most TT landlords already long put and long call in their levered RE investment. a mortgage has two built-in options:
1. a put that allows the borrower to walk away when price of the property drops ("put" depreciated property back to the bank);
2. a call that allows the borrower to cancel an expensive existing mortgage loan with high coupon and replace it with a low rate loan with same balance when interest rate drops.
just my 2c.
1. a put that allows the borrower to walk away when price of the property drops ("put" depreciated property back to the bank);
2. a call that allows the borrower to cancel an expensive existing mortgage loan with high coupon and replace it with a low rate loan with same balance when interest rate drops.
just my 2c.