Most people we speak to in the real estate biz think that their home is their most valuable asset. Unless they live in a multi-family that generates positive cash flow they are seriously mistaken. Put quite simply an asset puts money in your pocket. If your house is costing you on a monthly basis how is this viewed as an asset? In my eyes, and in the opinion of many accomplished investors, your home is your greatest liability.
In order to truly become wealthy you need to have your assets generate enough passive income to surpass your monthly expenses. This is accomplished not only by investing the money you have but also lowering your expenses. That's why I feel that Pay Option ARMs are one of the best investment tools around. It will not only unlock equity and free up cash to invest but it will also lower your monthly expenses at the same time. Most people bash the Pay Option ARM program because there is deferred interest, yet those same people will advise their clients to perform a 1031 exchange.
A 1031 and an Option ARM are the same because you are choosing not to pay the goverment (or the bank) when the money is due. This gives the smart investor more cash to invest and generates a higher passive income. I think of the Option ARM as an "interest shelter" just like the 1031 is a tax shelter. In addition the Option ARM's deferred interest is a write off as it is paid down or at time of refinance or sale. This gives me more of a tax benefit at time of sale. Even though the principle balance increases it is still viewed as interest!!!