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From: johnl@ima.UUCP
Newsgroups: net.invest
Subject: Re: Mortgage Down Payments and Good Inve
Message-ID: <109000016@ima.UUCP>
Date: Thu, 21-Nov-85 10:43:00 EST
Article-I.D.: ima.109000016
Posted: Thu Nov 21 10:43:00 1985
Date-Received: Sat, 23-Nov-85 11:05:34 EST
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Nf-From: ima!johnl    Nov 21 10:43:00 1985


/* Written  4:26 pm  Nov 18, 1985 by morse@leadsv in ima:net.invest */
> How much income do you derive from equity in your house?  None.  That money
> should be invested in some way.

Not quite.  The income you get is the interest you don't pay on a larger
mortgage than you'd otherwise have.  This is real money, as anybody who
has a $100,000 mortgage can tell you.

Limited real estate partnerships have their charms, but they also have
serious risks.  The first thing to keep in mind is that they have wonderful
tax benefits if you're in a really high tax bracket, and correspondingly
less wonderful benefits if you're in a lower bracket.  The other thing is
that they're extremely illiquid.  If your real estate deal runs 10 years and
you need to get out in 5 years, you're lucky to get 50% of what you put in.
(I know people who make a bundle picking up these slightly used partnerships
and waiting them out, in fact.)  Oh yes, and if the deal you get into is a
lousy one, as most of the ones available to small investors are, you may not
get your money back even after 10 years.  I wouldn't touch a public real
estate partnership -- they all smell like sucker deals to me.

Sceptically,
John Levine, ima!johnl

PS:  In case you wondered if I'm sincere, I cashed in most of my other
investments and put down over 50% of the purchase price of my house when
I bought it 4 years ago.