If you think like me that inflation

O

okusooner

100+ Posts
is on its way. I'm too young to remember the 70s and 80s.

What best ways to protect yourself financially. I have a bunch of rental property should i liquidate. What other things would protect me in a market where i think inflation is going to go crazy.
 
There is no guaranteed protection against inflation, except to make your money grow faster than inflation.

However, commodities that are limited in nature (i.e., gold) are a good safeguard. Sell your properties. Buy gold -- in kilograms.

Or, stop worrying about something that you really can't predict, nor control.
 
If the Fed raises interest rates to combat inflation, fewer people will be able to afford a home - especially with the tighter standards -- so rents should go up. And the cash flow should help you cope with your own rising expenses.

So why liquidate your rental property?
 
sooner - supply and demand are the key to your rental properties. At a time when home ownership is in peril for many and when home ownership is going to be more difficult - rental properties will rise on the demand side. If the demand side rises - so will rental rates. Stand pat on rental properties.
 
Inflation is not on its way. Inflation >10%/year is already here, and has been for a while. So much so that the Fed decided a few years back to not even bother publishing the M3 money supply anymore. Maybe you meant "hyperinflation" is on its way. On one hand it's good to own real assets during inflation. On the other, if we go into "stagflation", and it looks like there's a good chance that we will, then you have to worry about high rates of unemployment, which means your tenant might not be able to pay the rent. There is no magic bullet to protect yourself against hyperinflation. Everyone loses. The key is to lose as little as possible.
 
Seriously? you think inflation is over 10%/year? By your calculations, prices of commodities are doubling every 7 (give or take a few months) a year? How deep are we in the 10%+ inflation?

[In fact, from a global POV, the USA is probably going through a deflation because of the recent (and continued) devaluation of the dollar.]

I'm not sure where people come up with these ideas.
 
Well this economy is scaring the hell out of me. I currently have 9 rental properties but part of me wants to pick up another 3-5 since interest rates are so low. However i've never felt these inflations worries before and I'm worried that if i over extend myself and the economy tanks then people quit paying rent. If that happens, i'm going to be in a world of hurt. Now if one or 2 of my properties don't perform no big deal i have income that can over that, but if i have 4 or 5 properties that i have to pay the mortgage on with no rental income,it will get painfull fast

Pros to buying: good buys out there currently and very low interest rates. With inflation approaching interest rates will follow. Also i've not had any problems getting my properties rented and maintained so far. Plus with tighting credit, its getting harder for people to buy so i would assume a better rental market.

Cons are the what the hell is going to happen with the economy. What will happen with people's budgets and will that make it harder for me to collect rent on my properties.
 
sooner - I doubt it would be feasible, but I might offer my tenants a discounted up-front payment deal. Pay me $500/mo. or $5,000 upfront for the year. Maybe some kind of combination of months/discount. Think outside from your tenants point of view. What would help them?
 
okusooner:

Also consider that the bulk of the variable-rate mortgages will reset during the first half of 2008. Then add in a number of months that will take some people to go into foreclosure, and I would think that by the end of 2008, first half of 2009 will be a great time to buy real estate. So I would recommend: wait on the sidelines for a while.
 
Without knowing where your rentals are i offer up this advice. Do not sell. If the re-sale market in your area is over 4 months the that should tell you; one that the market is not turning over fast and two your homes would need to be in top shape to attract buyers.
In addition if rent is going up because of demand then someone is going to get your renters at a higher rent rate.(I am going off the homes being sold to someone who will actually move into them and let your renters go away.)
 
For whatever reason, I just don't think the economy is DOOMED like the media continues to report.

Just like the war in Iraq, "sensation" sells. All we read these days is how bad things are and how much worse it will become.......you read it enough, you start to believe it.

I say all this because I work for a manufacturer who sells products throughout the US. We read the same articles and we were concern about 2008 (so were our buyers). However, we are seeing the exact opposite of our fears- our sales are up and our buyers are saying they aren't seeing any signs of a slowing economy.

This isn't to say things haven't slowed down- they have. But I think the media has worked us into such a frenzy you would think Hoovervilles are on the horizon.
 
Am I the only one who remembers the 1970's? During inflationary times, leveraged real estate is a GREAT place to be.

Who is the number one group that the government wants to bail out right now? Highly leveraged home owners. The Fed isn't going to anything to stop inflation.

Bernard
 
We manufacture office furniture. Also not an "essential" product if the economy is in the shatter and we have seen double digit growth the first two months of this year.
 
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