Borrowing money to own real estate does NOT make sense when

The reasoning behind selecting that the scenario where the borrower has no reliable source of income to repay the loan does not make sense for borrowing money to own real estate lies in the fundamental principle of lending. Mortgage lenders require borrowers to have a steady income to ensure that they can meet their repayment obligations. Without a dependable income, the risk of default increases significantly as the borrower may struggle to make monthly payments.

When borrowers lack reliable income, they may find it difficult to secure financing, given that lenders prioritize the ability to repay when evaluating mortgage applications. Additionally, the absence of income may also leave the borrower in a financially precarious position, making real estate ownership impractical, as they risk losing the property through foreclosure if they cannot afford to keep up with payments.

In contrast, the other options all present situations where borrowing could still be rational or beneficial. For instance, positive leverage can enhance returns, many cannot pay all cash, and the tax implications on loan proceeds do not directly negate the ability to borrow.