing prices and incomes should reach an equilibrium, where no place remains consistently "affordable" or "unaffordable", relative to local wages.But that is in a market that is not only free, but where all actors are both fully informed and rational.And none of us, never mind all of us, are either fully-informed or fully rational in our economic activity.So what do you guys think?

Plus you'll need to qualify on rations for the next purchase.

. - It would indeed be awesome if you could rationally explain to a bank how the numbers work on a real estate investment, but my guess is that unless you're dealing with a small community bank that doesn't want the property on their books, and would rather sell the property to an investor (and maybe even service the loan for them)...you're not going to have much luck talking reason and sense into a bank.Then again...it never hurts to try and hopefully someone can come along and tell us both who wrong I am and provide that secret sauce recipe.