No matter what kind of business you have, or you even have one, one of the best strategies to hit your freedom goal is to understand that your personal financial wealth and well-being depend on two VERY important things…
- The right to own and control private asset 〰️ your time, ideas, work product, and investments
- The freedom and ability to understand and successfully navigate the dynamic interrelated variables either directly or indirectly affecting number #1.
Sounds simple, right?
Well, there’s one more factor that you will need to understand to be able to hit your freedom goal faster and that’s to understand how to use inflation to build your long-term wealth.
It would be easy to talk about the negative side of inflation… because we’ve all seen it (and likely, most of us have FELT it). You know what we’re talking about. Every time you go to the grocery you notice the price of milk 🥛, meat 🥩, bacon 🥓, and cheese 🧀 increases, right?
As the government continues to print money like crazy, incurring over $272 TRILLION at last count (whoa 〰️ that’s a lot of zeros to digest‼️) it’s easy to get wrapped up in the negative side of inflation.
And we GET IT. Inflation by no means is a good thing. It drives the cost of everything to be much higher. What once was $400 yesterday, could simply cost you an additional $7.20 today. 🧐🧐
But since we won’t be able to control what the government will continue to be doing — printing a trillion here, two trillion there, and another trillion here, and so forth, we simply don’t necessarily need to look at inflation only in the negative light.
On the positive side, if you’ve held any hard assets (i.e., real estate properties) prior to the 2020 pandemic, congratulations your property went up in value without you lifting a finger– that’s the power of inflation.
As the price of goods and services continues to go up, today, we are going to show you how to use inflation to build your long-term wealth…
WHAT IS INFLATION?
Inflation is an average increase in the prices for a collection of goods and services in a given economy over a set period of time, usually calculated by year. Over time, inflation can erode the purchasing power of your dollars.If you do not want inflation to chip away at your investment returns, choose investments that will give you a return greater than the current rate of inflation — or at least keep up with it is the key.
HOW INFLATION AFFECT REAL ESTATE?
- Property values will increase – As you would expect, real estate prices will also increase as the inflation rate hits the economy. The reasons for this are quite obvious and simple. Since the prices of construction, raw materials, etc. will be high, developers will spend more when building new properties. This will lead to an inevitable increase in the price of new real estate properties. Moreover, existing properties will also rise in value due to the reduced supply of new constructions.
- Rental rates will soar – The increase in rental rates is one of the most noticeable effects of inflation. Due to the high cost that comes with mortgages, most people will opt to rent rather than buy. The high demand for rental properties and the influx of tenants will prompt real estate investors to raise their rental rates organically. Needless to say, owning apartments in this economic climate places you in an ideal position as tenants are more willing to pay higher rents than taking on an unmanageable mortgage.
HOW TO USE INFLATION TO BUILD A LONG-TERM WEALTH?
- Appreciation offsets inflation – Land and property values tend to rise alongside inflation. As a matter of fact, the appreciation rate of US real estate has been consistently higher than inflation for over a decade now. Hence, if you’ve ever looked at a breakdown of the most successful portfolios you’ll typically see real estate being used as one of the strategies to build long-term wealth.
- Rental properties generate high returns – Rental properties are without a doubt the most profitable assets during inflation. We know it. We see it. As more people steer away from loans and begin flocking to traditional rental properties, real estate investors will be able to capitalize on the trend by charging more for rent. The high rental income coupled with the low vacancy rates is the driving factors that generate a very high return on investment for real estate investors.
- Cheaper money borrowed for tomorrow’s dollar – debt may seem like the opposite of an investment. But incurring it can also be a good financial move when inflation is rampant. For example, $1 in 1990 is equivalent to about $2 today, so a $1,000 mortgage payment 30 years ago would be worth about $2,000 now. But after all that time, you’d still be paying $1,000 per month. So the value of what you need to pay is reduced by about half. Effectively, you’re paying half as much each month to service the debt.
Yes, inflation can suck for many of us. But it’s IMPORTANT and if you think about it, our relationship with inflation doesn’t have to be NEGATIVE. We can use it to our advantage without doing any 24/7 heavy lifting…it just happens organically…
Through debts and inflation, we continue to create what we called “Infinite Returns.” 😎😎 As currency printing and debt flooding the whole world, the dollar in your pocket today, that dollar’s worth or value, will be less one year from today if you keep it in your pocket… Cash is trash, but cash flow is king!
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Whether you are new to apartment investing or you’ve got a couple of passive investments but want to reach a new level of success, having a clear strategy is vital. With a clear strategy, you will be able to scale effortlessly, overcome challenges, and reach your full potential…
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Palmy ➕ Nancy
The Kitti Sisters