This from gse36 on Real Estate Talks Thu Mar 27, 2008 1:31 pm
“Case in point. friend’s house (fully paid) went from 400->800k.
he took out LOC 600k (75% of value), and purchased some $3M of presales (8 of them) (only put 10-20% down) and it only cost him 500k or so of that LOC.
He pays interest on the 500k @ prime so around $2k/mo for hanging onto them.
Thats cheaper than buying 8 right now and renting them out (will bleed more than $2k/mo). And much cleaner (no tenants to have to deal with etc), and he can write off the interest.
He made some money already on the earlier purchases, but the later ones. i don’t know.
In either case, its quite risky. if prices slide, he risks losing the farm.”
[Will be archived under 'Where Do They Get The Money?'.]
smart idea and a great way to make $. i believe if investors did the same today, 10 years from now they’ll be smiling. having said that i notice many new buildings with 15-20 suites being flipped and they are sitting on the market now 5-6 months, with no price reductions. so maybe they’re not flippers but holding long for their price.