My brain is still completely tied in knots about bank bills and how you use them in property investing.
I'm imagining something like this:
You have a property debt-free. Hypothetically, let's say the property is valued at $500k. You take out a LOC against it for, say, $300k, at 5.5% interest.
You then buy a bank bill for $300k, (or $270k or something because of the discount to the face value?) at 3%. You use this bank bill to pay out your LOC. You now have no LOC, no available cash, and a bank bill that you're paying 3% on every time it rolls over.
Doesn't sound particularly useful. What am I missing?
Or can you buy a bank bill using equity and then use it like cash? E.g., same example, but use your equity to purchase $300k bank bill at 3% instead of LOC at 5.5%, and then use that bank bill as deposit on another property? Can you split a bank bill and use it as two deposits?
So confused.
I'm imagining something like this:
You have a property debt-free. Hypothetically, let's say the property is valued at $500k. You take out a LOC against it for, say, $300k, at 5.5% interest.
You then buy a bank bill for $300k, (or $270k or something because of the discount to the face value?) at 3%. You use this bank bill to pay out your LOC. You now have no LOC, no available cash, and a bank bill that you're paying 3% on every time it rolls over.
Doesn't sound particularly useful. What am I missing?
Or can you buy a bank bill using equity and then use it like cash? E.g., same example, but use your equity to purchase $300k bank bill at 3% instead of LOC at 5.5%, and then use that bank bill as deposit on another property? Can you split a bank bill and use it as two deposits?
So confused.