That’s a big gamble. I thought this was about asymmetric upsides but here there’s a pretty huge downside.
Firstly, how do you realise the gain when you need somewhere to live? Primary residence != investment.
Secondly, 20x leverage shouldn’t be a selling point. A tiny dip in prices leaves you in negative equity and unable to move home. Less of an investment and more of a prison.
95% LTV mortgages tend to come with well above average rates to match the level of risk too. The gamble isn’t cheap.
Property can be a great investment but people are confusing buying a home with investing in property. They aren’t the same thing.
Short sales, in the United States at least, limit downside. You can generally sell a house underwater and not owe anything, so the risk to you is only whatever you put in plus some harm to your credit worthiness over the next 5-7 years.
Your own argument is that you need a roof over your head, either way, so if the value doesn't increase, then you simply live there. If it does, then you keep all the profit, tax free.
Yes, you probably shouldn't buy a house if you imagine you'll want or need to move in the next 7-10 years. And, yes, it's also not the case that there is zero risk. It's just lots of leverage with favorable tax treatment. But it's not a magic money machine.
That’s a big gamble. I thought this was about asymmetric upsides but here there’s a pretty huge downside.
Firstly, how do you realise the gain when you need somewhere to live? Primary residence != investment.
Secondly, 20x leverage shouldn’t be a selling point. A tiny dip in prices leaves you in negative equity and unable to move home. Less of an investment and more of a prison.
95% LTV mortgages tend to come with well above average rates to match the level of risk too. The gamble isn’t cheap.
Property can be a great investment but people are confusing buying a home with investing in property. They aren’t the same thing.