Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
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?
Los Angeles, CA · Member since 2008 · 557 posts · 70 votes
15y
I prefer the term "Cycles Bug." With my affinity for the yellow and silver stuff over the last few years I am capitalizing on uncertainty/uncharted territory. I cannot predict hyper-inflation. However, betting that we were (and still are) heading into uncharted territory feels like a solid play. Gold loves uncharted territory. That is easy to see from history.
I believe experienced real estate investors can make money in any market. Especially uncharted territory. However, I am not sure how well "purchasing real estate at a premium" will do with uncharted territory. I won't be doing that unless it's my primary :)
With that, I agree with you if I was purely to hedge against hyper inflation and believed wholeheartedly that it was coming .
The 50% rule makes sense to the newcomer long-term residential landlord, under the context of stable economic times. We'll get there again.
Los Angeles, CA · Member since 2008 · 557 posts · 70 votes
15y
I prefer the term "Cycles Bug." With my affinity for the yellow and silver stuff over the last few years I am capitalizing on uncertainty/uncharted territory. I cannot predict hyper-inflation. However, betting that we were (and still are) heading into uncharted territory feels like a solid play. Gold loves uncharted territory. That is easy to see from history.
I believe experienced real estate investors can make money in any market. Especially uncharted territory. However, I am not sure how well "purchasing real estate at a premium" will do with uncharted territory. I won't be doing that unless it's my primary :)
With that, I agree with you if I was purely to hedge against hyper inflation and believed wholeheartedly that it was coming .
The 50% rule makes sense to the newcomer long-term residential landlord, under the context of stable economic times. We'll get there again.