Let’s define arbitrage. Arbitrage is when an investor profits by exploiting small price differences between similar (or identical) financial instruments. Arbitrage occurs because of pricing inefficiencies in a market. These small price blips can add up to big money for the shrewd investor. Think George Soros – he made his fortune in the margins of the currency market.
But we don’t care about George. We’re here to talk about Double Inflation Arbitrage in the income property market. Here’s how that works.
You walk up to the bank and say, “Bank, I have proposition. I’m going to put down 20% of the purchase price for this property and you’re going to loan me the rest.” If you have a good credit record, there’s a fair chance they’ll say, “Okay.”
But now you’re left with the loan debt that must be paid back. Yes, real life can be irritating like that. But then you get the bright idea to rent your property out so that the tenant is the one actually paying the carrying costs of the mortgage, while that mortgage is losing real value from inflation. Bad for the bank. Good for your. That’s your first inflation benefit.
It gets even better. Historically, assets like properties have appreciated faster than the rate of inflation. Whammo, you’re benefiting from this also. Double Inflation Arbitrage. This is no fantasy. It works in real life. Use it to create life-changing wealth.
The Platinum Team
