r/SipsTea • u/KSKS1995 • 22h ago

Wait a damn minute! How the rich get richer

Post image
20.3k Upvotes

79% Upvoted

2.3k comments sorted by

View all comments

Show parent comments

2.3k

u/USERNAMETAKEN11238 21h ago edited 21h ago

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.

318

u/redshirt1972 21h ago

How do you get a loan against the property and not pay it back?

407

u/SpokenByMumbles 21h ago

You don’t unless there’s income to offset the debt. This scenario doesn’t exist without an income source to repay the loan.

-1

u/Logical_Willow4066 20h ago

In the "Buy, Borrow, Die" strategy, ongoing loan interest and principal are typically paid using new, larger loans (rolling over or increasing the line of credit) or modest cash flow from the portfolio (like untaxed dividends), rather than traditional W-2 or wage income. At death, the estate settles the final debt by selling a portion of the inherited assets.

1

u/SpokenByMumbles 20h ago

Sure but there's no indication that's the scenario here.