patrick.net

HeadSet says

By the way, loans are never income, they must be paid back with interest. Claiming "tax free" income because one uses stocks or real estate as loan collateral makes no sense. That is no better than saying "Max cash out your credit cards and use part of the proceeds to make minimum monthly payments and pocket the rest as tax free income."

I took out an $85k margin loan. $125/mo. I paid zero taxes on it. Basically my house mortgage was $125/mo for 2 years. It wasn't my margin and needed to pay back the principle, but let me know where you can live with nothing down besides attorney and title fees for $125/mo? Nowhere.

This is what the rich and savvy do. I would have paid $1,200 principle and interest with a regular loan via FHA or Fannie/Freddie backed loans. I saved $24k over two years. Paid back the in law and had a roof over my head.

How do you think people buy homes in high cost of living areas? And the credit card comparison is silly. There's no way with even an 850 credit score on a cash advance you be under 20% on a CC. The margin loan was 2.5%. I've done it, so it can be done. It's backed by something someone can freely take from you so you get lower interest rates because they just sell the stocks and get paid back.

Borrow $100M, set aside $20M for interest and live off the $80M. That's what Musk, Trump and Gates do. That's how they say they don't make money. It's all borrowed.

psychoh says

Strategy used by the ultra-wealthy, "Buy, Borrow, Die." They buy assets, borrow against them tax-free, and when they pass, the assets get a step-up in basis—meaning their heirs can sell them with little or no capital gains tax. There is no taxable event.

In that situation, the loans would have to be settled before the assets are passed on. Also, even middle-class folks who have stocks get that basis reset when those stocks are passed on to the kids. Odd thing though, if the stocks are in a Traditional IRA then selling the inherited stocks counts as taxable income. Not any type of capital gains but taxed as if wages on the full amount withdrawn.

WookieMan says

I took out an $85k margin loan. $125/mo. I paid zero taxes on it. Basically my house mortgage was $125/mo for 2 years. It wasn't my margin and needed to pay back the principle, but let me know where you can live with nothing down besides attorney and title fees for $125/mo? Nowhere.

Let me see if I get this straight. Your mother-in-law loaned you $85k to buy that house and allowed you to pay her back at $125 per month for two years. After 2 years you paid a lump sum for the balance. Are you calling it a "margin loan" because the MIL borrowed this $85k using her stocks as collateral? You said the loan was 2.5%, but at that rate simple interest alone on $85k would be about $177/mo, let alone any amortization. So, was that $125/mo "interest only" payments with the full $85k due at the end? Or did the MIL credit the payments toward principle and you only paid $82k at the end?

HeadSet says

Let me see if I get this straight. Your mother-in-law loaned you $85k to buy that house and allowed you to pay her back at $125 per month for two years. After 2 years you paid a lump sum for the balance. Are you calling it a "margin loan" because the MIL borrowed this $85k using her stocks as collateral? You said the loan was 2.5%, but at that rate simple interest alone on $85k would be about $177/mo, let alone any amortization. So, was that $125/mo "interest only" payments with the full $85k due at the end? Or did the MIL credit the payments toward principle and you only paid $82k at the end?

No principle involved. Interest only. Paid taxes and insurance but the total was $400/mo roughly (this was 12 years ago). I'm probably off on the interest a touch, but the payment was right around $125. Not $177/mo. Insurance $900/yr and taxes $2,800/yr.

Paid $130k at the end to pay of debt for improvements in a refi. But yes, $85k on the margin loan. Made the offer on the house as cash and didn't have it. Then needed to figure something out. I did. In the process of doing it right now. Should get $89k by the end of the week and then another $150k on our house sale next week.

I should get back in real estate but it would be commercial/industrial/storage/shipping type spaces. I'm just lazy because the wife makes a lot. I got 3 kids so if she's knocking it out of the park I think it's more beneficial for the kids for now. Good grades, never in trouble, smart ass mother fuckers, great athletes and 70% of that is because of me.

When people give me shit here they have zero clue the life I've lived. What I know. That's why I seem defensive at times. I've lived it. So it's annoying when users call people fluffers on topics. Probably doesn't even own or have kids. My life is fact and I share it here. It's not open to argument because anyone would be wrong. Anecdotal and experience. I have it.

WookieMan says

Paid $130k at the end to pay of debt for improvements in a refi. But yes, $85k on the margin loan. Made the offer on the house as cash and didn't have it. Then needed to figure something out. I did. In the process of doing it right now. Should get $89k by the end of the week and then another $150k on our house sale next week.

Your MIL seems very generous. Is she the one buying your house?

HeadSet says

Your MIL seems very generous. Is she the one buying your house?

My mom is buying our house. $100k coming today. She wants to be close to us and my sister. She's currently an hour away. Still healthy but she's nearing the years where she doesn't want to deal with house stuff. She'll be 3-4 blocks away.

MIL had no clue when we got the money about margin. She approved it, but had no idea what a margin loan was. I told her the risk of a margin call and selling stocks to cover it, but she was fine since she has $500k in liquid stocks. Would have taken a 50% crash for a sale. We paid all the interest.

I should have $10-50M right now. I'm just lazy if being honest. I have so many resources for OPM that I don't use. I also don't want to sour personal relationships if shit hits the fan. I also don't want to work. This is why you network though. The more you know so to speak.

And sorry if that came across as bragging. I know I sometimes come across as an ass and don't understand other people's lives.

I like Elon. So far, he seems to be a good guy doing the right thing at great personal cost.

WookieMan says

And sorry if that came across as bragging.

What bragging? You just spoke of how your MIL and mom financed your house buying. Or do you mean mentioning rich relatives that could provide you with loans in that $10-50M range?

RWSGFY says

Hell hath no fury... and baby mama competition drama is the deepest pit of hell.

Ask any Tyrone.