Anyone who is interested in creating wealth for the future should be made aware of the stages of wealth creation. Knowing the stages of creating wealth in regards to income property, along with the proper strategies, is imperative to a successful investment future. Here are the stages of wealth creation as Jason Hartman defines them.
Stage 1: Launch and “Stocking Up”
The first stage of wealth creation can be called the “launch” stage. In this stage, it's important to stock up on things like:
- High quality debt
- Fixed-rate debt
- Long-term debt
- Investment grade debt
All of these things need to be attached to hard commodities which are in demand universally. Constructive debt on these commodities is the asset. It's unfortunate, but most people believe debt is a liability. It's not, unless you have consumer debt. Investment (constructive) debt is an asset. We have an opportunity right now to invest in good debt because interest rates are low, and we should take it.
Stage 2: Have Time on Your Side
stage is all about time, and letting it be on your side. To do this, let time go by and enjoy increasing rents, appreciation, and tax savings throughout the year. Use the “Refi Till Ya Die” program taught by Jason Hartman, and you can find financial freedom
, though you will have to keep extracting equity.
How long does a house generally last? Jason Hartman estimates about 60 years, before going into a major remodeling job. For this reason,
lock in the cost of construction for 6 decades, and lock in the cost of borrowing for three decades.
If you invest in commodities with universal demand, everyone will need what you have, but what you have will become more expensive to build. Remember inflation? Although income property will become more expensive to build, the dollar is gradually devaluing. Also, fixed-rate debt will be easier to pay.
For instance, if you were to buy a home in 1976, you might pay around $62,500. The mortgage payment may be around $416, and at the time, that might seem stressful. Fast forward into the future, and you may be able to rent
the home for around $2,300. Suddenly $416 doesn't seem so stressful because inflation has diminished the value of the debt.
By knowing the stages of wealth creation, it's possible to create stable financial future. Think of the stages in combination with proper income property investment strategies, and you'll find an effective way to build sustainable wealth. (Top Image: Flickr | Images_of_Money)
The Jason Hartman Foundation