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Inflation and Your Real Estate Investment

Not only is Real Estate the best hedge against inflation, it can also increase your profits.

©2009 Bob Sharpe
C.E.O., RealEstateWinners.com

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Welcome to 2009! Suddenly we're living in a different world. It seems as if the only certainty is uncertainty. Even so, some things are certain:

  1. With the new massive spending bill, our government is burning through more money faster than any nation in all of human history.
  2. Our exploding national debt will affect our economy for decades.
  3. We can expect to consequences:
    1. We will have higher taxes
    2. We will see higher inflation as the Federal Reserve will print more and more money to help cope with the national debt.

Real Estate Is Your Best Hedge Against Inflation

Even though most real estate in the U.S. has gone down considerably from 2007 to 2009, it always goes up - long term - in high demand areas. Over the past 60 years, it has gone up approximately 90% of the time.

Good real estate almost always rises faster than the rate of inflation.

Inflation Increases Your Return on Investment 

Many experts agree that we are facing more inflation for a longer period of time than we have ever had in our history.

Let's say you purchase a $150,000 investment property today with 20% down. Your $120,000 loan requires mortgage payments of $739 a month in today's dollars.

If inflation is 10% a year - a likely scenario in the near future - you are making your house payments with cheaper dollars. It's like getting a 10% discount on your mortgage payments! You'll benefit from that 10% "discount" until your property is paid off.

Let's suppose inflation continues at 10% for a few years - another likely scenario. As dollars get cheaper and cheaper, your mortgage payments are effectively going down.

If inflation runs 10% for 4 years, your mortgage payments will look like this:

  • This year - $739 in today's dollars
  • Year 2   -   $665 in today's dollars
  • Year 3   -   $599 in today's dollars
  • Year 4   -   $539 in today's dollars
  • Year 5   -   $485 in today's dollars - that's a $254 monthly "discount" on mortgage payments!

No other investment allows you to profit from inflation like real estate.

 

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The  
$1,000,000
Strategy

  2. Buy your own house. 
  3. Purchase an investment house.
  4. Buy several more investment properties as you are able.
  5. After about 10 years sell your houses and purchase an apartment complex.

Where to Find the Money to Invest

  1. Your savings account.
  2. Your home equity.
  3. Cut back on unnecessary expenditures and save the money.  Use the Calculators.
  4. Start a part-time home business.
  5. Upgrade your IRA to purchase Real Estate.

 

 

Disclaimer

Real Estate has historically been the safest and most profitable vehicle for investment. However, there is no such thing as investment without risk, even in Real Estate. All numbers and estimations given by us – electronically, orally or in print – are based on the information that was given to us by real estate developers and by our research of investment publications, trade publications and other expert business sources. We can use historical precedent and current market conditions and trends to project future expectations. However, no projection is ever a guarantee of future profitability. We strongly recommend investors to carefully inspect the available properties and to do their own research before investing. It is always advisable to consult a licensed professional before purchasing property. Also, in order to know the tax benefits a particular property will bring, the investor should consult a professional tax advisor who specializes in working with Real Estate investors.