On: The 30-year mortgage is an intrinsically toxic product (2018)

[Gibbon1]

Skeeziest thing a friend did when rates were low during the pandemic is mortgage his house and use the money to buy a commercial property. The rents on the commercial property cover the mortgage on his house.

But you are correct. You shouldn't treat an owner occupied house as an ordinary real estate investment. The flimsy type of analysis that poo poos buying a house always assumes you'll live in a large cardboard box somewhere.

[yuppie_scum → Gibbon1]

Why is that skeezy? It’s no worse than using your credit card to buy something. In fact, maybe better since it’s backed by a real asset.

[unmole → Gibbon1]

> always assumes you'll live in a large cardboard box somewhere.

It assumes you'll rent a comparable place.

[Gibbon1 → unmole]

Makes a lot of textbook assumptions.

In my case interest minus tax breaks plus property tax is 40% of current rent for a similar place.