Episode description
Quick Fire Finance Question of the Day:
"We are fortunate to have paid off our mortgage and have no debt. We have switched the full amount of mortgage payments into an investment fund.
I’m wondering if it might be smarter to instead borrow to buy a rental property, and hopefully earn capital gains on.
The investment fund only earns returns on what we put in, but an investment property might earn capital gains on the full amount. If the rent could cover most of the mortgage interest, and we kept paying off the mortgage at the same rate we are now, we might be able to pay off an $800,000 house in around 15 years, by which time it may be worth far more.
While I’m certainly enjoying being debt-free, I’m wondering if getting back into debt for this type of investment might be the way to go. On the other hand, I worry that the housing market is overinflated and could face a big correction.
Source: https://maryholm.com/nz-herald-18-december-2021/
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