Real Estate Specialist Offers Caution When Taking Second Mortgage to Invest in Bitcoin
Real estate specialist Simon Campbell of Bankforeclosuressale.com has cautioned homeowners against taking out a second mortgage on their homes to invest in the growing cryptocurrency space, particularly Bitcoin.
Campbell said that while it is within the rights of every homeowner to use their homes equity, investing in Bitcoin offer several risks. One of the main issues in digital currency investing is that the technology is still nascent and evolving. He added that are no historical data to analyze the performance of the new asset class.
“It’s important for homeowners with equity in their property to realize that they have options. It doesn’t make sense for everyone to use a second mortgage to purchase Bitcoin, but it’s an investment just like any other. There is risk involved, but at the same time there is a big upside that could pay off in a big way over the course of several months or years – or even quicker.”
Campbell made the statement as he noted an increased in the number of people taking out second mortgages, particularly when Bitcoin’s price jumped exponentially at the end of 2017. This may lead to financial disaster, given that buyers at peak prices have already lost around 65% of their investment in a month.
But the price of Bitcoin and other digital currencies are on a downward spiral since Friday. BTC slid below $8,000 on Monday and was trading at $6,227 on Tuesday, which industry insiders describe as the “panic mode level.”
Campbell went on:
“If considering investing alternatives such as cryptocurrencies, the foreclosure market still offers some excellent, affordable and tangible opportunities in cities such as foreclosures homes in Ohio, New Jersey, Miami among others.”
Understanding Bitcoin Risks
According to Campbell, investing in Bitcoin involves risks, the same as stock market and real estate portfolios. But compared to traditional investment instruments, virtual coins are riskier, he said adding that an investor is “taking a more prominent risk” with their money.
Homeowners have to take into account they are using the equity in their home to raise capital for their investment. If the portfolio plays out and delivers good returns, then the investment grows, and the house is secured. However, there could be a lot of concern if the cryptocurrency investment loses money. The homeowner may not be able to repay their loan, and this could lead to another round of foreclosures hitting the market.
“Every investment, regardless of the potential risk or reward, will always get people interested. This is particularly true with cryptocurrency, such as Bitcoin, because it’s so new to the world and its returns have been astonishing since its creation in January 2009. However, investors shouldn’t jump in feet first, assuming that Bitcoin growth will continue indefinitely.”