Realty411 Magazine Featuring OCG Properties - Part Two | Page 14

Invest
Investment Vampires
for the Next Decade
in YOU
he ten years ahead of us will be
extremely difficult for investors.
Yield and growth will be scarce,
but much worse will be the four
vampires waiting to suck the life out of
almost every investment you consider. In
this article, we will meet each vampire in-
dividually, understand how they drain your
investments dry and learn about some “in-
vesting garlic” that can keep them away.
Realty411 Wealth
Real Estate
A Resource Guide for Investors
www.realty411guide.com | Vol. 3 • No. 2 • 2010
Tips for Long-Distance
LANDLORDING
Vol. 1 • No. 1 • 2010
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Turn-Key Rentals
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Mathew Owens, CPA, owner of
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Inflation: the First Investment Vampire.
If you remember President Gerald Ford
then you may remember his “Whip Infla-
tion Now” campaign, created to fight infla-
tion climbing over 10%. Eventually
inflation reached over 14%
annually in 1980, usher-
ing in years of stagfla-
tion—high inflation
combined with high
unemployment. In
only five years the
value of invest-
ments dropped by
50% and the dollar
lost almost 75% of
its purchasing power
during that decade.
This year, with unem-
ployment and underem-
ployment already approaching
25%, the nation is poised to see a replay of
those difficult years.
To estimate the curve of inflation in this
new decade, we need a basic understand-
ing of the causes of inflation. Noble Prize
winning economist Milton Friedman said it
best, “Inflation is always and everywhere
a monetary phenomenon.” In other words,
when the Federal Reserve prints more
money than the economy can absorb, the
economy catches a bad case of inflation in
the next 12-24 months.
The money supply exploded in 2009. It
doubled in the space of a few months and
then grew another 50% in the next year.
Since the economy has not grown by
150% in the past two years, all this money
is waiting in bank vaults to drive signifi-
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by Richard Barrett
T
Never Miss an Issue!

PAGE 14 • 2010

cant inflation soon. Experts argue that de-
flation is the bigger risk. While that may
be true, it does not make inflation any less
destructive when it starts nibbling at your
investments.
Garlic to Protect Your investments from
the Inflation Vampire
To protect against the corrosive power of
inflation, you need investing vehicles with
three specific features:
•Asset value that tracks inflation.
•Asset income that tracks inflation.
•Asset that has considerable leverage.
It’s no surprise that investment real es-
tate has all three of these critical features.
In general real estate values track
inflation. That is, their value
remains constant or appre-
ciates even as the value
of each dollar declines.
Likewise, the income—
rent—from investment
property tends to track
inflation. And finally,
you can leverage your
investment asset.
But Not Just Any Real
Estate!
In truth, most real estate does
not deliver these three critical fea-
tures. The past few years, have seen crush-
ing drops in the price of condos in Miami,
almost any property in Detroit, suburban
tract homes in Phoenix, plus office tow-
ers and shopping malls across the country.
Buying investment property takes effort,
considerable research and a team of ex-
perts working to assist you. With the right
guidance and team in place, an investor
will never have to worry about those evil
investment vampires.
Richard Barrett is CEO of RBS Homes
(www.RBSHomes.com). With offices
based in California and Texas, RBS Homes
provide investment properties with these
three critical factors in place.

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