Comments on: Equity Management Is Overrated

By: Arizona Mortgage Guru » Equity Management Counterarguments

Arizona Mortgage Guru » Equity Management Counterarguments — Thu, 28 Feb 2008 20:18:50 +0000

[...] craked out to be. I also wrote a post on AgentGenius.com (a national real estate magazine) that equity management is overrated. I can’t say these articles have caused a firestorm, but proponents have come out and made [...]

By: agentgenius.com- national real estate opinion column » Blog Archive » Equity Management is Misunderstood

Wed, 27 Feb 2008 14:20:08 +0000

[...] couple of weeks ago, Shailesh (fellow genius) wrote about how equity management is overrated. Personally, I think it is underrated as it is often misunderstood. As many believe, he went on [...]

By: Brian Brady

Brian Brady — Fri, 15 Feb 2008 03:09:39 +0000

Shailesh,

Equity management, as a name, may be “new”, the principle is not. I’ve practiced it since 1990 and it’s served me well. I have a leveraged home and enough cash to pay off the mortgage with a click of the mouse and a 3 day wait.

I think the problem is that we have unsophisticated originators talking to unsophisticated customers about a strategy that is a little more complicated than the brother a vs. brother b demonstration.

However, when properly implemented by a mortgage originator, a stockbroker, a CPA, and an insurance agent, any argument against the strategy (no matter what you call it) is defeated. I’ve heard critics claim that the strategy doesn’t work in a depression; trust me- neither does owning real estate, regardless of the mortgage

By: Benjamin Bach

Benjamin Bach — Thu, 14 Feb 2008 02:45:42 +0000

If you only play defence, you’ll never score a goal. You need a good defence, and a good offence.

By: Shailesh Ghimire

Shailesh Ghimire — Wed, 13 Feb 2008 22:57:53 +0000

Benjamin and Robert,

Great points. It is all about education and making sure it makes sense. However, my nervousness has to do with placing your house on the line. On paper whole thing makes sense, but with the way things can change overnight, it’s too risky and for most people it makes little sense. I’m fearful of the guys who have been calling me up wanting me to send them my borrowers so they can do a life insurance product for them with all their home equity. Sounds like a guy with a hammer that sees everything as nails.

Education, assessment, understanding risk and your personal risk level is what it’s all about. When it comes to investments, I firmly believe you have to play both offence and defense. Playing offence with your home when your home should be a surefire defense, that is what bothers me the most.

Thanks for your comments guys!

By: Robert D. Ashby

Robert D. Ashby — Wed, 13 Feb 2008 21:57:10 +0000

I agree with what Benjamin stated and I have yet to have anyone who is educated tell me that it is overrated, rather they say the word needs to get out about what it equity management truly is.

Equity Management goes beyond simply taking cash out and investing, it is incorporating your home’s equity into your overall financial and investment plans. I am a conservative guy as well and would not “bet my house” either. Equity Management keeps you from “betting”, but rather balancing to provide a better chance of attaining financial goals.

By: Benjamin Bach

Benjamin Bach — Wed, 13 Feb 2008 20:03:46 +0000

Shailesh, I think what it comes down to is educating yourself about all the investments you’re making.
Taking underperforming equity out of a home to invest in a positive leverage situation can create massive returns for an investor – and if they aren’t careful, losses.

As Buffett says, education mitigates risk. My clients are educated, and do very well using home equity to invest in appreciating assets.

BenjaminBach.com