• darq@kbin.social
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          1 year ago

          It literally is no problem if you already have assets to use as collateral. The problem is that most people don’t.

          • Knightfox@lemmy.one
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            1 year ago

            This is the answer, literally this is what millionaires have been doing for ages. It’s just unique that the COVID era interest rates were so low that it made it so that 100-thousand-aires could do what millionaires had already been doing.

    • Knightfox@lemmy.one
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      1 year ago

      Well for a couple reasons.

      • I don’t have a million dollars
      • I couldn’t qualify for an investment loan worth a million dollars without making some really poor/speculative decisions
      • Being a full time landlord is super profitable and trouble free until it isn’t. If you get some troublesome tenants your sweet business decision can become a freaking nightmare.
      • This estimate doesn’t include taxes or insurance
      • I think these rental prices are outrageous and I’m surprised anyone agreed to them. Not sure who these people are, but someone took the deal. Maybe there was some sort of arrangement so that they didn’t pay the listed rental price (like x number of months free, waived deposit, etc).
      • I wouldn’t be surprised if the owner is overleveraged unless they were already independently wealthy or they got in before the interest rates went up.

      For a while between 2020 and 2022, if you had your home paid for, you could take a mortgage out on that property and invest that money and make more money on the return on investment than the payment for the mortgage and the taxes owed on your profits. That’s how low the interest rates were for a while. I have a coworker who refinanced his house for 2% on a 30 year fixed rate, inflation is generally higher than his interest rate. Doing that sort of thing, taking a loan out on one house to invest with, is stupidly speculative but I wouldn’t be surprised if people did it.