Quote:
Originally Posted by Slava
This is actually very simple and in the cases that I deal with its far easier than a mortgage. You can borrow that whole $100k without the $10k if you so desire and invest the whole shot. You do have to pay interest on that $100k.
The interest rate does depend on where you borrow from and how you do that; in general though you are looking at prime (4.75% today) to do this. You can write off the interest though so your break-even is actually about 3.25%....in other words anything above that is profit. With real estate there are a lot of things to be concerned with...such as you can't write-off the interest on land in this fashion, the properties are not as liquid as stocks/bonds, and the list goes on.
If you have other questions fire away!
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So a bank will lend you $100,000 just to go play the stock market?
What type of collateral do you have to put up? Where is the banks security if you invest in Enron and lose it all?