Posts Tagged ‘equity’

Michael Lewis: Home Without Equity

Posted by admin on Monday, June 12, 2023

Meaning of Michael Lewis Money Quote: saying house payments are as good as rent if no equity is accumulated. Michael Lewis said:

 
A Home without Equity Is Just a Rental with Debt Quote
 

“A Home without Equity Is Just a Rental with Debt” — Michael Lewis

 

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This quote from Michael Lewis suggests that a home purchased with little or no equity built up is essentially functioning like a rental property, except with the added burden of mortgage debt that must be serviced. Some key points in interpreting his perspective:

  • Lewis implies that if a homeowner has put little of their own money into the property through low or no down payment, they are really just renting from the bank through mortgage payments rather than truly owning the asset.
  • He portrays taking on a large loan-to-value mortgage as leaving the homeowner with the costs and responsibilities of ownership but few of the benefits since they have little personal financial stake in the property beyond obligation of debt.
  • However, building equity takes time and responsible use of mortgage debt allows many families to access stable, affordable housing. Reasonable experts disagree on the impacts of various levels of home loan leverage.
  • A balanced interpretation is that the quote reflects Lewis’ caution around high-debt home purchases, but the best path for individuals depends on their priorities, budgets, market conditions and how mortgages fit into a holistic long-term financial strategy.

Warren Buffett: Trump Terrific at Borrowing

Posted by admin on Sunday, July 1, 2018

Warren Buffett Money Quote saying Donald Trump is more interested in ostentatious display than equity and fairness in real estate and got overextended. Warren Buffett said:
 
 
Trump Overpaid for Properties, got people to lend money, never any real Equity  Quote
 

“Where did Donald Trump go wrong? The big problem with Donald Trump was he never went right. He basically overpaid for properties, but he got people to lend him the money. He was terrific at borrowing money. If you look at his assets, and what he paid for them, and what he borrowed to get them, there was never any real equity there” — Warren Buffett

 

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In this quote, Warren Buffett is criticizing Donald Trump’s past business practices related to borrowing money. Buffett says that Trump became too focused on how much money he could borrow from lenders, without properly considering whether he would be able to repay what he owed.

According to Buffett, this over-reliance on borrowed funds, or “leverage,” ultimately led to some of Trump’s business failures. Overall, Buffett is warning about the risks of taking on too much debt without having a clear plan for how to service and repay that debt over time.

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