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Posts Tagged ‘inflation’

Stronger Inflation Weakens Buying Power

The Power of the Dollar will be Felt at the Grocery Store

In an article on the front page of the Wall Street Journal on Saturday, August 11th, titled “Stronger Inflation Eats Into Paychecks”, by Josh Mitchell he discusses how rising inflation creates more expenses across the board, lowering the actual standard of living for most people. This is always true. Even in years when inflation is “lower” than it is right now. Inflation constantly erodes the buying power of the dollar and weakens people’s ability to live to a certain standard they may be accustomed to. Inflation is likely to also exist in the United States for the foreseeable future, due in part to the large budget deficit, and is unlikely to abate. In fact, as the article mentions, it is now accelerating.

As I wrote about in my books, mentioned in my upcoming public television special “Remote Control Retirement Riches With Adiel Gorel”, and specifically in my booklet (which is part of the package for pledgers who help support public television stations) called “How to Harness Inflation As Your Ally”, the very act of buying a solid, affordable single-family home in the right market (please refer to the same source materials, including the booklet “Where to Invest?”), and financing them with the incomprehensible 30-year fixed rate loan, which NEVER keeps up with inflation, actually REVERSES the effect inflation has on you.

Instead of eroding your income and buying power, when you have a 30-year fixed rate loan on a single-family home (technically these loans are possible to obtain on 1-4 residential units), inflation keep eroding BOTH your fixed monthly payment, AND the loan balance (which goes down gradually with the 30-year amortization principal payments as well).

When inflation constantly erodes your DEBT, obviously you owe less in terms of real dollars. This is an integral part of why rental single-family homes in the United States (to the best of my knowledge the only country where such loans exist), can improve your financial future, enable you to have a potentially far more powerful retirement, send your kids and grand-kids to college (as many have done using this investment style under our guidance), and actually have a constantly rising average net worth (long term, since local fluctuations both up & down in prices can vary that temporarily). In addition, you are building up to the future when either the loan balance looks so small it can just be paid off (usually well before 30 years are up), or the loan is paid off and now there is one more free and clear home providing income for the rest of your life.

I recently came back from speaking and meeting with investors in a foreign country. They are simply SHOCKED at the fact that United States investors can get the 30-year-loan (which is why I called it “incomprehensible”. Foreigners can’t understand why U.S. investors don’t get and many of these “gifts” as they possibly can. The foreign investor usually cannot get these “miracle loans.” Ironically foreigners can appreciate what these loans really mean and how they turn inflation into your ally, instead of your foe, more clearly than most Americans.

Starting this weekend, on August 18th my Public Television special “Remote Control Retirement Riches With Adiel Gorel” will start airing on various Public Television stations across the U.S. In the San Francisco Bay Area the special will air on KQED. A partial list of the air times in various markets (the list gets updated all the time) is here. For additional air times for KQED click here.

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Inflation Helps Single Family Home Investors

Inflation

In an article published in the San Francisco Chronicle from February 7th by Christopher Rugaber (AP Economics Writer), called  “Why Investors’ Fear of High Inflation is Probably Overblown,” Mr. Rugaber explains inflation by going into the pros and cons of higher and lower inflation.  He provides an overall concise glimpse of the situation as it is currently.  The Fed’s dilemma with increasing taxes in the face of strong employment and rising wages is certain to bring inflation to the economy. However, he also discusses how inflation assists borrowers.

ICG educates investors

Of course, at ICG, we constantly talk about how inflation erodes the 30-year fixed rate loan. This, in turn, becomes the borrower’s ally in reducing the real buying power of the loans fixed dollar amount. We will talk about this and many other important topics during our ICG Quarterly 1-Day Expo near SFO on Saturday 3/3/2018.

Topics to be covered

Our expert speakers will cover topics including the new tax law and how it pertains to real estate investors, how to buy rental homes out of a self-directed IRA, and how to use insurance as the first line of defense of protecting your assets.  There will also be lenders available to discuss what they have available and what you can expect over the next several months. Property management, legal expertise, and one-on-one’s can be found as well. And as always, we offer a lot of question and answer time.  Market teams from the most relevant metro areas in the US will be present. Everyone mentioning this blog will receive free entry. Please email us that you read this at info@icgre.com.

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Don’t Forget to Get a Fixed Rate Loan!

I encounter many investors still tempted to get some flavor of an adjustable loan when using their available investment loans. There are extremely low interest rates being offered on many shades of variable interest loans such as 1/1, 5/30 and so on. 


Given that there is a virtual consensus among economists that we are headed to a high inflation period, it would not be the wisest move. When inflation is looming the need for fixed-rate loans becomes even greater than it usually is. Fixed-rates are still very low, not far from the lowest rates in over 50 years. At this point, and before inflation rears its ugly head, it is definitely the time to lock in a rate forever. 


Once you have locked in your 30-year fixed rate loan, inflation actually becomes your ally. It erodes the real monetary value of your loan, which never changes with inflation because it’s, well… FIXED! In a way the very process of inflation will hasten the real-life pay down of your loan balance. 


Many of you are eligible for a lot more investment loans than you might think. We will talk about this in detail, and also share strategies to increase the number of investment loans you can get at our incredible Real Estate 1 Day Expo on Saturday, December 7, 2013 near San Francisco Airport. More details can be found on our website www.icgre.com.  We have been producing these events for over 20 years, and we always have the most useful experts to assist you.  


This time there will also be a discussion of the new Affordable Care Act (Obamacare) and strategies on what to do, credit enhancement and repair (to be able to get all these loans), and an amazing lawyer battling the banks in court to share his insights and wisdom. In addition, market teams from the most relevant markets in the US will be there. Looking forward to seeing you!
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New Markets Join the Fray as Pricing Changes

Up until the beginning of 2012 there were some states that lead the way as far as investor interest: California, Nevada, Arizona and Florida. That interest on the part of investors was justified, as these four states were the most clearly noticeable examples of recession housing prices. These four states were the “poster children” for extreme housing price collapse.

During 2012 and 2013 all four states exhibited strong housing price appreciation. Phoenix led everyone with a 70% jump. Las Vegas wasn’t far behind and California process improved rapidly. Florida prices went up but the uptick was tempered by far slower judicial foreclosure processes in Florida, as opposed to the quick and efficient trustee sale in the other three states.

Now, in the middle of 2014, Florida prices have improved quite a bit and yet, due to the slow foreclosure process, which creates a steady trickle of supply into the marketplace, Florida is still a place where investors look to buy. However buying in Arizona, Nevada and California has slowed significantly for now.Other states, which have not experienced such extreme price swings, are now becoming attractive investor destinations.

A prime example is Oklahoma City, with low unemployment and the benefit of the oil & gas industries. Rents are high and property taxes are low. Similarly, other “middle of the country” markets in states like Kansas and Missouri are starting to attract more buyers, as is the state of Texas (with a strong economy, high rents, but also very high property taxes and insurance rates) and states like Ohio.Overall it is possible that soon the effects of the recession will no longer be dominant and marketplace demand by investor will revert to parameters before 2008.

Some of these new markets will be present at our Real Estate 1-Day Expo this Saturday near the San Francisco Airport (see details at www.icgre.com). Call us (415-927-7504) or email us (info@icgre.com) and mention this blog entry and receive my book, for free, with registration at www.icgre.com.

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