Posted by MatthewC on April 14, 2006 at 20:55:40:
If you are basing your decision solely on equity position, that is speculation.
The fundamentals for supporting the property must work to survive downturns.
In other words, if the value of the property goes downward, you can still sustain a property if it positively cash flows. It helps if you had the foresight to buy at a discount.
The danger for many people is they will do a negative cash flow property and not be protected on the equity side. The reverse is also true. If equity is uncertain, you have to be able to make the debt service and have positive cash flow on top of it.
In any case, downturns are rare except for the highly dynamic markets in the coastal or NE cities. Most everywhere else in the U.S. don’t fall into that danger you speak of.