This is exactly the kind of math that normal people don’t get when it comes to this conversation. Every industry has some convoluted, obscure, non-intuitive way to actually make money when it doesn’t sound like you should. You have to think in different ways and in longer terms.
Even then though, it’s not as amazing as it seems. Real estate is not the only sector that can make profits on leverage. In fact, pretty much any publicly traded company relies on leverage and debt. If you buy a share of an index fund, you’re buying shared of companies, most of them taking advantage of the same leverage you would when buying a rental property.
But basically no broker is going to give you a million in margin on a 200k account, and you don’t get margin called on mortgages (typically) the way you do with margin accounts.
You missed the point. My point is that even if you buy stock on 100% equity, 0 margin trading, you still are investing on margin. You are investing on margin because those company stocks you are buying themselves used these leverage techniques in their own operations.
This is exactly the kind of math that normal people don’t get when it comes to this conversation. Every industry has some convoluted, obscure, non-intuitive way to actually make money when it doesn’t sound like you should. You have to think in different ways and in longer terms.
Even then though, it’s not as amazing as it seems. Real estate is not the only sector that can make profits on leverage. In fact, pretty much any publicly traded company relies on leverage and debt. If you buy a share of an index fund, you’re buying shared of companies, most of them taking advantage of the same leverage you would when buying a rental property.
But basically no broker is going to give you a million in margin on a 200k account, and you don’t get margin called on mortgages (typically) the way you do with margin accounts.
You missed the point. My point is that even if you buy stock on 100% equity, 0 margin trading, you still are investing on margin. You are investing on margin because those company stocks you are buying themselves used these leverage techniques in their own operations.