Inflation and your rental property appreciation

[Mark Nickoson]

OK, so maybe you are like me and own and rent a few rentals.  Are you impressed that the price of the property has gone up?  If I buy a house for say $100K and there is 10% inflation for the year and 9% more the next year.  At the end of those 2 years, if I see that the value of my house is $120K, do you think I have made any money if I were to sell?  Uncle Sam says that there is $20K profit and I get to pay the tax.  But you and I both know I didn't make anything.  Inflation blurs our thinking.  We should be getting out our business calculators and getting used to the Future Value functions.  The inflation is a silent robber that steals the value of our asset and allows the government to continue to collect their tax.  Just wait until the high interest rate brings down the value of that house too and I am upside down on the mortgage.  Hmmm.  My numbers were numbers you might find in the mid-west.

Watch out California!