The heard mentality in equities and property is incredible. Property prices in Taiwan for example dipped 10-20% over the past 10 months from the peak and have rebounded by 20-30% over the past 3 months… just like that. Even today's stock market is just a juggernaut now, where when we were at sub 700 on the S&P, everybody was expecting us to go to 500.

At any rate, it's harder to get out of property in a down market than equities, as the bid ask spread is just that much wider. The property I buy is for the lifestyle I want to lead. And if it so happens i can cash out with a gain in 20 years, wonderful. But, I'm not counting on it, and neither should most people.

Best,

Sam

When I was a kid, in upper middle class America in the 1980's, they weren't called HELOC's, they were called "Second Mortgages." Somebody in the neighborhood who had gotten a "second mortgage" was whispered about in hushed tones as if he had filed for divorce.

"Do you know Richard and Helen took out a second mortgage?"

"Oh no! Really? Did he lose his job?"

"We're thinking his business must be way down."

"Well, I'm sure his drinking isn't helping."

"What a shame, how sad for the kids."

"I know, I feel terrible."

And this was in the 1980's, folks, I'm not even 30 yet.

And RB, you cite illiquidity as a reason house flipping can go horribly wrong. I think the real reason has more to do with extremely high leveraging more so than illiquidity. You can sell any house in a week for the right price; and the prices are not THAT volatile, certainly not as volatile in the short term as individual equities. But if you're leveraged 10 to 1, or more, then you might not be able to sell at all, which I guess makes it illiquid for you, but that's not the cause of the problem.

Using your HELOC to buy properties got people in a lot of trouble over the past few years. The property bought loses 20% of value, then your HELOC gets wiped out, yet u still have to pay the HELOC.

Don't hold back on your dreams apprentice, I'd would just find some other way to raise that money for your business i.e someone else's money! Use your HELOC to arbitrage your debt away, or make smart & necessary home remodeling choices.

Best,

Sam

I will consider the HELOC in the future and I agree that money should not be spent on material needs or impulse spending.