eatmoremeatnow t1_j9tveed wrote

A strategic default is when you have a loan on an asset but the loan costs more than that asset is worth so you stop paying the loan. With you not paying your loan it frees up money to do other things.

Example: If you have a $500k loan on a house that is worth $400k you stop paying your mortgage and live rent free for a year (while they evict you) to build up cash. Then rent a house across the street and wait a year or two and then buy another house and do it again.