in the world of Black and White there is Debt and Equity.Imagine...

in the world of Black and White there is Debt and Equity.

Imagine you found "renovators Delight" which after doing all hard work would return 10%.

You have done all numbers but have no equity to secure the 6% loan from the Banks.

Somebody is offering 100% finance @6.5% but wants 64% equity in the house as a compensation, you may think it is a rip off.

But there is no better deal so you go ahead and take $1 000 000, buy the wreck of the house and do it up.

All rent goes to the investor and 20 years later house is worth $3 000 000, fully payed off.

You have the $1 000 000 your share and the other investor has $2 000 000 assigned to his name.


Was he very generous or crazy providing you with a "free" money ??