8% ROI and a Hedge...can it be true?What are we looking at ?
What we're dealing with....
Quite clearly the US government is actually incapable of cutting spending - deficit(s) will continue no matter which party is in power. Even if you were to wave a magic wand and have everyone in the executive and legislative branches actually agree to cut spending...it would take 3+ years to actually implement by the time you worked through inevitable bureaucratic resistance and legal challenges from entitlement advocacy groups. As they say in NY ".....foogedaboudit..."
We all know the US National Debt is huge and growing with no real effort is being made to deal with it. Overall growth is minimal and even the optimists agree it's going to be anemic for the foreseeable future. Low interest rates have helped keep financing costs low but are inevitably going to have to rise and will push the deficit refinancing costs much higher.
Inflation is coming - big time. The massive expansion of the money supply is doing two things; Firstly it's putting upward pressure on commodity prices which will raise consumer food and product costs. Secondly, by virtue of the fact that the US Dollar is the world's reserve currency...we are exporting our national debt to the world thus raising prices and costs for everyone. This tends to really irritate other governments and they will start looking for alternative currencies to settle trade accounts and alternate reserve stores of value -think metals (gold, silver etc.). This has already begun to happen with Russia/China trade. A growing "dollar flight" will repatriate dollars currently in worldwide circulation thus adding to the domestic money supply and more inflation.
What are your options....
Obviously holding on to US Dollars in any form is a losing proposition...even gains made in trading, stocks, and interest income etc. can all be wiped out with inflation and/or devaluation. Trading currencies in this environment is like upgrading to a better stateroom on a sinking ship.
Investing in metals has the potential to preserve buying power and is valid strategy as an inflationary hedge....but are passive and problematic to hold. Those pursuing this strategy would want to take actual delivery, keep it out of bank vaults (remember executive order 6102), but still would have the problem of generating income with it unless you were a...jeweler?
A closer look at a....... "Silver Lining"
Real property presents the best of both worlds. Buying the right kinds of income properties can be a great hedge against inflation and can yield consistent and increasing returns.
Today's relatively low prices make much real estate a great value. Inflation has always been kind to housing in the median price ranges. As the old adage goes "...people gotta eat and people gotta live...." Buying properties where people "...gotta live..." is a no-brainer.
Low interest rates enable today's investors to lock in a low fixed monthly payment (for a relative eternity) which is paid back with "cheaper" dollars over time. You'll want to leverage as much as you can to increase this inflationary benefit as well as maximize ROI on invested funds.
The economy will eventually improve (it always does) and then rents go up as does the value and prices of these properties. Cash flows improve with increasing rents and really jump with paid off mortgages.
So the answer is.... YES it's definitely possible....and I'm doing it here in So Cal !
*Christopher Kevin Boyle and the Christopher Kevin Real Estate Group (CKREG) are not investment advisors and neither I nor this site are professionally licensed to provide investment advice. Nothing on the site should be construed as the purpose of buying, selling, or investment recommendations. These are simply the ideas of the writer and discussed because of the user's right to freedom of speech. The viewer is held completely responsible for deciding whether any strategy discussed should be an investment. You the user are held completely responsible for deciding what is suitable for your investing based on your own financial situation. We are licensed professionals in California Real Estate (DRE 01135746) - not finance, legal, nor tax information - Please consult licensed professionals about these matters.
We can be contacted at: ChristopherKevin@CKREG.com let's hear from you !
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