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Updated about 1 year ago,
Margin Loan for Real Estate Investing. Is it worth it?
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 :)