The best way to become a millionaire is to borrow a million dollars and let renters pay off the loans.– Jack Miller
Miller was a very rich man when he died. I don’t know how many homes he owned free and clear, but it was probably well over a hundred. He started with nothing in the 1960s.
The Federal Reserve is buying mortgages. This is a subsidy, and it is big: $40 billion a month. It will not stop.
This is good for the housing market for as long as it continues. Investors are now looking for homes sold at a discount.
I am one of them.
Some people buy a house, improve it, and sell it. This is called arbitrage in financial markets. It is called flipping in real estate markets. Both are important services.
This makes it harder for first-time buyers with little money for down payments. So what? The idea is to get qualified buyers to buy unsold properties. The idea should not be to subsidize weak buyers. We went through that wringer: subprime mortgages.
Maybe banks are finally unloading properties that should have unloaded three years ago. It’s about time.
Most of the flipping is in the “sand states”: California, Nevada, Florida, and Arizona. That is what we would expect: these states had the biggest bubbles. They popped more than others.
The presence of low rates is great for investing in houses to hold as rentals units. Buy cheap, borrow cheap, and let the renters pay off your loans.