JayZ and Beyonce bought a house "all cash."
Pinned by FinanceVaults
@everyneed3959 explained it here:
For those who don’t understand let me explain:
1.) Jay Z and Beyoncé have $200 million dollars worth of assets. This can be stocks, bonds, etc. the assets have to be something the banks are interested in and I’m sure those 2 have strong relationships with their banks. I also wouldn’t be surprised if they put up their music masters as collateral as that’s something that could be very valuable to banks (tho I highly doubt this but it’s something to think about lol)
2.) jay Z and Beyoncé asks the bank for a $200 million dollar cash loan and uses their assists as collateral. So if they don’t pay back the loan then the bank gets to sell off their assets to pay off the loan for them. Jay z and Beyoncé are basically saying “hey if I don’t pay back this $200 mill you can have all these assets to cover the loan” and the banks are like “bet say less”
3.) Jay Z and Beyoncé now have $200 million dollars in cash but keep in mind it’s a loan still. They use the cash to pay for a $200 million dollar house IN FULL! They own 100% equity in the property. Equity is the value of the property vs. how much you owe. If you pay off the full value of the property then you don’t owe anything and that means you have 100% equity.
4.) Jay Z and Beyoncé now refinance the property, or get a mortgage. This is just a fancy way of saying they got a loan AGAIN and used the house they now 100% own as collateral. They did the same thing twice, only difference is the type of assets. When you use a house as collateral they call it a mortgage/refinancing. The only main difference is the terminology. So now they got another $200 million dollars cash
5.) Jay Z and Beyoncé now uses the refinance money, or new loan, to pay off the first loan fully. And now they are making payments towards the new property since they refinanced the house. This new refinance term, or new mortgage, has wayyy better rates and i am willing to bet their interest rate is 1% or even lower if that’s possible. And they can write off the interest payments on their taxes, lowering their taxable income. The main reason why they would do this is so that they have cash in hand without selling their assets. If all your “money” is in investments it might not be a good idea to pull your money out of them to then use them to buy stuff. It would be wiser to get a loan against your investments and use your investments as collateral instead. That way your money KEEPS GROWING in investments and you have cash ready to then buy more investments. If you have any questions lmk below. Thumbs up so ppl see.