If housing prices are rising by 20 percent per year, you can borrow money at 5 percent per year, and you are sure housing prices will continue to rise in the future, you would be wise to:

Question

Quizplus · Accepted Answer

Buying as many houses as you can is wise in this scenario because the appreciation rate of the houses (20 percent per year) significantly exceeds the borrowing cost (5 percent per year). This means the value of the houses you buy will increase much faster than the cost of the debt, leading to potential profit.

If Housing Prices Are Rising by 20 Percent Per Year