If the goal is to maximize the return on the money that you have, why purchase a property to own at all? Wouldn’t it be more prudent to simply purchase property for investment to enjoy the tax benefits, leverage to the hilt, and live in a nice rental? As long as the cost of renting is less then the cost of ownership (including the tax consequences) then wouldn’t living like that carry your mode of thought to a far end of the spectrum? It seems to me that this would be a less expensive way to live and would enable you to maximize alternate investments. This question is more philosophical but am wondering what the response will be.
I think if the goal is to maximize the ROI but still minimize risk, purchasing a property to live in is still a good idea. With a fixed interest rate, you’re guarantee that your “rent” will not increase. So, as you keep on paying down your mortgage, you have 2 options, one is to completely pay it off. At that time, you’ll have no more mortgage payment. The other option would be to periodically refinanced to take out money to invest in other things, be it more RE or stock or whatever. If you only take out a small amount that would keep your mortgage payment unchanged, you can use that cheap money to invest and still get the tax benefit. Obviously, this plan is not as lucrative if interest rate is high. But at 5-6%, after tax write off, your basic cost of borrowing this money is 3-4%. That’s relatively cheap compare to other way of leveraging.
