TPB X thread (30 Viewers)

[Mavsker]

Would take a rate of about 15% to cut it by 13 years. If you're making extra payments on a loan at 3.5% you really hate investing.

Ok but if you owned your house outright, would you mortgage it in order to take the money and invest?

For 99% of people that answer is no, but it's the same difference.

 

[1HuskerDad]

 

[1HuskerDad]

 

[Jim14510]

Ok but if you owned your house outright, would you mortgage it in order to take the money and invest?

For 99% of people that answer is no, but it's the same difference.

I absolutely would and have when the rates were lower. Virtually every small business owner does this. House generally not paid off completely but advanced money from the equity in home. Whether its investment in other real estate, active business, passive investments or market.

 

[Mavsker]

I absolutely would and have when the rates were lower. Virtually every small business owner does this. House generally not paid off completely but advanced money from the equity in home. Whether it's investment in other real estate, active business, passive investments or market.

I understand small business owners do this, but most people would not. Nor should they. Yes the market on average returns much more than 3.5%, but it's not guaranteed. The 3.5% is guaranteed. Most people wouldn't want to put their house on the line for the chance at higher returns in the market.

I'm a bit hypocritical here because I invest while having a mortgage, but I am on a 15 year mortgage. I saw way too many people who took on 30 year mortgages for all the house they could afford, and moved every 5 to 10 years, whose houses never appreciated to the point they had substantial equity, and now they're 60 with a mortgage. Plus, there's the whole risk of spending that extra money rather than investing it, which sinks most people who try this plan.

 

[MtnHusker]

What is everybody's thoughts on Natural Grass in the stadium? I know artificial turf has improves since I played but my legs/knees felt it after we played games on astroturf compared to grass. KU's stadium was the worst. Literally like cheap carpeting on top of concrete and it had that 3 foot pitch. Crazy how it sloped down to the sidelines 3 ft from the crown. My buddy who was a Linebacker at KU still talks about how unfair it was trying to cover Eric Bienemy because they motioned or option him towards the sidelines and that sloping field helped him build up speed so he'd blow by people. Either over commit to him on the outside giving up the inside a bit or get toasted as he sprinted down the sidelines

 

[MtnHusker]

Ok but if you owned your house outright, would you mortgage it in order to take the money and invest?

For 99% of people that answer is no, but it's the same difference.

We have clients that are buying investment properties utilizing equity in their primary home. If you can get a good return on a commercial or residential property it can make financial sense. My brother has amassed quite a real estate portfolio by leveraging his properties. It's not without risk but it has served him quite well. And like @Jim14510 said it can depend on factors like interest rates. Real Estate is like the stock market in that it can go up and down but you will be hard pressed to find people who have lost money on real estate when holding it long term unless there our extenuating outside factors.

 

[Mavsker]

We have clients that are buying investment properties utilizing equity in their primary home. If you can get a good return on a commercial or residential property it can make financial sense. My brother has amassed quite a real estate portfolio by leveraging his properties. It's not without risk but it has served him quite well. And like @Jim14510 said it can depend on factors like interest rates. Real Estate is like the stock market in that it can go up and down but you will be hard pressed to find people who have lost money on real estate when holding it long term unless there our extenuating outside factors.

Be that as it may....the point stands that most people should not put their houses on the line for the potential of better returns. It would be insane to suggest that for most people.

 

[1HuskerDad]

 

[1HuskerDad]

 

[1HuskerDad]

 

[1HuskerDad]

 

[1HuskerDad]

 

[1HuskerDad]

 

[Dr.DrakeRamoray]

How can you have any pudding if you don’t eat your meat!

 

[Jim14510]

I understand small business owners do this, but most people would not. Nor should they. Yes the market on average returns much more than 3.5%, but it's not guaranteed. The 3.5% is guaranteed. Most people wouldn't want to put their house on the line for the chance at higher returns in the market.

I'm a bit hypocritical here because I invest while having a mortgage, but I am on a 15 year mortgage. I saw way too many people who took on 30 year mortgages for all the house they could afford, and moved every 5 to 10 years, whose houses never appreciated to the point they had substantial equity, and now they're 60 with a mortgage. Plus, there's the whole risk of spending that extra money rather than investing it, which sinks most people who try this plan.

Over 30 years I win. Guaranteed. Whether or not you can afford the risk during those 30 years depends on the person. 90% of the country lives paycheck to paycheck so yes you are speaking for the majority. I'm not trying to beat 3.5% every year. I'm trying to beat 3.5% over my working lifetime.

 

[MtnHusker]

Be that as it may....the point stands that most people should not put their houses on the line for the potential of better returns. It would be insane to suggest that for most people.

If someone has some financial commonsense the risk isn't that big. I'm not saying put your entire house on the line. But for example I have clients who have their primary homes paid off so they have a Line Of Credit (Home Equity Loan) on their house that is available if they want to buy something. Have a $600,000 and pull out 30% or $180,000 using that to buy a condo outright to rent out VRBO. They make $30,000/yr profit from the rental which will have the Home Equity Loan paid off relatively quickly. If interest rates drop down they can get a mortgage on it and pay it off quickly. It depends on your comfort level with Risk and your business acumen.

My brother literally built a real estate empire by doing stuff similar to this. He and his business partners had limited funds 25 years ago but leveraged what they had and now own over 100 rental units, multiple commercial buildings plus numerous restaurants and bars. It was not without stress but paid off.

Every investment has risks including the stock market. If you are a savvy investor you can make some serious coin putting your money and equity to work for you.

 

[MtnHusker]

 

[Mavsker]

Over 30 years I win. Guaranteed. Whether or not you can afford the risk during those 30 years depends on the person. 90% of the country lives paycheck to paycheck so yes you are speaking for the majority. I'm not trying to beat 3.5% every year. I'm trying to beat 3.5% over my working lifetime.

If you ignore risk, yes on average you win. But you can't really just ignore risk and call it a better investment.

And it's not even close to a guaranteed. You don't get to count all 30 years, because this person allocating extra to their mortgage is paying it off in 15, so they're going to match your RoR in the last 15 years, and they can invest more in those 15 years, since they now have no mortgage.

 

[1HuskerDad]