[quote=peterb]
Buying a highly leveraged asset that is depreciating in value is a very good way to become insolvent. BK, to you and I.
[/quote]
Not when the mortgage is so cheap you can work at 7-11 to pay it (slight exaggeration, but not far off). He has to live somewhere, so why would he rent a condo for $1,500, when he could buy a 3,000 sq foot house and pay the same? Sure he might “lose” the down payment, but again, at $100/sq and $1,500/month, I don’t think he cares much.
The only issue I see with it is, depending on the down payment, he may have trouble getting a conventional loan on a rental 6-12 months from now as he may not have the required equity. There’s always cash, but it’s a better return to put up as little as possible for rental property.
