Oddbean new post about login | logout Imo you are right but there is a caveat. If the mortgage holder could borrow against their real estate with a HELCO and use the credit to buy Bitcoin then they’re accessing Bitcoin sooner and still not paying ≈ 1 million usd in rent over those 30 years to live. I would buy the Bitcoin vs put a down payment on a house if I had the 100k and no Bitcoin. At this point the Bitcoin has at least an order of magnitude more upside than real estate.
If you take out a HELOC, dont you just end up paying more interest for longer? Because now you owe 500k instead of 400k. https://image.nostr.build/c56914fb9d7d660535d92d7ca1775a0c96a47cd971cfe8f619c197a353b00f1b.png
Yeah but you’re using that debt to gain control of Bitcoin, which I expect the purchasing power gains over 30 years would crush the interest expense. The game in fiat is stack debt that can’t be margin called and can be paid off slowly. 100k in fiat debt won’t be shit in 30 years. That will be the cost of a beat up used car or something 😂
I get what you're saying. I just don't like the idea of using debt and playing fiat games with my house on the line haha
If I felt good about my cash flow and didn’t have any Bitcoin I would max out my HELCO and smash buy as much corn as I could 😂 Luckily I’m not in that position.
If you had better cash flow you would just buy more corn instead of dealing with the headache that comes with all the paperwork haha
But being able to buy 100k today on borrowed money is very different than DCAing 100k over 3-5 years.
That’s true but I don’t know enough about HELOCs. There has to be some additional cost. Otherwise the standard 20% down payment would be pointless. My guess is that your interest rate on the loan goes up as you take on more risk with a HELOC.
Okay I just looked it up. Typically a new homebuyer can take out a HELOC 30-45 days after close, access up to 80% of their equity value and payback over up to 20 years 😂😂😂😂😂
My guess is you’d have two loans then and the second loan will probably have a higher interest rate because it’s considered more risky ?
Internet said it’s a separate loan, usually variable rate, but typically a similar rate to the initial mortgage. They can be fixed rate too. They can be paid off early. And they can be refinanced. The banks want as much debt as possible no wonder they make these things so sweet.
Hes wrong because he needs a roof over his head no matter what, and you can’t live inside your bitcoin.
It’s buying vs renting though
But the minimum down payment is not 100k, it’s 17,500. So he could still “buy” 82,500 worth of bitcoin, when purchasing the house, which seems to be lacking in the analysis. So the opportunity cost is not as great as is indicated, AND increasing cash flows needed to service the rent are not included vs a fixed rate mortgage payment, which is assumed to be covered by cashflow for the life of the loan.
Very good point. Rent is sure to increase massively over the duration of a 30 year fixed.
And as I said, everyone needs a home, so the personal value of owning a home, becoming part of a neighborhood/community, and the security of not being forced out at the whim of an owner, is also lacking. Not to mention moving costs, security deposits lost(effectively a 13th month of rent dependent on an owners willingness to renew a lease), lack of autonomy over one’s lifestyle(want pets? Need owner permission) are all lacking. The calculus is flawed.
Can you show how my math is flawed with actual numbers? Show me how putting 100k in bitcoin and renting an apartment will make me less wealthy than putting 100k down on a house and paying a mortgage over a 30 year time period.
That’s a false comparison, because as your own numbers said, you only need to put 17,500 down to mortgage the house. So if you have 100k to spend, you can actually buy the house AND bitcoin, it’s not either/or you can buy 82,500$ worth of bitcoin, and pay the mortgage.
That’s fine you can use $17,500 instead. Assume that’s all the money I have. How will my net worth make me better off buying instead of renting 30 years from now? Show me the numbers In my initial post, the down payment was $37k and the difference wasn’t even close.
If that’s all the money you have you don’t qualify for the house in the first place.
Yes I do with FHA on a $500k home
If you qualify for FHA with a 3.5% deposit on a 500k loan at 2.5% interest, there are a lot of assumptions to to make about HOA fees, property taxes, PMI, existing debt levels. I made assumptions of 2700/y in property tax’s and 2400/y insurance and mortgage insurance of .8% and no existing debt, suggesting you make ~90k/year and will be paying just about 28k/year on the mortgage. After taxes, and mortgage you should have somewhere around 2500/month left over. Buy your food, and other stuff like phone or utilities and you probably have about 1000-1500$ left over each month. Save in bitcoin. I think this scenario is totally unrealistic. If you’re making 90k per year as a single male, have only saved 17,500 dollars, and are deciding between buying a house or buying bitcoin with your ENTIRE savings, you possibly could have recently acquired a very secure position and are looking to leverage that job security ASAP but most likely have been spending too much. If it’s the former, you could decide to buy the bitcoin now and then proceed to buy the house in one year, or vice versa. If it’s the latter, you most likely can’t budget properly to afford the house or the bitcoin anyways.
