Updated almost 8 years ago on . Most recent reply
Cash versus Mortgage
I am reading BP's book "Rental Property Investing" and got to chapter 13 on financing. Currently, I haven't made any purchases, but I have a question about the math.
Does anyone look at the amortization to see actual numbers for purchases involving loans? If a house goes from $100K to $110K, I see the cash buyer making $10K, but over all the loan buyer would still loose money in the long run. How much would depend on interest rates and term.
Is there something I am missing? Does the total of all payments not affect any of the calculations?
Most Popular Reply
and if you really want to get into the weeds, interest is tax deductible. But the easiest way to look at it is if you can outperform the debt then don't pay it off. If the debt is more expensive then your return (think credit card loans) then pay that down first...