Author Topic: RENTAL property refinance  (Read 1564 times)

Offline Cornflakes

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Re: RENTAL property refinance
« on: July 21, 2021, 08:28:05 PM »
Here is some math homework to do:

Today, you are on the hook to pay $2560 a month for next 22 years and you are debt free on the property.
After refi, each month you pay same $2560 = $2045 mortgage + $515 in brokerage account. For next 22 years.

In the brokerage, choose a basket of 5 stocks (coca cola, clorox, P&G, J&J etc. safe and trusted names). Assume 4% annual dividend reinvested each quarter, and 0%, again 0% change in the stock price at the end of 22 years. Project the balance in your brokerage at the end of 22 years. Compare that amount to the payoff amount on the mortgage - do you come out ahead?

If the stocks lost money at the end of 22 years, we all will have bigger problems to worry about at that point than a few thousand dollars lost in the stock market. Chances are those safe stocks will more or less track the market returns. And, you will have 22 years of dollar cost averaging as basis!!

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