Refi Til Ya Die Strategy

[Mark-Anthony Villaflor]

In this time of COVID I'm looking at purchasing extra property but am looking at getting the downpayment from cash refinancing properties. I listen to several podcasts aside from Bigger Pockets- Real Estate Guys and Jason Hartman. I got interested in the concept of "refi til ya die" when I heard it on Jason's Creating Wealth podcast. 

@Jason Hartman

Are any of you familiar with the concept or deploying it? 

Summary of it is that you buy and hold rental properties for the long haul building weatlh through the cash flow, mortgage being paid and the appreciation. After some time you'd refinance higher than the original purchase price (being mindful of cash flow). This then would go to the purchase of a new property. Also, the cash refinance wouldn't be taxed so you'd be saving on taxes as well?

My understanding on keeping a high loan balance is that banks don't want to take the property back and would work with ya. In cases like COVID folks who have high loan balances simply went into forbearance. They don't want you to outright default. 

I'd love to hear folks thoughts on this. I've got a property in Houston purchased from 2012 and have a decent amount of equity so am trying to sort out this next move and the long-term play.

@Jason Hartman

[Account Closed]

Originally posted by @Jason Hartman:

@Account Closed

It's been several years, hope all is well! 

That's an odd thing to say. @Account ClosedThis couldn't cause a crash in a zillion years. As well will agree, the causes are substantially different and far more complicated. My strategy requires a minimum of 20% equity at all times. 

That's the minimum, most investors will have much more equity than that over the years they are benefiting from the strategy. 

I don't know about a zillion but people borrowing to buy houses they can't afford certainly caused a housing crash 12 years ago. And how many people with no mortgage do you see losing their house? I really think its an irresponsible message that is very prevalent on BP that leverage is the be all end all of everything and you have stretch yourself paper thin to build an empire. This strategy is highly risky and and unstable and depends on everything going well all the time. Sure you can use debt wisely in the early stages of building wealth. Its almost impossible to start out as a cash investor. But to retire with a highly leveraged portfolio scraping $100 per door while holding millions in debt is not a wise plan and can leave you destroyed at a time you cannot rebuild again.