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I think you should mention the higher risk exposure from having so much liability tied up in a single asset if the house loses value. Also, why is option 2 @2%

I think you should mention the higher risk exposure from having so much liability tied up in a single asset if the house loses value. Also, why is option 2 @2%? If you're investing the $360k at 7%, you should compare it to the same investment at 7%.

arcticbull 6y ago
Option 1 is a 20% down payment on a $450K mortgage, so a $90K down-payment (10% yield) and a $360K investment in the market (7%) and a $360K mortgage (0.53%). Option 2 is a $450K cash purchase of a house, which, on average, appreciates at the fed target inflation rate of 2%. Indeed although in both cases you own the home and are subject to the same depreciation risk right? Although if you're willing to take a credit hit, I suppose you're shifting that depreciation onto the bank.