"For a loan, at current rates, e.g. 5 year I/O ARM paying 1000 US per month, for 300K, I get 35% growth and a 7% annual distribution, paid monthly. My expectation is that California real estate will back off in 'value' when interest rates climb, after the election."
I have no real comment about your investment choice good luck with that, but you are not avoiding or protecting yourself for a drop in real estate. Whether your borrow money or own free and clear, if the property is 1,000,000 and drops 100,000 your down 10%. So unless you plan on filing bancrupcy and leaving the keys in the mail box for the bank you have done nothing to hedge your real estate or protect any gains you may have gotton.
So what you have really said is, Im going to use the spread of what I pay the bank and what I can get in my other investment. personal loan, real estate loan, or loan on the donkeys doesnt really matter.
Good luck with the investment at worst you'll finally have a mortgage payment at best you'll beat the bank and make some money. |
