3 ms·

just take the loan out of the equation. don't borrow money trying to make money. that's like having a margin account with etrade! You don't pay interest on a lo

• pjc50 8y ago
  The leverage is what makes it worthwhile in the first place. You generally can't take out a six figure loan to buy shares, but you can for property. Only the 1% have the free cash to just buy upfront, outside of events like inheritance or pension maturity.
• speedplane 8y ago
  > don't borrow money trying to make money. that's like having a margin account with etrade! You don't pay interest on a loan and use the money from that loan to buy stocks do you? The difference is that interest rates on margin accounts are far higher than they are on real-estate. A margin loan may be 8% or more. So you have to invest in something that grows faster than that to make any money. However real estate loans are 3-4%/year, and in addition they generate rental revenue which is also roughly 3-5%/year. Taking out a loan on real-estate makes far more sense than taking out a margin loan.
• lazyjones 8y ago
  > Just saying, real estate is a fine thing to buy, with all cash! The model clearly proves you wrong (even though it's not very realistic in general). If you have cash lying around, you're better off investing in the stock market, or buying houses with loans anyway (just more of them).