Getting paid to borrow money.

The cacophony of advice about where to put your money coming at you from all sides can sometimes be deafening. We know that. That’s why we try to be the Joe Friday of investing. Remember the character from Dragnet? “Just the facts, ma’am.”

At Platinum Properties, we’re big on facts and when it comes to investing, the facts tell us there is no better place to be than real estate. One of the multitude of reasons we believe this relates to the title of this entry. When you buy a piece of income property, taking out a mortgage in the process, you actually DO get paid to borrow money. At least, that has been the case historically and there seems to be no reason for it to change.

The reason we say you get paid to borrow rests in the reality of inflation, pure and simple. In inflationary times, your best shield against the declining value of the dollar is high-quality, long-term, investment-grade, fixed-rate debt tied to a piece of rental property.

If you muddled your way through that last convoluted, hyphenated sentence, the payoff is this simple statement – the right kind of debt is good. Here’s why and how it works. Let’s assume a dollar was worth a dollar and you bought a house in 1972. Over the next 30 years, continuing inflation driven by near-imbecilic government economic policy drove the value of a dollar down to .24 when compared to the 1972 version. It’s all about purchasing power. By taking out a loan that doesn’t come due for those 30 years, you have effectively saved yourself money by paying off the note in cheaper dollars than what you borrowed with.

You just got paid to borrow money, bubs.