Why Inflation Is Your Best Friend When It Comes To Real Estate Investments
In the mid-19th century, life expectancy was about 40 years. In 1950, that rose to about 65 years. Today, that life expectancy has grown to about 81 years, and it continues to go up. We are having longer retirements than ever before in history. Medical science progressing at the rate that it is, those retirement years are going to stretch even further! We are living longer, healthier lives than ever before, so shouldn’t your financial health reflect this? Here’s how you can ensure it.
It is never too late to invest in real estate.
I have in the past connected with Warren Buffet, and we have communicated now and then since. Now this financial whizz isn't known to be a big investor in homes, but even he saw the wisdom of buying single family homes in the aftermath of the 2012 recession.
If you think that this is something you should have started when you were younger, let me tell you, you can start to invest in real estate at any age. We have had people that have started the process well into their 70s or even later. There is the story of Mindy, a school teacher who bought a rental home in her 50s. She finished paying for her 30-year fixed rate loan in 16 years, so now at 70 she has free and clear ownership of a property that earns her a steady passive income from rent. There is also the story of Brad who lives in the San Francisco bay area. He started investing in the 1990s, ended with 16 homes in the Phoenix area and retired early!
Invest in the Sun Belt states.
About 35% of the US population is renting – that is over 110 million people! A massive potential for passive income right there! For a number of reasons the sun-belt states suggest themselves as the places with the best growth potential right now. In these areas, the larger metropolitan areas with a lot of commercial activity are great choices.
This is where young professionals and their families are coming to work, where they are looking to rent properties, live, study. So if you want to make the wise decision to invest in real estate, I always recommend single family homes in good areas rather than apartments or condos. You are setting up your present as well as your future.
Let inflation be your friend.
Usually inflation is a bad word, but not when it comes to real estate investments. Firstly, I recommend the 30-year fixed rate loan – and that you make the lowest down payment possible. While your outgoing seems high right now, after some years it will be roughly the same as a nice dinner out somewhere. While your loan repayment amounts remain the same, your rental incomes go up over the years because the cost of living (with inflation levels) goes up!
So, what size of home should you buy? New or pre-owned? What type of property is going to fetch you the best rental incomes and what will appreciate over the long term? Who will manage properties so far from where you live? I have the answers to all those questions and more. Check out this video where I answer some of these vexing questions – and more.