The interest on the heloc is typically going to be higher than the mortgage rate - I understand the tax advantages but what if someone can't afford to pay that interest?
The growing efficiency of the mortgage (amount that goes to principal vs interest grows over time) covers the interest cost, meaning you never have to pay any additional money. Meaning say month 1 you have $800 to borrow and invest, you will always borrow $800 each month there after. Any additional from the growing principal payment, covers the interest cost of the month previous. This way you get to invest sooner and compound your investment growth. Also the tax refunds that prepay the mortgage go ALL to principal meaning you pay less interest on that mortgage over time, making the exact same mortgage payment amount you would have been making anyways. Hope this helps.
@user-gt2vx7ko1f it doesn't, you maintain your debt over time. However you have built a substantial savings with the benefit of compound growth over say a 25 year mortgage. After 25 years you could pay off the debt or keep it invested, growing and still get tax write offs. Robinson Smith has example videos going through the calculator showing how much your investments can grow even adjusting return rates and interest rates
Instead of putting your readvanceable funds in the HELOC into dividend stocks (or real estate), could a person put those funds directly into a Whole Life (participating divedend paying) policy to pay the premium and build cash value? Does CRA regard dividend Paying Whole Life differently then typical income earning investments (stocks, real estate, business)? Thanks
It does get paid with the investments. But if you borrowed 200,000 at a 7% return rate and 3% interest rate, you could still make 4% - $8,000 that year.. now - compound this - increase the amount and time - and you’ve made 400,000 off 400,000 in 10-12 years’ time.
Thank you for your reply. I appreciate your video contents and learning with you! I have been binged watching your video contents and learning from you. Do you have any Smith Maneuver experts to recommend? Re: My question is to whether I should cash out and refinance my primary home to purchase a second rental property. The background story is, we have our primary home, of which we expect to be paid off by summer 2023. We also purchased a student rental property in February for one of my daughters. She is residing there, along with paying roommates. We do not charge our daughter and therefore, we are negative cashflowing. I am hoping to do the same for my second daughter, following the same model. Would it be better to cash out and refinance my primary home to buy the second rental out right? Or should I have the second rental property on it's own mortgage? Chances are, this too, will negative cashflow as I will not charge my daughters. Primary home- 97K left; appraised at 1.3M This could be paid off if I cash out mutual funds next year. Rental 1 - have 458K mortgage Target rental property 2- purchase amount, not including closing cost 550K Your input is greatly appreciated. Best regards.
The interest on the heloc is typically going to be higher than the mortgage rate - I understand the tax advantages but what if someone can't afford to pay that interest?
The growing efficiency of the mortgage (amount that goes to principal vs interest grows over time) covers the interest cost, meaning you never have to pay any additional money. Meaning say month 1 you have $800 to borrow and invest, you will always borrow $800 each month there after. Any additional from the growing principal payment, covers the interest cost of the month previous. This way you get to invest sooner and compound your investment growth. Also the tax refunds that prepay the mortgage go ALL to principal meaning you pay less interest on that mortgage over time, making the exact same mortgage payment amount you would have been making anyways. Hope this helps.
Ok so that pays the interest on the HELOC. When does the principal get paid and with what money ?
@user-gt2vx7ko1f it doesn't, you maintain your debt over time. However you have built a substantial savings with the benefit of compound growth over say a 25 year mortgage. After 25 years you could pay off the debt or keep it invested, growing and still get tax write offs. Robinson Smith has example videos going through the calculator showing how much your investments can grow even adjusting return rates and interest rates
Instead of putting your readvanceable funds in the HELOC into dividend stocks (or real estate), could a person put those funds directly into a Whole Life (participating divedend paying) policy to pay the premium and build cash value? Does CRA regard dividend Paying Whole Life differently then typical income earning investments (stocks, real estate, business)? Thanks
When does the principle portion of the HELOC get paid and with what money???
When you liquidate your investments I think.
It does get paid with the investments.
But if you borrowed 200,000 at a 7% return rate and 3% interest rate, you could still make 4% - $8,000 that year.. now - compound this - increase the amount and time - and you’ve made 400,000 off 400,000 in 10-12 years’ time.
Watched and liked, thanks! Too many click sounds though. That really gets annoying especially when your voice audio is quieter than the clicking.
Thank you , both videos were really informative.
You are welcome!
Any referral for a smithe maneuver specialist?
Can the Smith Maneuver be applied to a paid off house?
Yes for sure. Contact a smith maneuver specialist to get more specific answers though.
Thank you for your reply. I appreciate your video contents and learning with you!
I have been binged watching your video contents and learning from you.
Do you have any Smith Maneuver experts to recommend?
Re: My question is to whether I should cash out and refinance my primary home to purchase a second rental property.
The background story is, we have our primary home, of which we expect to be paid off by summer 2023.
We also purchased a student rental property in February for one of my daughters. She is residing there, along with paying roommates. We do not charge our daughter and therefore, we are negative cashflowing.
I am hoping to do the same for my second daughter, following the same model.
Would it be better to cash out and refinance my primary home to buy the second rental out right?
Or should I have the second rental property on it's own mortgage?
Chances are, this too, will negative cashflow as I will not charge my daughters.
Primary home- 97K left; appraised at 1.3M This could be paid off if I cash out mutual funds next year.
Rental 1 - have 458K mortgage
Target rental property 2- purchase amount, not including closing cost 550K
Your input is greatly appreciated.
Best regards.
Can the manoeuvre be done with a house that has had its mortgage paid off?
So it’d essentially just be a heloc with a second mortgage?
I think part of this is to capitalize the interest
Hello sir , do you offer one on one mentorship ?
Hey. I do offer coaching and mentorship programs. Shoot me a message at info@darrenvoros.com and I'll see if I can help you out.
Hello, this is for investment property right ? Cause there is no way for primary residence to apply that. Let me know if I am right please
Couldn't stick with the video due to the loud and frequent sound effects. This may not affect everyone but it's triggering for my poor ears.