How do you feel about this?
Stocks are never a sure thing.
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If heās so sure about the 8% compounding interest then he should cash out refi and keep the condo. Best of both worlds. End of story.
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8% is long term, if heās talking about cashing out now on the home, maybe heās not as long term.
Realistically speaking, stock market has a higher chance of going down than up these days.
Also bay area RE appreciates 7% or more on long term average, and with this he has mortgage leverage too!
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He has said āI am not sure what to doā¦ā He is right, he does not know. All he has to do is just hold it as long as he can.
The simple fact is āhold the home, bought before 2011, as long as anyone canā. Since he is in PA, his cash flow cap rate is low around 2% or 3% (His calculations are not clear). But still his growth (appreciation) is more. Over time, cash flow will increase, make him FI.
I asked him to visit the forum. He will come here and get benefited.
Original reddit poster here. Why is your thread title so insulting? Thatās really uncalled for. I am a young person recently begun to be a landlord in the last 6 months and debating my options to best optimize for early retirement and to have a safety net in case I become disabled again. Someone being young and new to investing and asking for advice doesnāt warrant mocking them in a thread title.
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Hey, not the person creating the title. Dontā take it as insulting, he didnāt mean to. Here in the forum we are talking about different investment vehicles. we have both stock bulls, and real estate bulls, sometimes it intersects in one person (@wuqijun), sometimes it does not (@Elt1).
Welcome to forum, and donāt take us too seriously. we are a bunch of folks with different world views.
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I think Jil meant āuninformedā or āunder-informedā. Jil is a long-timer here on the forum and he is not the insulting type. Itās probably just a language thing.
As for your choices, itās all about your faith on the bay area real estate market, especially in the silicon valley, as relative to the strength of the US stock market. You already said that itās unlikely for your condo to lose value dramatically, so for downside protection you already agree that the condo is better than stocks. As for the upside, bay area real estate historic return is very decent compared to stock market returns, and combined with leverage from a 75% mortgage with a nice 30-yr fixed-rate loan at historically low interest rate, it should only do better than the stock market.
To get exposure to the stock market without having to sell, as harriet said, you should take as much equity out as your situation allows and invest the proceeds into the stock market or whatever you believe in. That way you get the best of both worlds. The leverage increases your risk but if you keep the numbers under control that allows you to sleep at night, it seems the best option in your situation. In my opinion a 30-yr fixed-rate loan against a valuable property is the best and safest way to increase leverage. No other type of borrowing can rival that. My personal view is inflation is definitely coming which is the true reason why all prices are so high right now. To play into that increasing leverage with fixed borrowing costs is the way to go.
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You will learn more from negative feedback than positive. Play to your strengths, never sell unless you have too. Avoid taxes. Use leverage to boost your returns. Donāt count on a 8% stock return
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We have a guy here doing the opposite. @wuqijun took margin loan against his stocks to buy properties in Bay Area.
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I did not mean to mock at you ! Sorry, if it hurt you already, removed part of title.
You have come to right forum, people are here to help you.
We have different types of bulls: conservative bulls, aggressive bulls, and then thereās @wuqijunā¦ 
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Canāt agree with you more.
I know what you meant to sayā¦ you know I donāt like thatā¦ 
ā@wuqijun took margin loan against his stocks to buy properties in Bay Areaā
Did you take margin loan to buy properties?
Reason for my ask: Today, my lenderās underwriter was asking me (as a last question before final approval), like letter of explanation, how much margin loan I have with my brokerage?. I was surprised with such kind of questions.
Yes, I had too much stock and not enough RE. So I took out some margin loan to buy real estate.
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I strongly agree with what @maluka said. @Jil is one of the serious posters here and is definitely not the insulting type.
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Going back to topic, the reason I brought up @wuqijunās margin loan example is that, one should own both real estate and stocks. Both belong in a healthy portfolio. You can quibble about the ratio but I think one should own both.
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How so? Iām not a dictator. People are welcome to freely express their viewpoints without any fear of retribution from meā¦
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