🏡 Never put a downpayment on your house  

This is not good advice at all.

"How to leverage yourself to another bankruptcy"

I was very curious until you said to put it in the stock market. Then I stopped watching .

Banker: Works great for me. Now sign here, here, here, here, here...

POV: someone with no money is giving financial advice

They always talk about the gain scenarios, but never the losses 🤦🏽‍♀️

“Invest the other 82,500 in stock markets” I literally laughed when he said that.

My husband and I put 20% down cash he saved and I saved over the years. We got in 2.9% on a 15 year fixed rate mortgage. Our purchase price was 127,900. Our original loans after down payment was 104,000. We now owe less then 50,000 after owning it little over 2 years. We have been investing in our home past year. (Debt Free). We will be mortgage free by summer of 2025. We don’t pay PMI we are beating the interest.

Translation: I’m going to gamble to difference and hope it pans out

Step 1 have the $82.5k

Please do this everyone! I will buy your house when you are over leveraged 5-10 years from now. Thanks in advance

The problem with this is that putting that 20% down payment in is a guaranteed return. Investing in the s&p 500 has a compounded annual growth rate (cagr) of 10.5% over the last 30 years but there is a lot of volatility in between that time. Sure if you hold this downpayment money you saved as an investment in the S&P 500 for the long term you will make more money. Although, making the home payment every month lower, and not paying pmi, is most likely worth it for most people as it is a guaranteed return, and having to pay less every month as well also helps with your monthly expenses being less.

Ah yes, an Economics graduate from the prestigious JTMBU. Just Trust Me Bro University.

This feels like the same advice that lead to the financial crisis of 2008

If you lose your job, the pain will be much greater.

I did the math u have to let that money sit there for 170 years!!!💀

If you listen to this man you gone f*ck around and find out… DON’T DO IT!!!

Plot twist, almost no one will actually invest the difference

Ive got an even better idea: dont buy a house just now, instead GAMBLE the money and with the gamble returns youll be rich. And if youre saying thats unlikely, studies have show that 90% of gamblers stop right before the big win, so just keep on playing cause if you stop, youll miss out big time (this is a very real study but dont fact check me please)

Gonna be smoking a pack a day staring at the wall in silence after this one

And this my friends is how you end up poor with a mortgage payment…

i feel sorry for whoever’s done this. the bottom is coming

10% a year? That’s optimistic to say the least

Note this only works when interest rates are low

I sold two properties in 2020 and am now waiting for a house crash to buy cheaply. Meanwhile, I've been considering stocks as an alternative; do you know if now is a good time to invest? People say it's a madhouse and a dead cat bounce right now, but I still see and read articles every week about people making over $$$k in trades. Why is this so?

Im so glad people are seeing right through him just goes to show how many ppl had enough of hearing bs

In that case, I would put 5% down and use the rest to renovate the house and make improvements. You’ll get another appraisal and the equity will be over 20% so your PMI will be gone

Stock market 😂 you will never see ur money again -400k

Don't gamble on things you don't have

One thing you forgot to consider was that the person who makes the 20% down payment can invest the $500 they save every month on the mortgage payment and the $200 they save on PMI. The present value of those 360 $500 investments and 130 $200 investments at 8% annual returns is $85,495, which completely offsets the extra $82,500 you get when going for the 3.5% down payment. tl;dr using the proper math, you won't gain anything using this strategy, and will expose yourself to more market risk in the process.

The study, the career, the time, the network, the investing… And none of them will have any real castles with real sheep on a real pasture prairie paradise!!?? 😮

I ran the numbers that way on the last home I purchased for myself. I opted to pay the PMI and invest the rest of the money to buy more rental properties!!

Love tiktok and youtube shorts. All of a sudden everyone is an expert in mortgage loans, bank finance rules, and house flipping.

Comes back 12 months later... "My investment is down 50% and I lost my job!"

For the bank to just causally try to talk you out of 87k is crazyyyyy

Yeah. The stock market never fails. Good plan guy.

He said “historically 10%” 😂😂😂

My advice because it’s what it’s what I did: Put at least 20% to avoid PMI! Next do NOT even consider a 15 year mortgage; get a 30 year mortgage so that the monthly payments are lower ‘just in case’; however, you should MAKE EXTRA PAYMENTS OR ADDITIONAL PRINCIPLE PAYMENTS over time (treat it like a 15 year loan). I bought my house in 2006 and paid off in 2021 doing just that!!! Now debt free! (Credit goes to Dave Ramsey whose RU-vid and podcasts motivated me to become debt free!)

the hypothetical assumes you have the 16.5% to invest. most don’t. put 20 down, no PMI, lower monthly payment. Invest that difference over 30 years

1929 has entered the chat. 💬

I did this and I'm 40% down. No joke.

He forgot that PMI is not for the life of the loan, once you hit 20% paid you can drop it and also you can refinance for a lower rate at any time, I also wouldn't suggest putting that amount of money in the stock market alone but spreading it out into things like retirement plans and more stable investments, you could always put that money back into the property with renovations to increase the sale potential of the home or use it as a down payment on an ivestment property. It's always best to diversify your investments incase one doesn't work out so well

We bought a house 2 years ago and we put 50% $20000 in down payment, we felt more safe this way

Instead of putting a 20% down just do 100%🤦‍♂️

I’m 40, just bought my first house. Paid cash ✌️

Next he will tell us to finance all our furniture and vehicles and grocery trips and invest the difference. Glad I followed Sean, Not only was I financially free in no time, I was also bankrupt!! Financial irresponsibility is the best way to build wealth

So why bother buying a house? Just invest $2900 a month and rent something

10% a year 😂

The smart move would be to instead buy a house for 100k rather than 500k. It would be paid for. Then you can now use the cash flow you have monthly to invest. You will make and grow far more this way. Living beyond your means is why everyone is already in major debt. I own my house out right and have zero debt. I invest my money in to the future.

It's downright immoral to not even mention the risks: 1) Your home loses value and you end up upside down on your mortgage. 2) You lose your job and can't afford monthly payments. 3) You lose money in your other investments. Sure, you may get rich doing this if you're riding a good economy. But in times of crisis, all of the above can happen at the same time. That's how millions went bankrupt in 2008.

How to have a higher mortgage payment and lose money... GREAT IDEA!

it is called buy a home in a growth area and then re-sell the home after the price increases significantly.

*JPowell enters the room* "I'm bout to end this man's whole career"

I’m so thankful for this video! I was not able to do math my self!

Great! I’ll go gamble in the stock market and see how it goes 🤦‍♂️🤦‍♂️🤦‍♂️ Good luck with that!!

A 10% rate of return isn’t average, it’s generous. Very generous. I wouldn’t use more than a 7% rate of return for the high end, and 3-4% for the low end.

1) Don't use this trick to buy a house you can't actually afford. Make sure you can afford the monthly payments first. 2) This only works when % return from investment is more than % interest on your mortgage. Assuming 10% returns might be a bit optimistic, but regardless, the interest rate right now is maybe 8%. If it goes much higher, this is no longer a good idea even in theory. 3) Putting up a larger down payment and investing the difference in monthly payments in stock ALSO makes you a millionaire. ~1.1Mil vs ~1.4Mil, so it's less money, but still a millionaire.

This is great advice…show me a 20 year period where the s&p500 had a negative return….even if you held through 2008 you are up now. Buy and hold i don’t even look at mine.

You forgot risk and human nature

this is one of those things that seem smart in your head until the market goes belly up

This my friends is how we end up over leveraged and the economy crashes every ten years as people accumulate more debt than they can handle. It's literally the economic cycle. People burrow too much money. Some unforseen market change happens. People can't afford the monthly payments. Economy collapses. Like clock work.

The trick here is you need that extra 82,500 or whatever to invest in the stock market already. Most people don’t

Another approach: Put the extra cash into an offset account (if available). These are like savings accounts that offset the interest on your mortgage so long as you keep the money there, very common in Australia where I live and invest. I’m at the beginning of a new rental property loan and right now every $1 put in early equates to approx $3 in interest savings over the life of the loan, guaranteed, a 300% return! Hard to find a mutual fund that matches that return in the immediate, certain way of the offset. IMO, always good to put down the minimum, then drop a bunch of cash on the loan in the early years when your payments are mostly interest.

99.9% of us only have the 3.5% down payment 😂

This is good but always....always, consider the fact that your doing math with no risk. You may lose your job, natural disaster, something breaks in your house will cost you money and hurt your projections. Always consider risk.

I'd rather have as low of a monthly payment as possible, and get reputable tenants living with me to help pay my mortgage. I also would rather just spend less money on a home and ramp up as I have more and more cash flow. Having a more expensive property doesn't necessarily equal higher cash flow.

Not financial advice, but this is what I would do. If you are a Canadian, you should put as much as possible as a down payment if it’s your first home, minimum 5% and 20% to avoid cmhc. Then lock in at 3-5 years. Over pay for the first 3-5 years. For for a 500k home you put 5% $25k and over pay $20k per year $100k after 5 years. Then re-sign for 5 years, it will lower your mortgage rate significantly. If you can afford to over pay, then you can keep doing that, generally you are allowed to do 10% per year, so you could potentially pay off your home much much sooner which would save you a substantial amount of money, plus you’ll have equity to upgrade to a bigger home and do the same thing until you have a home and equity of $1.5 million within 30 years, not only that, but home prices will increase in value S the dollar is deflationary and will always fall in value making asset much more valuable such as a home, a home may be $500k today, but the same home in 10 years could be worth $1 million. All of this applies the same as it does in the states, except amortization is different, but you can still actively over pay which would be substantially better and then you are guaranteed to have equity growth. You also want to build an rrsp and potentially get it over $1 million by the time you retire which will allow you to earn 5-8% per year in interest, so $50-80k for free. Then when ready to retire switch rrsp to rrif which brings in a higher rate. Downsize your home which let’s say you are in a $2 million home at that time and downsize to a $500k home. Now you have $1 million in rrif earning 8% per year free, and $1.5 million in equity after downsizing your home which you can use for vacations, or a vesting whatever you want.

What is not calculated here is the risk factor.

This advice really depends on your current position. If the monthly payment is still below 34% of your income, then you’re okay. Money suffers from time decay, so the borrowed amount is affected by inflation during the lifetime of the debt. Across 25/30 yrs, that’s nothing and if the place is being bought in a new city that property hasn’t been massively inflated. Yeah you can lose your job, but again you can always sell the house. Look to live in a place for at least 5 yrs and you’d have some equity in the house. All these better than renting a place and paying off someone else’s mortgage. Buy a place and pay for it across 5 yrs minimum and sell. Versus renting a place for 5 yrs and having nothing

This is how to become overleveraged and overexposed. These are the people I will be buying from in the next recession.

Did this a year ago and already up 20% on my S&P position with the money saved. Also working OT to invest more and pay down mortgage principle

I'm just gonna build me a tent in the woods and save my $$$$

After reading comment I realized why only a handful of people are rich af. Because majority of people want to play on the safe side and doesn’t know about the leverage. That way you can not only invest in stocks or other night return investment but also can buy more homes with more cash flows. But you must know what you are doing. I have been doing this way and now I owned multiple properties and am having tenents paying down my mortgages every month. Smart money comes to smart people.

Customer: that’ll make me a millionaire Banker: how? Customer: cause I’m a billionaire

I put down 3% and refinanced in 2 years when I had the 20 % equity. It California, home prices are always going up.

Leverage is great when it works in your favor. Adjust to your own risk tolerance according to what you have to lose as well

Depending on your level of risk appetite. If you want to buy a property (to live in, in this scenario) and invest in shares etc, you carry a lot of risk of one failing affecting your ability to finance the other. Because ur primary goal should be to build capital here, you stand to lose too much if the stock market tanks and / or interest rate shoots up like it is now and you'd be forced to liquidate one or both asset. However, if you're investing in a rental property, it'd be smart to be negatively geared, and invest your cash in shares rather than putting it towards the loan. The risk here is lower because you're mainly investing, rather than building capital. Assuming you already have equity in another property that you live in, you wouldn't be too fussed about short term stock market dips or interest rate rises, provided you're not overly negatively geared. Edit: disclaimer: I'm not a financial advisor and this is not financial advice. General personal view only. Please see a professional financial advisor for advice tailored to your own circumstances.

The reason why you put more down is about keeping debt payments to sustainable levels relative to income. Its a strategy that minimizes debt in your life.

10% on average then proceeds to calculate 10% every year guaranteed

Or... you invest in the stock market and lose it...and still pay the extra money in interest on the home.

Historically means that you tend to win, but when you are losing, you lose bad. Very few people have the nerves to withstand losses, hence they’ll make further mistakes. But the loan will be there no matter what.

Some people say this is the way to go others say pay your house off. I will pay the house off first

Interesting... I wish I can do 3.5% and PMI and invest properly...

Dear god please anyone watching this, do not listen to this man. This idea is only good if you are already rich AF.

If you knew your way around the stock market, maybe. But sadly, not a lot of people do, and a lot of people think they do when they are not.

now that he threw $82000 into the stockmarket moneypit gambling machine he will have to figure out where he will find that monthly expense that will haunt him every month with high interest. I will sleep good being poor and have a simple family life.

I'd put the 20% down, then invest some of the monthly savings into the market instead. Shit gets rough, you have more liquid on a constant basis.

Good idea doing this right before the recessions

Awesome!!! I'm gna do this with the extra 80 thousand dollars I have laying around....

Everyone saying you'll go bankrupt isn't getting it or just scared of losing money.

In the end it comes down to the yield your investment makes and the risk you are willing to take.

Except NOOOOOO ONNNNEEEEE follows through and invests the difference.

Great advice assuming you’ll make gains from the stock market

This is great, IF you always get that return. Otherwise that house of cards will come crumbling down

You are right. But this only work for people who are financially savvy and disciplined. Negative comments are from people who lack both and operate from a position of fear and scarcity. That’s why the 1% rule over 99%. Becoming rich also requires taking risks AKA courage.

It’s a lot smarter to use the 3.5% loan to purchase multiple rental properties that pay themselves off.

“Historically” is where he would go wrong

And when the market crashes and your house drops in value - which it will at sone point in a 30 year span - you’ll be over-leveraged and bankrupt. I’m old and a RE broker. Seen it happen many times before.

You can actually take out that loan at 3.5% on a multi-unit (4 max) and rent out the 3 other apartments. There are some caveats, but this is one of the ways to (moderately) sustainable passive income.

👋 Shawn, you fail you mention one😁 Major thing, which is that at some point after year or so your property gains value...Hoping the market does well, that's when you can 🔥refinance to