[quote=SK in CV]Sounds like his timing was right. Maybe even perfect. If he’d been doing that beginning in say….2002, and continued through 2007 or 2008, it wouldn’t have looked so pretty. Highly leveraged RE can be risky, with commensurate potential rewards. I don’t have to tell anyone here that. Glad his timing was right.[/quote]
It begs the question though. If he did it at the time around the 90ies when RE was more or less trashed…Would a repeat encore right now yield similar results (unless we think a major correction is still enroute).
If he took out a bigger mortgage, I’m assuming he was also getting additional income from rent. So paying for his total mortgage on his primary was still coming from his regular job + now from rental income. And I assume that his rental income was at least break even with the additional amount he now needed to pay on his larger mortgage. Where I would could think he would have gotten burned if he couldn’t rent on the place or rented out the place for far less than his higher primary mortgage.
As far as if the rental property value fell..Well, it’s really not his problem either, because he’s not really paying for it…His renters were, right?
Also, back then…he did this when there still was mortgage interest rate deduction phaseout. So I’m just curious how the hell he did this.
I don’t think if it was him, he could have done this in 2002 throughout 2007/8. Because during this time he wouldn’t have been able to find decent property that he could have cash flowed…And I don;t think most people in this scenerio would rent out at a loss…
Sorry, my mind is totally fried right now. Maybe I’m just not thinking straight.
