Always_Ask_Questions,
“I think this is bad math. It does not matter in a long-term, when you pay just interest or principal. There is cost of capital that you pay as interest and you are paying it regardless.”
I think this is bad following the argument. We’re not talking long term repayment of a bank loan with interest in a vacuum. CTLAWYER specifically said that his children paid him back for the houses he bought and/or flipped them for larger houses in 5-7 years, which is short term.
Let’s say Billy got a bank mortgage of $120,000 at 3.25% interest for his starter property, and Bob got $120,000 from his father as a zero-interest loan. And they pay the same, so Billy pays $522.25 a month in P&I, while Bob pays $522.25 a month to dad as just P. After 5 years, Billy has paid not quite $13,000 into the principal of his loan, while Bob has paid over $31,000 towards the principal. Who’s got more purchasing power to flip his house for a bigger one? Add to that the fact that Bob’s dad gave him a job right out of school and let him live rent-free with his wife in an apartment for a number of years, whereas Billy had to find his own job and pay rent, and you can see that CTLAWYER’s help is pretty substantial.