/biz/ - Business & Finance

>7 figure debt
uhh...

>>30391796
the point is its meant to be close to what you are paying in rent and the house is meant to be appreciating in value over time. if both these things are not true then you are in for a world of pain.

The idea is that today's money is worth more than tomorrow's money. I knew people that took a very low interest debt to buy a home even when they had the cash. They instead invested the cash and payed the debt back. At the end, they had more money than they started with. What is there not to understand?

>>30391845
no you misunderstood me
I must have not been clear.

I have 7 figure portfolio and want to know how I can "leverage debt".

Right now I have 0 debt

>>30391918
> the point is its meant to be close to what you are paying in rent and the house is meant to be appreciating in value over time. if both these things are not true then you are in for a world of pain.

What steps to follow to make sure this is true? Is there a guide?

>>30392020
> I knew people that took a very low interest debt to buy a home even when they had the cash. They instead invested the cash and payed the debt back. At the end, they had more money than they started with. What is there not to understand?

Ok, but if it's easy "free money", then why banks fall for this trick? Banks are supposed to be smart jewish bankers right? So why do they not do it themselves?

>>30391796
> doesnt understand debt
> doesnt understand leverage
> "i have 7 figure portfolio"

ITT OP larping as a 7 figure person

/thread

>>30392150
You know I didn't really need to understand "debt" and "leverage" to buy Bitcoin back in 2012 and then sell half and then buy stocks in 2015.

Not sure why you claim /thread, when the original questions I asked still are not answered.

What would be the reason for you writing "/thread"?

>>30392142
Where do you think they're getting that money they loan you, anon?

That's right - it's other people's deposits. It's scams all the way down.

>>30392291
Is that really true?

https://youtu.be/lLyCZ26ONB8?t=884
Rational Reminder podcast (Ben Felix) talked about that not really being the case. Banks just create the money. They don't need depositors to create it.

>>30392406
you fucking retard. don't think the whole world is just about USA and that all other countries uses the same monetary policy.

>>30392142
Risk.

>I gamble my money
>lose it
>gone

>I lend you money
>you gamble it
>you win
>I get my money back + interest
>you lose
>I get my money back + interest from your collateral

>>30391796
Buying on leverage is literally debt, and the other way around, you fucking moron

>>30392200
it's really simple, retard. look up net present value. say you take out a loan with interest rate r. the investments you make with this loan have an net appreciation rate a. if a > r, you are successfully leveraging debt.

>>30392452
So what do other countries have?

Could you kindly explain the context you are referring to?

Also, what were the reason you called me and I quote: "fucking retard"?

Thank you

>>30392475
Ok, but is buying real estate a gamble?

>>30391796
You're taking a leveraged long position on the property against the currency.
Either the house gains value or the currency loses value for you to profit of the transaction.

>>30391796
the benefit is that when you have a 7 figure portfolio it is more beneficial for you to take a loan on a fraction of that and pay monthly interest, while using the rest of your money to take several other mortgages and rent them out to cover utilities, tax and maintenance + some profit in your pocket.
Compare that with using your 7 figure portfolio to buy a home in a simple buy-sell transaction: you lose all the money but you get to keep your house forever until you run out of money to pay real estate tax and the utility bill

So here is the trade-off:
1) Use 1/7th of your portfolio to take a loan + Use 6/7th to invest and generate income, so that you can pay for the mortgage + tax + utilities + maintenance
2) Use 7/7th (100%) of your portfolio to buy a home. Then get a job or get money by renting out a room to a hobo.

which one do you like better? First option seems more reasonable.

>>30392606
You're purchasing a real asset with risk, gambling is just buying risk. Buy a non-defective house in a not shit area and only take on the debt you can reliably service. You won't lose if you do the above, fiat currencies are going to hell.

>>30391796
i want to stick my head between her legs and take a loooong whiff like an old jew at a deli

>>30392522
What are risks in this case?

Is it really that simple?

So what would you do my case if you were in low 7 figures and wanted to get to 8 figures?

>>30392716
> the benefit is that when you have a 7 figure portfolio it is more beneficial for you to take a loan on a fraction of that and pay monthly interest, while using the rest of your money to take several other mortgages and rent them out to cover utilities, tax and maintenance + some profit in your pocket.

Thank you so much for explaining. You sound wise.

If it is that easy, then what are main concerns and risks with this approach? Surely there is no free lunch?

And why can't anyone else do it just in smaller scale?

Theoretically, a 6 figure person could also do the same. Why is this approach more beneficial for me with 7 figures than a 6 figure person?

>>30392606
>Biden equality renting act passes
>you now have to rent out to jogger, pajeet, tranny
>jogger wrecks everything
>pajeet infuses the wall with curry and shit
>tranny offs xisself, soaking the whole building in estrogen and AIDS

>>30392606
Yeah. House build in the 1980 is valued lower than similar house build 2021. Only reason that house build 1980 would be appreciated more valuable would be location.

>>30392716
>>30392716
>>30392716

High IQ explanation, thanks so much anon.

Question
>So here is the trade-off:
>1) Use 1/7th of your portfolio to take a loan + Use 6/7th to invest and generate income, so that you can pay for the mortgage + tax + utilities + maintenance
>2) Use 7/7th (100%) of your portfolio to buy a home. Then get a job or get money by renting out a room to a hobo.
>which one do you like better? First option seems more reasonable.

In this case... what about third option:
> investing in index funds and using dividend payments to RENT a house to live in instead

Do you think index funds are a better investment than real estate or real estate management would trump holding all those reserves in indices?

Which one do you think makes more logical sense long term (10-30 year outlook)?

>>30392924
Oh no worries about Biden, I'm not from US

>>30392452
All banks work on the same principle, they'd be as retarded as you are to do otherwise.
Creating debt on their side and credit on your side of a ledger requires zero deposits in of itself, the deposits are collateral for their own borrowing, they borrow against the collateral for liquidity in running costs and interbank transactions. It's not a ponzi scheme, it's a credit communication system to facilitate trade throughout an economic network.

All investments except bonds are actually just different ways of being short US dollars. The key to things going up over time is actually just that dollars are devaluating. There are a lot of laws in place that support people getting into homeownership, so the interest rates in it are actually very low and banks routinely sell the overvalued bond's to the fed because the bonds that get issued are not actually good investments. So basically yeah, mortgages are just a leveraged short on the US dollar that the issuer of US dollars supports. You would be stupid to not get in on it.

Leverage in other asset classes typically doesn’t work out and the issuer of the leverage usually is the one making money, but in the case of real estate the government actively supports you.

>>30392933
In that case doesn't investing in index funds make more sense? Since index funds will never "depreciate" from being old, won't require upkeep and you can use dividend gains to just rent out a property you want to live in?

>>30392783
Buy a major crypto and stake it. It'll appreciate in value and in APY, you'd hit multiples at minimum.
BTC/BNB in Autofarm would get you 0.003% compounded daily, the coins are in sync at present and unlikely to diverge significantly or permanently.

>>30393025
I guess, however, that using debt as a way to ‘cash out’ instead of selling is the other way that debt makes sense if you would pay less in interest than in taxes.

>>30391796
Source? He looks like my future gf

>>30393031
Index funds are a blind trade. Index funds are filled with companies that are doing well primarily because they got into an index fund at some point and everyone just buys the index without checking the contents. Dumb money blows up eventually, but in the short term you'd be fine.

>>30393163
> Buy a major crypto and stake it. It'll appreciate in value and in APY, you'd hit multiples at minimum.

So what are the risks with it?

Is it really that easy?

I still hold BTC, so buying another crypto and staking it would imply that that process would gain more than BTC will gain in future.

Do you have any specific cryptos to recommend?

And also, I'm staking USDC on BlockFi.

> BTC/BNB in Autofarm would get you 0.003% compounded daily, the coins are in sync at present and unlikely to diverge significantly or permanently.

And what are risks with it?
What if BNB just collapses in price?

It can't just go up forever, right?

>>30393283
> Index funds are a blind trade. Index funds are filled with companies that are doing well primarily because they got into an index fund at some point and everyone just buys the index without checking the contents. Dumb money blows up eventually, but in the short term you'd be fine.

Ok, but what if I buy total world market index fund and not S&P500?

That way I'm literally buying ALL the companies and not select ones?

Do you think in 10-30 year perspective world stock index compounded will underperform buying real estate with leverage and renting it out?

>>30391796
https://jlcollinsnh.com/2013/05/29/why-your-house-is-a-terrible-investment/
in short, leverage is not too beneficial

>>30391796
time value of money
>>30392142
fractional reserve
>>30392509
Yea, OP is literally brain dead. And TVM is just finance 101.

My bitcoin is down 25%, but mochimo is up 100% already :)))

>>30391796
Retarded r*dditfagot cant even understand leverage
Just kill yourself if you're that low IQ
Also you aren't in 7 figures hell, you probably have max 4 figs

>>30393395
BNB is running BSC chain and a major crypto exchange, ethereum and ethernet are struggling with gas so BNB is likely to overtake it at present.

As more money moves into the cryptospace, BTC and every other coin of note will rise, while the USD plunges. Check out how much USD was created just in 2020 alone and you'll be fleeing it as well. The risk with a pair is divergence in price, the increased APY is meant to compensate for that risk, but as I out lined even if they diverge it'll be one rising slightly faster than the other, you'll still be ahead as both are rising and the pair is earning.

Nothing goes up forever, but the USD can sure as hell hit zero. You don't need to hold forever, just until you find something better, in the meantime you're losing out by staking USDC and simply holding BTC.

>>30391796
>buy a home with debt
>it increases in value by 200-600% over a couple of years
>sell it and keep the difference
OP how the fuck are you a millionaire when you have such little knowledge?

>>30393436
>Do you think in 10-30 year perspective world stock index compounded will underperform buying real estate with leverage and renting it out?

If you don't know what you're buying, you could probably do better. It depends on the real estate, buy the right place and you'll make a killing, the wrong place and you may go backwards. Do your research, workout where people are leaving and where they're going.

>>30393436

Seconded >>30393730, how are you both wealthy and financially clueless?

>>30392200
By "/thread" he is making the statement: OP is a retard
Good luck in your endeavors. Also, lurk more.

>>30392077
Buy a multi senpai (3+unit) residential income property with cash and immediately take out a HELOC against it it to buy another one, use the income from both to pay off the HELOC as fast as possible, then rinse and repeat with exponential growth. Helps if you’re handy with DIY maintenance

>>30392077
You can leverage 50,000 debt out of a 7 figure portfolio.

Let's say you have 1,000,000 USD.

You want to invest in a speculative asset. Instead of using your actual money. You just get a loan for 50,000.

Because 50,000 is nothing, you basically 50,000 for FREE

You are using your existing wealth to leverage smaller debt.

The worst that can happen is that your investment goes sour, and at the very worst it goes to 0 meaning you end up with a 950,000 portfolio. But in the long run this doesn't really matter because it's still a lot of money.

However the potential gains you can end up with offset the bad. Let's say for example that your investment goes from 50k to 100k. That means your total portfolio is now 1,050,000 after paying off the debt.

This means you used your existing wealth to leverage debt into growing your portfolio. The potential gains offset the potential losses because of your wealth.

This is different for someone with a smaller portfolio. To take 50k USD of debt with a zero dollar portfolio (which is ironically what I did when starting) is a big risk. If it goes to zero I would have had to wage for a long time to pay it off. But luckily for me I invested in Chainlink, it mooned, then converted it to BTC, which also mooned. I also invested in Fantom at 30c and a few other shit coins.

>>30394919
>Let's say for example that your investment goes from 50k to 100k. That means your total portfolio is now 1,050,000 after paying off the debt.

>what are interest rates

>>30392142
They take a higher risk than the bank does. They put the money in the stockmarket, the market goes tits up, they lost their money, but still have to pay bank.

>>30395234
Approaching zero globally.

>>30394919
Wtf this makes no sense??
Why would you take a loan instead of putting 50k of your own money from that million and you would have 1,050,000.
This “leverage” is just stupid buzz word.
You still have to pay interest so you do worst than someone who would just put 50k from their portfolio.

>>30395234
>>30395902
ngmi
>interest rates
>to someone who can pay the loan off instantly.
vs
>to someone who will have to pay off the loan over the course of at least 5 years
You proved my point thanks. All loans are different, but mine had a no penalty pay off. Didn't even require a fee.

As if someone who has 7 figures isn't going to instantly pay off a loan where their speculative investment went to zero.

>>30396123
why the fuck would the bank invest in someone without a fee lmao
even if you leverage your loan with a home -which turns into much lower interest rate than stocks- you get some % monthly COMPOUND interest

worse case scenario is not that you lose 50 grand, is that your investment either crabs or crashes after a few years and your debt is increasing due to interest and you also have to pay taxes if you cash it out to pay back

sure it does sound like free money making but you are increasing your risk much more.

>>30393730
It's more to do with the fact that by paying with cash you're reducing your liquid capital that could be making higher returns in other investments. None of this should be new to anyone on a "Business and Finance" board, so idk what OP's deal is. This is the effect of MMT and QEinfitity, by keeping rates and reserve requirements near 0 borrowing is incentivized and fixed-income investments like CDs and bonds are disincentivized.

>>30393686
>Nothing goes up forever, but the USD can sure as hell hit zero. You don't need to hold forever, just until you find something better, in the meantime you're losing out by staking USDC and simply holding BTC.

What is better than holding BTC?

>>30393900
>>30393730
Because all I did was buy BTC early and then buy stock index with BTC gains duh

>>30393730
>buy a home with debt
>it increases in value by 200-600% over a couple of years
>sell it and keep the difference

Ok, but is your home guaranteed to increase 200-600%?

If it is guaranteed, then surely others know about it as well.

Then surely others are also taking this opportunity.

Which in turn makes home price increase.

So in reality the information of it's expected 200-600% is already priced in, therefore is not to be expected.

Doesn't this endeavour carry risk?

>>30394422
Ok, but how does that help?

>>30393806
> If you don't know what you're buying, you could probably do better. It depends on the real estate, buy the right place and you'll make a killing, the wrong place and you may go backwards. Do your research, workout where people are leaving and where they're going.

Ok, how do I make sure I buy real estate at "the right place"?

>>30394833
Is that safe?
If it works so well, why is not everyone doing it?
Also, what are the risks?
Will home prices keep going up forever?

>>30392291
> it's other people's deposits
those times are loooooooooooooong over fren

it's even worse
they literally print it out of thin air

>>30394919
>>30394919
>>30394919
>>30394919
>You can leverage 50,000 debt out of a 7 figure portfolio.

>Let's say you have 1,000,000 USD.

>You want to invest in a speculative asset. Instead of using your actual money. You just get a loan for 50,000.

>Because 50,000 is nothing, you basically 50,000 for FREE

But why would you do this?

Because to take 50,000 in debt you have to pay additional percentages.

But if you just put 50,000 of your money upfront you don't have to pay loan percentages.

So what is the difference?

Just the time value of money?

> Because 50,000 is nothing, you basically 50,000 for FREE

But you don't. Since it's a loan you have to pay back 50,000+%interest.

> The worst that can happen is that your investment goes sour, and at the very worst it goes to 0 meaning you end up with a 950,000 portfolio. But in the long run this doesn't really matter because it's still a lot of money.

But wouldn't you end up with less than 950,000 since of loan percentages? Nobody loans out money for nothing?

> However the potential gains you can end up with offset the bad. Let's say for example that your investment goes from 50k to 100k. That means your total portfolio is now 1,050,000 after paying off the debt.

But if you originally paid 50,000 of your 1,000,000 to do the same thing you would also have 1,050,000 without debt. What is the difference?

>>30396722
> It's more to do with the fact that by paying with cash you're reducing your liquid capital that could be making higher returns in other investments.
> could be making higher returns in other investments.

Ok, but if your capital "would be making higher returns in other investments", then why would you buy a home in first place?

Wouldn't it make sense mathematically to keep all the liquid assets in those "higher investments" and at worst just use dividends or rent?

It seems like if you have knowledge of investments that beat real estate one would not invest in real estate. Why would I invest in A which gives me 5% yield, when I can invest in B that gives me 7% yield??

>>30397092
>So what is the difference?
>Just the time value of money?


basically its about ROI

you lend money with X% interest with hoping to make X+Y% ROI.
i.e.
you lend 50 grand to buy a car with 3% interest

you could also take those 50k you have in cash and pay it instantly but what if u make 4% ROI per year and you only have to pay 3% for interest?

you (in theory) get a loan and pocket those 1%

>>30393900
>>30393730
Because its a (LARP)
Dont ask me why these retards do it but apparently lying about your money on an anonymous peruvian throat singing board makes their dick hard
Some go as far as making LARP blockfolios

>>30397346
what logical sense would it make for me to lie? I go to finance forums to ask questions I don't know answers to and educate myself.

>>30397266
Ah that makes sense.

So the idea is that you have alternative investment X that is making more than the loan you have to pay?

So let's say you stake USDC on BlockFi for 8% a year.

Theoretically, it makes sense to take a loan against that that will be 3% a year and just make free money?

Of course it seems risk would be your USDC stocks making you 8% a year or BlockFi gets hacked or something and you lose it all and are left holding a contract to pay 3% still?

>>30394833
>having more than one senpai
Disgusting

>>30397508
>>what logical sense would it make for me to lie? I go to finance forums to ask questions I don't know answers to and educate myself.
and yet you can't provide any proof
the only thing I see in this thread is your low IQ and complete lack of any financial knowledge

If I had the cash to buy outright, the only question I would ask myself is, can I make more from the money by keeping it or would I lose more by accepting the debt? If your money produces more wealth than the interest consumed , you take on the debt and interest. If your money isn't as productive and the interest would destroy more wealth, you don't accept the debt. I hope that makes sense.

>>30392110
Buy low sell high. The housing market isn't a secret.

>>30391796
if the cash flow covers the mortage its a free property, if the cash flow covers the interest its a free speculation on the house price which you can sell if it goes up

>>30392571
Go read some investopedia articles

>>30397190
Attention to anons who are unaware, this is the same anon that was shitting up the xmr general yesterday with 100 rehashed fud posts, who would've guessed that xmr fudders can't understand basic econ or finance? He could just do a few seconds of research instead of coming to 4chan for financial advice and acting like a dumb child when people give him straightforward answers.
>Captura de pantalla 2021-(...).png
If you bought in 2012 obviously you remember the phrase DYOR but these days it seems like nobody's ever heard of it they just expect people to spoonfeed them 24/7. You aren't bad at debating and you don't really seem dumb, you're just bad at research and too stubborn to admit when you're wrong. Look up time value of money, MMT, and QE infinity, if you still don't get it then maybe you are retarded.
>why would you buy a home in first place?
It isn't just about real estate, using cash is technically always worse than credit and a house is usually a person's most expensive asset. This stuff is just common knowledge anon...it's why people finance cars or iphones, or use credit cards even when they can afford to pay cash. Since future income from wages/salaries can be used to repay debt, present day income and savings can go towards investments and usually repaying part of the debt so interest doesn't compound. I'll repeat again, time value of money. It's the third post, this thread should not be this long...you are really thick skulled.
>if you have knowledge of investments that beat real estate one would not invest in real estate
If the real estate generates cash flows it's essentially arbitraging time, cash flows could come from not just rentals but any sort of business like hotels, sports arenas, retail stores etc. It's profitable if the expected future price of the real estate plus cash flows over the life of the loan is greater than the debt including interest. It's less risky than equities but we are in a "risk on" environment because of MMT.

>>30399251
How do you know when it's "low" and how do you know when it's "high"?

>>30399477
> Attention to anons who are unaware, this is the same anon that was shitting up the xmr general yesterday with 100 rehashed fud posts, who would've guessed that xmr fudders can't understand basic econ or finance? He could just do a few seconds of research instead of coming to 4chan for financial advice and acting like a dumb child when people give him straightforward answers.

What's wrong with asking questions?

> If you bought in 2012 obviously you remember the phrase DYOR but these days it seems like nobody's ever heard of it they just expect people to spoonfeed them 24/7. You aren't bad at debating and you don't really seem dumb, you're just bad at research and too stubborn to admit when you're wrong. Look up time value of money, MMT, and QE infinity, if you still don't get it then maybe you are retarded.

I'm literally doing my own research by asking on a forum specifically designed for finance and investing questions. What is wrong here?

> It isn't just about real estate, using cash is technically always worse than credit and a house is usually a person's most expensive asset. This stuff is just common knowledge anon...it's why people finance cars or iphones, or use credit cards even when they can afford to pay cash. Since future income from wages/salaries can be used to repay debt, present day income and savings can go towards investments and usually repaying part of the debt so interest doesn't compound. I'll repeat again, time value of money. It's the third post, this thread should not be this long...you are really thick skulled.

That's a good explanation. Thanks.

> If the real estate generates cash flows it's essentially arbitraging time, cash flows could come from not just rentals but any sort of business like hotels, sports arenas, retail store..

But isn't this only useful if you are not able to generate more via stock index holdings?

>>30391796
$1M house
4% interest mortgage
6% long term annual equity increase
$5000/month mortgage
$1700/month rental income
You do the math. Debt makes money for the rich.

>>30400438
It might be too late for OP

>>30392142
Or you could just buy the house and eliminate the risk factor.

>>30392142
Banks aren't allowed to play the stock market

>>30400438
> 6% long term annual equity increase

Ok, but this is not fixed. The stocks can return that 6% and they might go in a lost decade.

> $1700/month rental income

And this is guaranteed?

>>30392998
>t.states equality renting act passes
>you now have to rent out to jogger, pajeet, tranny
>jogger wrecks everything
>pajeet infuses the wall with curry and shit
>tranny offs xisself, soaking the whole building in estrogen and AIDS

>>30401408
I AM NOT FROM KEKLAND US

>>30401997
Doesnt matter.
You WILL rent out to joggers, pajeets, trannys.

>>30392452
Youre a fucking retard bro. Banks literally create money out of thin air, it never appears on their balance sheet before you actually get it. So youre quite literally inflating the monetary supply by taking out a loan, directly.

>>30391796
>dress lik whore with pussy clearly visible through pants
>offended when males stare at her whore pussy

>>30402458
easiest way to get around that is to have a high rent and require first/last months rent and security deposit up front. only whites who have no intention of screwing you will front you $4500 lol.

>>30402542
>high rent payed by socialist state
>socialist state raises taxes

>>30400105
It's not wrong, you aren't hurting anyone lmao, just a little annoying when people ask basic questions that can be answered with a quick web search. It's not just you, it's pretty common for people to ask strangers to think for them, it's like when a little kid just keeps asking "why? why? why?" nonstop. This is 4chan, it's for memes, shitposting, astroturfing/psyops, and sometimes finding lowcaps/pnds early, not the place to ask for financial advice.
>>30400105
It's less risky since it's almost guaranteed income even in a recession, stock market returns are far from guaranteed. I don't see what would stop someone from investing in both equities and real estate at the same time anyway, they could even invest some of those cash flows.

>>30391796
Scenario 1, you save up enough money to buy a house in cash at 50. Scenario 2, you use debt to get a house at 30. Do you not see the benefits?

>>30392863
>Surely there is no free lunch
Money is imaginary anon

>>30391796
>>30393730
>>30393900
>>30396826
>>30397346
I refuse to believe that someone with at least 7 figures who is also on this board doesnt know the terms
>Opportunity Cost
>Cash Flow
It's 100% a LARP