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Updated over 13 years ago,

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Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
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50% Rule Of Thumb And (Hyper?)Inflation Hedging

Bryan Hancock#4 Off Topic Contributor
  • Investor
  • Round Rock, TX
Posted

Can you be a true believer in strict adherence to sourcing properties according to the 50% rule of thumb and also believe in the power of fixed-rate debt to provide a needed inflation hedge in the coming years? It seems that many of our most adamant 50% rule believers are also gold bugs and are worried about a coming currency crisis. It seems to me that fixed-rate debt and paying a premium for property would be prudent in this scenario. Why source deals with the rule of thumb if hyperinflationary doom and gloom awaits?

Is it prudent to load up on subject-to purchases that barely scrape by on a cash flow basis as rentals in this scenario? If hyperinflation or even extremely high inflation is all but certain why not just leverage to the hilt and pile up the break even property count?

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