$6 Hours to Make $200,000, Using Other People's Money

D
David_S_Meng
楼主 (文学城)

I would like to share a small method.  This year, my wife and I borrowed money from the banks using our real estate properties, via line of credit and cash-out refi.  We invested the cash in an SP 500 index fund. It is all lenders’ money, not our own money.  This is using other people’s money.

Our SP 500 account is currently up with a profit of about $240,000. 

The expenses included interest payments to the banks and closing costs for refi, which total less than $40,000. 

So, the net profit in this SP 500 account in 2020 so far is more than $200,000.

The SP 500 will go up and down.  It may decline tomorrow.  But in the long term, it returns about 10% annually.

The $200,000 in our SP 500 account is a small profit, compared to the big successful investors on Wenxuecity.  A few of them do very well, and I respect them.

But this small method is simple and suitable for the ordinary people.  The total time that I have spent on this is less than 6 hours, including emailing documents to the bank, the time to do closing for the refi, and doing some clicks on my computer to buy an SP 500 index fund.

I think that spending 6 hours and making $200,000 is not bad for the ordinary people.

Furthermore, this 6 hours are a one-time event.  If in the next ten years the profit in this SP 500 account grows to $1 million, the total time that I spend is still 6 hours.

Hope this small example will inspire the ordinary people with houses and rental properties to use line of credit or cash-out refi to use the lender’s money to grow more wealth, passively, by spending only a few hours of time.  In the long-term, the SP 500 should grow much faster than the super low interest rate right now.

By David Meng, author of the book “$5 Million in 8 Years: Real Estate Investing on the Side.”

 

k
kitfrommars
太误导,且不说现在cash out refi根本不可能六小时搞定,股市赚钱你拿来说,亏钱的时候呢?
D
David_S_Meng
Yes you have to wait for a couple of months. But my time is less
D
David_S_Meng
but my time is less than 6 hours.
D
David_S_Meng
The key is long term. SP500 returns about 10%, long-term average
j
jjj7
very good. That's what I am doing
D
David_S_Meng
Please see my previous posts. It is explained there.
D
David_S_Meng
Very well. Good luck to you.
r
rapidestate
你写半天其实就是想卖你的书。
宁静的自由人
第一标题党。第二miss leading
a
alpha123
既然那么赚钱,还在乎卖书。呵呵。
闲来无事事
我也应该写本书,$6 Million in 2 Years

not joking. it's real

j
jjj7
楼主的中心思想还是很对的

不要光看标题,可能有些误解他的中心思想趁着现在利息低,借钱出来做别的投资是非常正确的。

D
David_S_Meng
书确实不赚钱,但是能帮到几个人,还是值得。
D
David_S_Meng
It's not misleading. It is true. It indeed can be done.
D
David_S_Meng
Thank you. It's a true method that people can use
D
David_S_Meng
people can use to make significant money passively.
G
G&G妈
这里的人都喜欢用中文,做广告在这里要用中文
h
hhtt
期待你的书,你就是把书写出来了,也就是第二名!第一名还是楼主,他的赚钱速度是一年292M(=6小时20万)?
喜喜哈哈
真的吗? 和我一起抄股票的几个

从房子里借钱炒, 不知道房子后来有没有被收走。 不过他们不是很LUCKY, 是在倒霉的2008年。。

D
David_S_Meng
He is better. I am an ordinary person with a practical method fo
D
David_S_Meng
with a practical method for the ordinary people.
D
David_S_Meng
You have a good point. I don't trade stocks. I use SP500, long-t
D
David_S_Meng
Hold for the long-term, and dollar cost average.
a
alpha123
Thanks for sharing ! 我看了上面的帖子,觉得楼主还是很诚恳的。
喜喜哈哈
No, that is not my point.

I don't think a lot of people survived in 2008 to borrow money from the house to put it in the stock market.

That is a very risky move. Now you are lucky since the market just makes a new high.

The more people have this kind of the thought like you do, the more cautious we should be towards the stock market.

 

D
David_S_Meng
For example:

To illustrate the point:

2020, do cash-out refi on house A, put the cash into SP500.

2021, do cash-out refi on house B, put the cash into SP500.

2022, do cash-out refi on house C, put the cash into SP500.

2023, do cash-out refi on house D, put the cash into SP500.

Etc.

 

D
David_S_Meng
Please see my "For example" above. Dollar cost averaging. Thanks
k
kitfrommars
你这个观点很对,可是楼主的例子比较误导,而且cashout refi的钱当然是自己的钱,又不是不用还
宁静的自由人
你这是叫别人从房子里贷款去炒股。炒得好的挣了,不好的房子就亏掉了。bad idea。
D
David_S_Meng
Thanks. Regarding the book, I first wrote it for my kids who stu

I wrote the book "$5 Million in 8 Years" for my three kids.  My wife and I have three kids.  Two graduated from business school and are working.  One is still in business school.  They liked the book and said that I should publish it.  So I added a few more chapters to make it more complete.  My son published the book on Amazon, because I did not know how to do it.  Amazon takes a big cut, and the money that I have received is truly negligible.  But there are some people who have posted book reviews on Amazon, such as life-changing and one of the best books, showing that the book benefitd them and helped them.  Therefore, it was worth the effort. 

D
David_S_Meng
It's not misleading. The $200,000 is net profit. If I

If I pay back all the loan to the banks, I still have the $200,000 left in my pocket.  If after 10 years I have a net profit of $1 million in my SP 500, then I pay back all the loans to the banks, and I still have $1 million profit. 

 

D
David_S_Meng
Please see my "For example" below. Two keys
D
David_S_Meng
(1). Dollar cost averaging. (2). Long-term
c
cczz
等SP500 跌十年,看你还能顶住否?
c
cczz
等SP500 跌十年,看你还能顶住否?
圆老扁
银行真傻,只赚几文利息,大钱都留给大家赚!
D
David_S_Meng
Yes, I plan to keep buying and hold for two decades. It will

It will revert to the long-term historic average return.

 

D
David_S_Meng
Yes, I plan to keep buying and hold for two decades. It will

It will revert to the long-term historic average return.

 

D
David_S_Meng
"SP500 跌十年" has never happened before. Please see list:

SP 500 Index Annual Rate of Return

1965    10.0

1966    -11.7

1967    30.9

1968    11.0

1969    -8.4

1970    3.9

1971    14.6

1972    18.9

1973    -14.8

1974    -26.4

1975    37.2

1976    23.6

1977    -7.4

1978    6.4

1979    18.2

1980    32.3

1981    -5.0

1982    21.4

1983    22.4

1984    6.1

1985    31.6

1986    18.6

1987    5.1

1988    16.6

1989    31.7

1990    -3.1

1991    30.5

1992    7.6

1993    10.1

1994    1.3

1995    37.6

1996    23.0

1997    33.4

1998    28.6

1999    21.0

2000    -9.1

2001    -11.9

2002    -22.1

2003    28.7

2004    10.9

2005    4.9

2006    15.8

2007    5.5

2008    -37.0

2009    26.5

2010    15.1

2011    2.1

2012    16.0

2013    32.4

2014    13.7

2015    1.4

2016    12.0

2017    21.8

2018    -4.4

2019    31.5

Average Compounded Annual Rate of Return of SP 500 (1965-2019) = 10.0%.

(By David Meng, author of book "$5 Million in 8 Years")

 

j
jjj7
出现的可能非常小
h
happyEstate
在利息地点cash out是一个好主意,不过我可能不会放在股市里,而是寻找合适的房产投资机会
h
hz82000
这个就看你是否相信美国的经济了,投资有风险,不投资风险更大
n
nyc2002
to disclosure return is better

could you let us know the return rate? this will provide a better picture. thank you for the idea.

c
crbeenuaa
还不如投指数年金

也是跟踪sp500,但保底,比你这个稳多了。

当股市大跌你看着你的钱少一半的时候,你就坐不住了。

想买指数年金的私信我可以推荐。

D
David_S_Meng
Yes I agree with you that real estate has higher return. My wife

My wife and I have 15 properties and feel that it is enough for us, at least for now.  That is why we put money into SP 500 as passive investment.  But you are right, real estate with leverage grows wealth faster.  Mine is about 27% annually as shown in my book "$5 Million in 8 Years."  Thanks for sharing.

D
David_S_Meng
Yes, sure, my SP500 return is 23% so far in 2020.
D
David_S_Meng
Our real estate has been about 27% per year in

in average as shown in my book "$5 Million in 8 Years".  Our SP 500 return of 23% in 2020 got lucky this year.  And 2020 is not over yet, so it can still drop some.  Real estate with leverage can return better.

 

D
David_S_Meng
Good point: 不投资风险更大
j
julie116
指数市场推广的差不多了。造就了很多新秀
天下攘攘
现在利率低,不能慢慢一年cash out一个

以后利率会涨吧?

我感觉应该cash out 所有的房子现在,然后投入一部分股票(1/3?),一部分房产(2/3?)

j
julie116
石油从没跌过这么久。用病毒演绎理念指导投资比较好。长持的sitting duck 都赚不了
b
blogcity
spy最高/最低也没有翻倍,你的spy怎么翻6倍的
D
David_S_Meng
翻6倍 from 0.8 m to 5.5 M was mostly in real estate, not SP500

That was mostly real estate.  With real estate using leverage, yes that can be achieved.  The SP 500 that I posted about was only $200,000 profit, not 6 folds.

 

 

b
blogcity
你自己写的:今年spy 4万成本,赚到24万。怎么做到的?
D
David_S_Meng
Where did you see "今年spy 4万成本"? We used line of credit and

We used line of credit and cash-out refi on our properties, and put in about $1 million in SP 500.  I clearly said that our return so far this year was 23%.  The "spy 4万成本" would be way too small for line of credit and cash-out refi.

 

C
Coco_lau
今年的SP 500 3/18/2020 买入大约是2448.,现在是3557,一股赚$11190, 今年如果买200股,cost
D
David_S_Meng
Please see my response

Yes you are right, the interest rate is very low right now. But the lenders would not approve more refi for us right now. We have to wait for more principal reduction due to paying mortgages every month, and more housing price appreciation, and then do more refi.  For example, this year, do refi on houses A and B.  Nest year, houses C and D, etc.  Thanks.