Reddit Refinance Student Loans – How I Borrow FREE Money
Reddit Refinance Student Loans – Review
Here is exactly how, and why, I borrow money for free – and how I use this to Invest in Real Estate. Enjoy! Add me on Instagram: GPStephan
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Now, first, I think it’s REALLY important to understand the nuances of “debt” and borrowing money – and make the distinction that not ALL debt should be placed in the category of automatically being “BAD.”
If having debt doesn’t MAKE YOU MORE MONEY – then, I think it’s safe to say – it’s automatically BAD. But, on there other hand, if you DO use debt CORRECTLY, you’ll go on to one of the main reasons I like to borrow as much money as I can…
Leverage. This is when you borrow money in order to invest…and that investment, ideally, makes you MORE money than what you owe in interest on that loan.
Now, here’s why borrowing money just makes WAY more sense for me…and exactly why I do it:
In Real Estate, you have two options for buying a property – one, is owning it outright and paying for it in cash – and the other, which is what MOST people do – is borrowing money and taking out a “mortgage.” And taking out a loan like this means you could make WAY more money than you could, otherwise.
In addition to that, the INTEREST I pay on those 30 year, fixed rate mortgages also becomes a tax write off against that rental income – which means, it helps lower my tax bill.
But, it doesn’t stop quite there…because when taking out a long term loan, we also have consider the power of INFLATION.
This is what happens when more money is printed into our economy, and the more money that gets printed, the less value our money is worth.
This is also how I’m, EFFECTIVELY, able to borrow money COMPLETELY FOR FREE – meaning, it’s CHEAPER for me to BORROW money, than it is for me to PAY for it, outright…if that sounds like science fiction, here’s how I’m able to do it:
First, I’m getting a low interest, 30-year, fixed rate loan. My AVERAGE interest rate, throughout the 3 mortgages I already have, on about $1.7 million dollars, is 3.52%.
When you consider that the interest rate is a tax write off against the rental income I make, in a 50% tax bracket, it’s essentially like I’m only paying HALF that, after taxes – or, 1.76% “out of pocket” in actual interest.
Then, that amount is also lowered by inflation – because, every year, my outstanding loan balance becomes “easier” to pay off with future money that’s worth less.
If we see that, this year – inflation was 1.76% – that means, when you factor in inflation and tax write offs – I’m getting loaned money, for 30 years, for completely FREE – adjusted for inflation. Not to mention, there may be some years where inflation is HIGHER than 1.76% – which means, in a weird way, banks will be paying ME to take out loans, to buy properties…so, in this case, it makes ABSOLUTELY no sense for me to pay this loan off early.
First, if I paid for any of my properties outright, or I paid off any of my current mortgages – I would be tying up a LOT of money in one place, meaning I couldn’t use it towards any OTHER investments – and that has what’s known as an “opportunity cost.”
Second, by borrowing money – as odd as this is to say – I’m able to diversify my investments much more, allowing me a much safer spread on my money.
Now, I will say – there ARE some advantages when it comes to paying in cash, and not having a mortgage, so I do think these are worth mentioning – just so I can give a well balanced argument to this video:
First, when you pay cash for something – you have a LOT less risk:.
Second, when you own something outright – you’ll have a LOT more peace of mind
And third, paying for something outright in cash is really, really easy.
BUT…overall, having done BOTH…I’ve bought properties outright, and I’ve bought them with a mortgage…I have to say, I’d take the mortgage route every single time.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com
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