Many people think this is ridiculous, however, you may already be doing this without knowing it. When you buy real estate, you will typically have a mortgage in which the bank is acting as your money partner. For example, if you contribute 20% of the value (downpayment), they will provide the remaining 80% of the value in return for repayment of the loan plus interest. If your property appreciates in value, it appreciates on the full 100%, not just on the 20% you put in. In the end, the bank doesn’t ask for any of the appreciation on their 80%. This is what is known as leverage. When a market is appreciating, you are using the banks money to make money. Try asking the bank to provide 80% of a stock. They will look at you like you are crazy.
The only way they may consider this, is if you back the loan with a hard asset such as real estate. The bank invests as your partner in real estate because it is a tangible asset that is proven to be secure and holds value over the long term.
