How do you pay the loans back? What do you do when you run out of money?
I get another loan. I don’t really make a big salary. I own parts of companies and banks are more than happy to use that as collateral to lend me real money.
What do you use for the down payment?
Most people will borrow money that they don’t have. I have the money. It’s just locked up in equity. I don’t do down payments, and as long as the loan is still earning interest, the bank doesn’t really need their money back. Why call in my loan just to lend it back out to risky, poor people.
So you can just borrow billions until you’re dead?
As long as my net worth keeps going up.
What if it drops and you don’t have more collateral to give to the bank?
I would probably create a shell company to bail me out. If I can’t get creative, which is extremely rare, hopefully there is a favorable tax code, otherwise I might let the bank seize my assets that I used as collateral. Doesn’t that look bad, sure, but you don’t pay capital gains tax if you never realize the gain. But that’s a last resort.
Otherwise you just avoid taxes until you die and then the estate handled it.
That’s actually the best part. When I die, my assets get re evaluated on a step up cost basis.Basically what I paid for the assets gets reset to what they’re worth when I died. So no capital gains tax.