Frankly, I know how my landlord did it, he just took a fairly big calculated risked to do it.
I’m assuming he had an ARM with a low teaser when I moved in. I know he just refi-d about 3 months ago. Not sure if he did long term or another ARM – teaser.
Originally when I moved in, I knew purchase price, HOA and property tax (ah, the joy of public records). With then current long term rates, he was upside down, breaking even on a TEASER and showing a slight positive cash flow from the tax benefit of claiming the depreciation loss.
At current rates, just crunching them now, if he long term locked @6.5% he’s upside down after taking the loss and depreciation tax benefits, but only by $1000 or so a year.
If he was smart, he long term locked, pulled $100,000 of equity out and is sitting on a yearly negative cash flow of $4000. Which gives him 25 years to ride it out.