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Updated about 1 year ago,

User Stats

2
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6
Votes
Yair Zarmon
Pro Member
6
Votes |
2
Posts

Margin Loan for Real Estate Investing. Is it worth it?

Yair Zarmon
Pro Member
Posted

Hi All,

I'm a newbie investor and very much looking forward to kickstarting my career in RE. Your help here will be greatly appreciated, and remembered!

I have been listening to David Greene and read a few of his books on the BRRR method. Purchasing an investment property in cash and refinancing it based on its ARV makes a lot of sense and is aligned with my long-term goals.

My situation is as follows:

1. I have a stock portfolio currently valued at $500k+, and an all-cash purchase means that I'll need to sell some shares and pay long-term capital gains tax (15%). 

2. I do not have a sufficient amount in savings to complete an all-cash purchase without selling shares (I'd be looking at properties valued at roughly $100k-$150k).

I can do the following:

1. Sell $180k worth of shares (this will roughly net $150k after capital gains taxes) to put an all-cash offer on an investment property and start the BRRR route.

2. Take out a margin loan at X interest rate, maintain the current stock portfolio without selling shares, and put an all-cash offer on an investment property.

Given the factors I mentioned above and today's economy climate, would it make sense to take out a margin loan to finance my initial purchase? Is the interest in a margin loan much lower than a traditional mortgage? How would leveraging a margin loan affect refinancing of the same property?

I look forward to hearing your thoughts :)

  • Yair Zarmon
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