Agent's Perspective - Financial Certainty


Inflation is defined as the rate at which the general level of prices for goods and services is rising, and the purchasing power of the currency is falling. Government uses monetary policies to attempt to keep inflation in check. Most economists feel that inflation in moderation, perhaps 2% per year, is considered manageable. 

Inflation is one of the primary reasons people invest; they want their money to make more than the erosion caused by inflation. If inflation is 2% per year you need to make more than 2% on an investment to stay ahead. You cannot control inflation, the Federal Reserve tries to do that. The government does not help you make or save money. If you want financial freedom, or independence, you need to do that on your own (unless you have rich relatives). Real estate investing is one of the best ways to protect yourself against inflations and grow your wealth. 

One of the biggest benefits of owning income producing real estate is cash flow. Your income stream not only produces spendable income, it also helps secure the value of your asset. Your monthly income stream and the value of your investment both grow over time. The government rewards rental property owners. Income from cash flow is not subject to self-employment tax and the government offers tax benefits that include depreciation deductions and lower tax rates for long term gains. 

Remember that every time you make a real estate loan payment you make a contribution toward principal, i.e. the balance of your mortgage goes down, and this increases your net worth every month. Every time you raise your rents the value of the property goes up and so does your income. 

In addition, while the loan is being paid down the value of real estate generally goes up. Sure there are short term ups and downs in all markets, but over the long term appreciation usually outpaces inflation and helps protect, and grow, your capital investment. 

When you have real estate investments you have personal control over that investment and your future. Unlike the stock market, you are not tied to the performance of any outside corporations, boardrooms, or sales slumps. If the rental market adjusts up or down, you can make changes to compensate for that volatility. 

There is nothing more rewarding than the pride you feel from your personal home ownership. The same is true with investment property. Working hard to maintain and improve your real estate assets gives you a great sense of accomplishment, pride, and a great hedge against inflation.