Increasing Inflation and Rates , Decreasing Dollar Value
The more money that is created together between the US Treasury and Federal Reserve , the lower the purchasing power . Inflation can severely damage the purchasing power of the dollar while generally benefiting real estate assets .
US M1 Money Supply ( February 2020 ): $ 4 trillion US M1 Money Supply ( March 2020 October 2021 ): From $ 4 to $ 20 trillion
Or , 80 % of today ’ s M1 Money Supply , or an additional $ 16 trillion dollars in circulation , was created within just 22 months ( March 2020 to October 2021 ).
Most Americans create the bulk of their family ’ s net worth from the ownership of real estate , not hiding cash under their mattress or holding stocks or bonds . Inflation is also a hidden form of taxation . One of the best ways to offset weaker dollars is to buy and hold real estate as a hedge against rising inflation while also generating monthly cash flow .
Today ’ s younger investors may not remember 10 % to 20 % fixed mortgage rates from years past . If your rental properties are losing money at a 3 % or 4 % fixed rate today , then any future properties purchased with higher rates will lose even more money unless you select a much more affordable interestonly loan product .
Let ’ s take a look next the average published 30year fixed rate for owneroccupants who qualify with full income and asset documentation by decade :
• 12.7 % in the 1980s
• 8.12 % in the 1990s
• 6.29 % in the 2000s
• 4.09 % in the 2010s
The common link between each of these decades was that perceived inflation risks were usually a core reason why the Federal Reserve increased interest rates in order to quash inflation . Today ’ s published inflation rates are at 40year highs . Yet , they are still underreported and are actually much higher as partly noted by annual used car prices rising almost 48 % in just 12 months near the end of 2021 .
Doubling Asset Values
If you keep the old Rule of 72 ( how long it takes to double an asset value by the annual gain or interest return projections ) in mind with rising inflation trends continuing to boost housing prices , you will clearly see the potential to boost your net worth . For example , a home doubles in value based upon the gains such as a 7.2 % annual increase that will
Image by mohamed Hassan from Pixabay take 10 years for the home to double in value ( 72 / 7.2 % = 10 years ).
Between November 2020 and November 2021 , it was reported that the average home price , including distressed properties , increased more than 18 %. If that home price gain trend continued at the same annual pace , the average home price could double in value every 4 years ( 72 / 18 = 4 years ). In many pricey coastal regions , homes have appreciated 30 % to 35 %+ per year over the past few years . As a result , many investors have seen their home values double in just two or three years .
As rates are more likely to increase than decrease in the future , the interestonly loan products that can be fixed for 7 , 10 , 30 , or 40 years make more sense from a cash flow and peace of mind standpoint . While NONI keeps your payments low , your net worth may be boosted sky high as the soaring inflation trends continue and properties may double or triple in value !
MEET RICK TOBIN
Rick Tobin has a diversified background in both the real estate and securities fields for the past 30 + years . He has held seven different real estate and securities brokerage licenses to date , and is a graduate of the University of Southern California . Rick has an extensive background in the financing of residential and commercial properties around the U . S with debt , equity , and mezzanine money . His funding sources have included banks , life insurance companies , REITs ( Real Estate Investment Trusts ), equity funds , and foreign money sources . You can visit Rick Tobin at
RealLoans . com for more details .
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