/biz/ - Business & Finance

>>53607524

>>51354785
Low interest rates make for cheap debt. Cheap debt drives up prices because its effectively money printing through fractional reserve banking. Prices going up give people a lot more equity when they get the value of their house re-assessed. This opens up leveraging the equity to get more cheap debt and buy more property. But as with the stock market this also makes you venerable to economic down turns and you can quickly become upside down on you loans.

Basically a lot of Americans speculatively invest in real-estate and that's why it can be more volatile over here. It ends up hurting everyone else too because just like with stocks the price of homes are set in the margins.

>>51224236
Just off the top of my head of possibilities,

>Cash out refinance at a lower rate but took most of the equity out.
>HELOC
>Cost of maintained, taxes, and incidentals going up
>She financed her primary house and uses the rent to subsidies an absurd mortgage payment.
>Change in standard of living, she is used to 1700 now and she would need to cut back her spending

Also probably most of the above. Look up the wealth effect.

>>50120907
I don't have any personal experience but Kevin O'leary has talked about it a few times. 2008 was enough to spook him into diversifying into every market and never leveraging more than he could pay off fast.

If I remember he has mentioned he knows people that were at his level before 2008 and after 2008 lost it all. To this day they still haven't recovered. Pic related is a good example. Investment is a whole other ball game and the contracts with the banks are different.

>>49966168
Do they have Home Equity Lines Of Credit (HELOC) over there? Lots of property owners here in the states use their investments like piggy banks with HELOC and cash out refinance. People regularly use margin loans on investments too. Lots of boomers thought they were fanatical geniuses thanks to all the money printing and out spent their new found wealth at the worst stage of life to make mistakes.

>>49644555
This Buy Renovate, Rent, Refinance, Repeat stuff is way more common that I thought. I was watching an economist talk the other day and apparently using margin loans to avoid paying taxes has become extremely common practice over the past 15 years.

>>49418845
>over leveraged myself
You and everyone else. Hoe you don't get called.

>>49395060