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At risk of stating what I think is the obvious: Either when the faithful change their minds, or when the USD is no longer so devalued. Money is based on faith,

At risk of stating what I think is the obvious: Either when the faithful change their minds, or when the USD is no longer so devalued. Money is based on faith, as well as the value of other assets like real estate (including precious metals). I purchase multi-family rentals to be short the US dollar. My assets slowly gain value (while cash flowing) as the Federal Reserve continues its stimulus efforts (currently called Not-QE), which in turn devalues the currency.

onlyrealcuzzo 7y ago
I think positive cash-flow rental property is an interesting hedge for this problem. Rents are unlikely to decrease substantially, even if house prices do, since they've historically been much less volatile. If rates go negative, house prices will likely increase A LOT. You're in for a HUGE windfall. If rates stay low, house prices will likely track inflation. Even if they track inflation, you're leveraged. You still have a very high yielding bond. If rates go up, you're stuck with the property, but you still have a decent yielding bond.
- raintrees 7y ago
  If rates go up, I have also locked in a lower rate of financing using the banks money, typically 75% where I invest. And we hold our properties for the long term, as we get tax consideration for almost 3 decades. Depreciation is a powerful tool to amass an investment base faster, and 1031 exchanges can postpone the tax from sales of the properties if and when we do sell. Lastly, that event would be similar to the game of Monopoly, i.e. trading in 4 houses for a hotel. Another merit is positive cash flow is now. If I were to continue to enjoy financial deals like I negotiated for our first 4 doors, $600K is all that is needed for control over enough assets to bring in $8K a month in cash flow. In the US, currently cash flow/investment returns can be received with a lower tax base than earned income, again making it more powerful. Subject to change, of course, but I work with what exists now and hopefully let the future work out how it will.

onlyrealcuzzo 7y ago

I think positive cash-flow rental property is an interesting hedge for this problem. Rents are unlikely to decrease substantially, even if house prices do, since they've historically been much less volatile. If rates go negative, house prices will likely increase A LOT. You're in for a HUGE windfall. If rates stay low, house prices will likely track inflation. Even if they track inflation, you're leveraged. You still have a very high yielding bond. If rates go up, you're stuck with the property, but you still have a decent yielding bond.

raintrees 7y ago
If rates go up, I have also locked in a lower rate of financing using the banks money, typically 75% where I invest. And we hold our properties for the long term, as we get tax consideration for almost 3 decades. Depreciation is a powerful tool to amass an investment base faster, and 1031 exchanges can postpone the tax from sales of the properties if and when we do sell. Lastly, that event would be similar to the game of Monopoly, i.e. trading in 4 houses for a hotel. Another merit is positive cash flow is now. If I were to continue to enjoy financial deals like I negotiated for our first 4 doors, $600K is all that is needed for control over enough assets to bring in $8K a month in cash flow. In the US, currently cash flow/investment returns can be received with a lower tax base than earned income, again making it more powerful. Subject to change, of course, but I work with what exists now and hopefully let the future work out how it will.