"P.Fritz" wrote in message
...

"NOYB" wrote in message
news

"DSK" wrote in message
news
NOYB wrote:
I am paying interest-only on a 5-year fixed at 4.25%.

Pardon me for being blunt, but that's friggin' dumb. That's as stupid as
punting on 3rd and short. Do you *want* the economy to take a big chunk
out of your future?

Why is it dumb? I explained in detail why it works well for me. Why pay
interest on an asset that's appreciating at 10-20% per year?

Some people just don't get that owing money is not necessarrily a bad
thing.





... I really can't afford an $825k house (with a conventional
mortgage) while I am still paying off my business loan. But if I
didn't buy when I did, I'd never be able to afford it.

So why do you feel you need an $800K+ house? To show off? To impress
your trophy wife?


Because I wanted to be on the water. Boating access down here is hard to
come by. The parking spaces at the ramps are filled by 9am on the
weekend. Even if you get there early enough, you have to pay a storage
place $100+/ mo. to store your boat on the trailer. Two largest marinas
have closed in the last 3 years stranding me and 500 other boaters
without a space to keep our boats. Renting private in-water slips for a
boat my size runs $300/mo...and the owner could decide tomorrow that he
doesn't want to rent to me anymore. I was keeping the boat in Ft. Myers
Beach, and the seasonal traffic was turning a 30 minute ride to the
marina into an hour and a half.

Now, I hop in my boat and I'm in the gulf in 17 minutes from my back
door.






... When my loan is paid off (in just under 5 years), I can easily
afford such a house.

In 5 years, a lot can happen. Including double-digit inflation and a
real estate crash... but in your case it sounds like a much less severe
scenario will still seal your financial doom.

So what. In 2009, my rate can begin adjusting 2 points per year, upto a
max of 5 points. The worst case scenario: I'll be sitting with a rate of
9.25%...which I can afford to pay since I won't have the $6500/mo.
business loan any longer. ;-)

And you are in a profession that is reasonably recession proof, unlike the
construction biz ;-)

You've also bought into a limited resource......there is a finite limit of
useable waterfront property.







... I look at like this: I'm effectively renting the house for
5 -years (but with a tax write-off!)

Or tying a huge anchor around your neck for the rest of your earning
life.

Not for the rest of my earning life. Just for another 4 1/2 years. Then
I can afford to start paying an additional $4000/mo in principal.

Hell, if you could pay interest only, with the tax deductiblity for life,
at the rate you have, combined with the historical appreciation of real
estate, it would still be a great investment.

Of course...and that's probably what I will do. When I retire, I can sell
my Naples waterfront home and move virtually anywhere in the country that I
choose...since Naples real estate will always outpace 90% of the rest of the
country. I'd be able to reclaim a large chunk of equity upon the sale of
the home without ever having to spend a dime on principal. An alternate
plan is to stay put forever. Then when I retire, I can then do a reverse
mortgage on the new-found equity, and use the proceeds to fund my
retirement.



I have clients that invest in retail properties, they keep everything
mortgaged to the max......they are constantly refinancing, pulling any
appreciation out of the property and reinvesting it in others.

There's a guy on TV selling tapes to tell people how to do just that. :-)
But who needs the tapes? It's not rocket science.