If you leverage $1M, you can buy a $3M commercial IP that makes 8% and costs you 7% (of the loan) including costs.
So this would get you $100k in the first year.
Very rough example, but it shows that it's plenty to live on.
Too many issues with this strategy the 3 obvious ones being:
- Too little income with a leveraged property
- One single point of failure. Over a 30 year time frame it's almost certain your CIP will experience a prolonged vacancy period with nil income but still paying interest.
- Over 30 years interest rates will exceed 8% at some stage.
Bankruptcy almost guaranteed.