Christian Osgood argues for interest-only payments on real estate loans instead of paying down principal. He keeps a kilogram of silver to represent each property, funneling cash into a separate account to eventually pay off properties one at a time, eliminating risk without losing leverage across the portfolio.
Chapters
I drove to my vault today so I can prove to you that you should not pay your loans off over time. This kilogram of silver equals one property. These are a portfolio of properties. Now, traditionally, on an amortized note, you would pay each off over time. So over a series of years, eventually you'd pay off the note by parking money in each individual property. This is risky because if you default, you lose the money and the property. So keeping it levered actually reduces your risk. Now, we do want to pay off debt. Introducing interest only. Instead of paying off all the notes, I take all the cash and I put it in the side. This makes a huge side account. You may then use this money to pay off a property in full, one at a time, removing the risk from the table. This works as long as you do not take the principal money and spend it on something stupid. If you don't spend the principal on luxury items, you instead use it to pay off your debts in full, you have no debt, a ton of money, you've now won capitalism.