Note Investing vs Inflation

[Jamie Greenberg]

Hi everyone.  Happy Thanksgiving!  I'm just curious how most note investors think and worry about inflation.  Properties are generally considered a hedge against inflation (since they would theoretically increase in value at the same time, Having a fixed mortgage is also said to be helped by inflation, since the rate stays the same even as the dollar is worth less....so does that make note investing in an inflationary environment a problem?  Wouldn't the on-time fixed payments that I receive get less and less valuable as the years go on?  Any thoughts?

[Bill P.]

@Jamie Greenberg 

Yes your payments would become less valuable as time went on in an inflationary period. However, if you're buying notes correctly by 1)not having all your eggs in one basket; 2) have laddered maturity dates; 3) discounted the notes to give superior returns; and 4) monitor and enforce your notes properly, you'll do a lot better than someone who simply puts their money in a 2% CD.