When there is blood in the banks buy Real Estate

[AJ Wong]

Isn't it ironic how the one time borrowers got a 'leg up' in the form ridiculously low interest rate mortgages that those same 'assets' are partially what is behind the collapse of several significant US banks and beyond? 

I just find it hilarious that these financial geniuses couldn't see that 2-3% loans for 30 years were not great returns. What is not as funny is how perilous, shaky and scary the entire financial system looks. If not for government guarantees and back stops where would the markets and depositors' deposits be? I'll tell you where they are not, in the accounts that you deposited them in. 

The same way inflation is taxing consumers, bank revenue is declining and their deposits are shrinking in part to flight, but also because the proportion of individuals and businesses savings are being eroded by higher costs and declining purchasing power. 

I won't go into length here about the decline of USD, it's purchasing power and the correlation to increased asset prices including housing, but I will say that if you have been considering investing in real estate I think the time to act is sooner than later. 

In fact I would go so far as to re-evaluate my entire investment portfolio. I am not a financial advisor but conventional equities and stocks are down roughly 20-30% in the past 12-18 months, certainly off peak and I think we're only half way there. (My personal call is to reach March/April 2020 levels or Pre Pandemic stimulus/QE.) Equities are in some cases still 15-20X earnings. There is all risk and little reward. Anyone with a significant equity position likely could have purchased a cash flowing or dream property with the value they 'lost.' 

So keep it in cash right? Well, yes if it wasn't buying less by the moment. Whatever their 'CPI' index is, is grossly under calculated and still you're losing 5%+ per year, on top of the already increased prices of everything else. Just wait until fuel prices really begin to rise and reflect..

Inflation destroys savings. The most responsible have the most to lose. The only way to outpace inflation is to increase your income, and/or reallocate to cash flowing assets, potentially utilizing debt that actually benefits from inflation. In other words the value of the debt goes down as inflation goes up. 

Historically mortgage rates are still reasonable and extremely available. We're working with several investors on a 10% down program with no PMI 1-4 units up to $1.3-1.4M. This often enables cash on cash returns of 1-2-3 years for high grossing rentals.

$25-$50-$70-$100k down and a positively cash flowing asset as opposed to losing .5% per month for the luxury of keeping it in risky banks, stocks or bonds. Doesn't sound so bad? Getting nothing for my hard earned money certainly does..I mean at least you'll know where your down payment or money went? 

Should and when rates drop expect an even greater flurry of purchase activity, or worse should banks and the debt crisis spiral into a dollar death debt cycle you could see a huge move of money into real estate as it is the most efficient way to convert significant capital into tangible hard assets. 

I cannot speak for all markets but the OR Coast and I5 Eugene corridor are incredibly strong at the moment yet still offers some exceptional growth opportunity and value. 

For example an Oceanfront updated estate on acreage or in a premier community for $1M +/- ? Bonus when world ends you're at least in paradise enjoying what you worked for.. lol 

I'm not an alarmist but I am a realist. The financial system is not healthy and the same financial game plan of equities and tech stocks are not going to yield the same type of passive returns generations have become accustomed to. The time to adapt is now, real estate is the first and most essential asset class. I firmly believe it's place in portfolios should be prioritized more than ever. When it comes to inflation and the risks associated with the USD there could be more lost by indecision than bad decision. 

What are your thoughts? Are the rules of investing and retirement strategies changing?