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You're desperately trying to contrive a scenario that does not exist, the rate on buying merchandise and selling it in groceries is still 1.7%. Borrowing money
by 8166284 10y ago
You're desperately trying to contrive a scenario that does not exist, the rate on buying merchandise and selling it in groceries is still 1.7%. Borrowing money and playing with the time window does not change this.
- ryanworl 10y agoI'm not going write a long explanation about this, but "borrowing money" and "playing with the time window" is the foundation of so many different kinds of businesses I can't list them all.
- CodeWriter23 10y agoFloat doesn't change the profit MARGIN.
- SomeCallMeTim 10y agoReal estate appreciates at 4% (on average, but let's say it's constant for the sake of argument). I buy a house that costs $100,000. My down payment (cash out of pocket) is $20,000. I pay 3.5% interest on $80,000 as I'm paying down the loan, plus property taxes and insurance, and it comes to $546.74/month [1]. The rent comes in at $550/month, pretty much canceling out the mortgage. Am I making 4% per year on my investment, then, because that's the amount the real estate appreciates? No, I'm making 4% of $100,000 per year, or $4,000, on my $20,000 investment. That's 20% per year. [2][3] Leverage properly applied can raise your net profit. You're welcome. [1] http://www.mortgagecalculator.org/ http://www.mortgagecalculator.org/ [2] The numbers can realistically be much better than this, given the right circumstances. I am personally using this as an investment strategy, and yes, it doesn't just work this way "in theory." [3] I'm ignoring repairs and vacancy rate for simplicity. Those obviously hurt profitability. But as I mentioned in [2] above, if you pick your investment property strategically, your margins are much higher, so that's your cushion.