Like a broken record, we keep telling you that big-time inflation is just around the corner and now is the time to adjust your investment strategy. But why do we think inflation is coming? Okay, fair question. Here is the chain of economic events we see coming.
1. The natural consequence of our politicians “print more money no matter what” philosophy is increasing inflation. As prices go up, more investors will sell bonds in an attempt to preserve their wealth. This will place an upward pressure on bond yields as rock bottom interest rates for government treasuries will no longer be acceptable.
2. As treasury yields drift higher, the ripple effect will cause mortgage rates linked to a treasury index to move higher also. This will cause a rise in “real” real estate prices because, due to inflation, the same monthly payment will not buy the same amount of house.
3. Diminished purchasing power will stall the real estate market, sending prices and appreciation down, down, down.
Taking into account the chain of events we just described, it would be a bad time to buy into real estate then, in a general sense, at least. We have a pretty good idea that Empowered Investor Network will still be able to find and recommend income properties that make financial sense the day you buy them BUT there’s no denying that it will be trickier to make a profit.
Higher interest rates will mean a higher mortgage payment and lower cash flow. The time to get in is now. Did you know that investing in long term, fixed-rate debt tied to a packaged commodity (like a rental house) can make you wealthy even in the face of inflation?
Call one of our expert investment counselors at 714-820-4200 to find out how.
The Platinum Team
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