An Extra 5% from the Government

As I write this, mortgage rates are very low (circa 5%) and set to remain so thanks to the government. At the same time, the yield on Municipal (local government) Bonds is high (circa 10% in many states) and they’re TAX-FREE yields.

So, if you remortgage a property and use the cash to buy a Municipal Bond, you’re up 5%. That 5% is made thanks to it being tax-free, so that really is FREE MONEY from the government!

AND, you could argue that Muni Bonds are just as safe, if not safer than real estate so no extra risk. The bond experts PIMCO state: "…from 1970 to 2006 the default rate for munis has averaged 0.01% annually." "Even during the Great Depression, the average annual default rate was 1.8%, with 97% of the defaulted principal eventually recovered."

5% on say, $200,000 that you might borrow is $1,000 a month free money from the government.

Even better, check other sections to see how easily you could be sitting on that sum unexpectedly right now and suddenly get a virtually risk-free $1,000 a month!