Most investors aren’t aware they can actually get paid to borrow. This is because appreciation on income properties tends to rise higher than the average rate of inflation. Also, it’s possible to rent out income property so the tenant can pay debt on the mortgage, allowing investors to acquire an asset while gaining income. Here’s a little more about getting paid to
When a lot of investors begin owning property, they become disillusioned into thinking that caring for a property is too much work. Yes, it does involve some work. However, direct management of diversified income properties can be managed by a management company. The rest isn’t as intimidating as one might think.
Getting Paid to Borrow Money
Say someone bought a median price home in 1972 for $18,000. This person gets an 80% loan and puts 20% down on it. The mortgage amount in 1972 would be $14,614. This is a thirty year fixed rate with a monthly payment of around $101 and a tax bracket of 33%. Keep in mind that in 1972, a dollar was actually worth a dollar.
Inflation is Real
Jason Hartman believes the government has a real incentive to have the population think inflation is lower than it really is. Why? They want us to buy more. In certain countries, such as the Weimar Republic and Zimbabwe, the inflation got so high that the local currency was essentially worthless. In Zimbabwe, for instance, people needed an armful of paper money just to buy a loaf of bread. This isn’t impossible in the U.S. either. Inflation is a real thing.
The reason the government loves to understate inflation is because entitlement programs and government salaries are all indexed to inflation. Social security payments will go up with inflation, and government employees get a raise based on the rate of inflation. If they have us believe the rate of inflation is 3% instead of 5%, they get a better deal.
Appreciation Rises with Inflation
The average inflation rate is around 5.1%, a property must also appreciate in value at that same 5.1% rate just to stay even. As Jason Hartman teaches, appreciation rates on income property usually rise even faster (the past few years being the exception). Income property tends to appreciate faster than inflation, which is part of the reason it remains such a great hedge against inflation.
Now is a great time to get paid to borrow with Jason Hartman’s investment strategies. Take advantage of recessionary low cost properties, and keep a close eye
on the market to guarantee a secure financial future. (Top Image: Flickr | 401(K) 2012)
The Young Wealth Team