Paid Off Homes (commercial, lease, cancel, reduce)

[kyam11]

Originally Posted by CaptainNJ

it is absolutely not accepted. you are the perfect example of people getting what they paid for online. what financial world do you participate in exactly? you should avoid trying to sound like an authority because naive people may actually believe that you know what you are talking about. avoiding paying for something isnt a "guaranteed return on investment."

Clueless

[22003yo]

Originally Posted by CaptainNJ

what fund do you invest in?

It was a joke, I'm 90% rental properties (50:50 D/E) and 10% VTI.

Rentals blow away my market returns but that's only because I buy distressed and do almost everything myself.

[Mr. Zero]

Originally Posted by 22003yo

If you have $10,000,000+ and your home is 10% of your NW that's quite a bit different. Yes I want my every last dollar working for me, I would think most would.

When interest rates are low enough, even billionaires like Mark Zuckerberg will take out a mortgage.

[CaptainNJ]

Originally Posted by 22003yo

It was a joke, I'm 90% rental properties (50:50 D/E) and 10% VTI.

Rentals blow away my market returns but that's only because I buy distressed and do almost everything myself.

gotcha, it did seem pretty silly but i wasnt sure. doing everything yourself improved your return but you also must be limited on the number of units you can work on yourself.

[Capitalprophets]

The best thing a person can do is pay off their house as soon as they can. A loan amount of 400k house with 5% interest rate in 30 years will accrue approximately $379k in interest so now you have paid $773k for a home that cost $400k. Now if you pay the same house in 15 years that will cut your interest amount in half and so on so forth.

Unless your investments in 30 years will turn out to be more than 379k it does not make sense to to invest rather just pay your house off in less amount of time.

Originally Posted by tcualum

That’s terrible advice if you’re worth more than someone who Dave Ramesy’s advice is usually geared toward. We’ve paid off half the note on our house plus we have a nicely diversified portfolio and have majority ownership in a successful business. We could easily pay off the house but right now that would be a poor use of our money.

[SuiteLiving]

Originally Posted by CaptainNJ

it is absolutely not accepted. you are the perfect example of people getting what they paid for online. what financial world do you participate in exactly? you should avoid trying to sound like an authority because naive people may actually believe that you know what you are talking about. avoiding paying for something isnt a "guaranteed return on investment."

so if I had a $100k mortgage and $100k in cash, if I pay off the mortgage I get no return on that money but if I put the cash into a CD that yields 3% I'm actually getting a 3% return on my money, even though I'm $1k poorer at the end of the year?

[mathjak107]

Originally Posted by Capitalprophets

The best thing a person can do is pay off their house as soon as they can. A loan amount of 400k house with 5% interest rate in 30 years will accrue approximately $379k in interest so now you have paid $773k for a home that cost $400k. Now if you pay the same house in 15 years that will cut your interest amount in half and so on so forth.

Unless your investments in 30 years will turn out to be more than 379k it does not make sense to to invest rather just pay your house off in less amount of time.

If the next 30 years are anything like the last 30 here in queens in nyc my plain ole mix of fidelity funds beat my kew gardens home by 4x . I can subtract out every penny of rent and taxes and buy multiple homes today . Just the s&p 500 would have been 3.50 times . My house was 169k in 1987 .today it is 995k so the funds did way better and that includes the lost decade for stocks too.

Of course that assume an apples to apples cash comparison of growth

[mathjak107]

Originally Posted by SuiteLiving

so if I had a $100k mortgage and $100k in cash, if I pay off the mortgage I get no return on that money but if I put the cash into a CD that yields 3% I'm actually getting a 3% return on my money, even though I'm $1k poorer at the end of the year?

You traded income for equity . We have that situation now if we buy a co-op instead of renting.

Renting cost 6k more than buying ,however if we buy and have no mortgage we will give up a minimum of 15k income on the money we use to buy. So we will be 9k poorer buying income wise . But equity wise we will have 350k in equity . In retirement we care more about cash flow than tied up equity so renting is a better deal.

In your case you traded the income on 100k cash for 100k more equity .

[kyam11]

Originally Posted by Mr. Zero

When interest rates are low enough, even billionaires like Mark Zuckerberg will take out a mortgage.

No they don’t. Quit making stuff up. Gates, Buffett, Jobs had no mortgages

[SuiteLiving]

Originally Posted by mathjak107

You traded income for equity . We have that situation now if we buy a co-op instead of renting.

Renting cost 6k more than buying ,however if we buy and have no mortgage we will give up a minimum of 15k income on the money we use to buy. So we will be 9k poorer buying income wise . But equity wise we will have 350k in equity . In retirement we care more about cash flow than tied up equity so renting is a better deal.

In your case you traded the income on 100k cash for 100k more equity .

Who cares about rent, stick to the example given.

My equity didn’t change by where the $100k went, but it decreased by $1k over a year by not paying off the mortgage.