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Well, it all depends!Aug 09, 2007


Some ideas for you:

The theory behind larger equity is that shareholders will treat the property as its own, i.e., there will be a higher regard for the building because you have more vested by way of your own money.

1. The argument may hold some water, but I've seen shareholders who own their 100% equity on their shares and their apartments are kept in deplorable conditions.

2. Some shareholders have put down 10% or 20% and have decided to invest in upgrading their units and go ahead and spend 40K or more to re-do kitchens, bathrooms and other luxuries.

I think the problem is admissions: how good are you in detecting investors or individuals who wish to flip units without putting a nickel into the unit. I think in 80 or 90% equity there is the suspicion that the buyer intends to flip the unit at a higher price to liquidate the mortgage which finances 80 or 90% of the unit.

However, bottomline is that if people can afford a mortgage at 6.35% fixed, 30 years and only but 10-80% equity and meet their financial obligations, they will rather do it if they do not have to commit their cash and use it for other creating wealth elsewhere. This is the premise of many businesses and the mentality of a free enterprise that we so adore.

Good luck!

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