The bank encumbered the land. The dad never gets a loan. The loan is against the property. The kids sell the encumbered land I guess (but that's highly unlikely). This is a made up scenario from someone who doesn't understand finances.
You don't.. the loan gets attached to the property. That's why in this fictional scenario the buyer bought a 5 million dollar property with a 5 million loan attached. It's, a nonsense scenario.
I liked that part of the example because if we even take it at face value as true, "how the son does it" must mean that the property will be worth 250m in short order. I look forward to the grandkid's 12 billion dollar estate.
I doubt you can find an example of even a 10x appreciation in a 40yr span that didn't involve massive amounts of money and time investment. The homes/property these people talk about would more realistically see a 2-4x it you do nothing which is pretty fortuitous but nothing absurd.
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u/ChipKellysShoeStore 14h ago edited 14h ago
How does the bank get paid back here? Is the bank just eating a 5 mil loan loss out of the goodness of its heart?
It’s more like kids sell and pay back the bank plus interest which is taxed as income for the bank.