Real Investments

Investing in Real Estate


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borrow today’s dollars and repay with tomorrow’s dimes.

People may think: Jordan, you’re too young to be a real estate investor.

My successful journey in real estate began 8 years ago when I started to realize the importance of the fluctuating value of a dollar.  I commonly tell people my age,  “Now is the greatest time in our lifetime to invest in real estate.”  Besides the fact that the United States housing market is down and investors can find great deals, there are opportunities to borrow money at the lowest fixed interest rates in history.  The surface of this reasoning is fairly simple:

low home prices + low interest rates = great deal.

Why is this is true?  Think of it in terms of why gold is increasing in value or why oil prices continue to increase. It is a reality that people seem to have accepted without questioning.  The underlying reason that oil and gold continue to increase in value is that the value of the dollar continues to decline.  Reasons why the dollar declines in value:

  • interest rates
  • banking regulations
  • the health of the economy
  • (perhaps most importantly) people’s subjective trust that it is a secure way to hold value.

All of these factors have lined up through this recession to decrease the value of the dollar. This article is not meant to dissect these reasons, but to simply make you aware of the declining value of the dollar.  If the value of the dollar goes down, then the price of the goods go up.  So why not invest in a price now, and watch your dollar retain it’s value in actual goods.

value of the dollar goes down = price of goods go up

What do people do when they fear that the value in their money is not secure?  They invest in real, tangible items.  Gold, silver, and oil are all tangible, therefore their prices have increased.  Houses are just as tangible, and perhaps even more secure because people need to have a place to live.  It is a life priority.  It is this reason that I believe investing in homes is one of the safest investments possible in an unstable market.  Let me take this thought process a step further.  If I were to ask you if the price of gas will increase in the next 30 years, you would say yes.  This means that, intuitively, you have the mindset that inflation will occur.  This is very much supported by history.  In the last century, the United States experienced a deflated market in only a dozen years.  The other 88 years, prices have increased.  If you were born in January 1988, you have experienced 95.91% inflation in your lifetime.  That is to say, a dollar then could buy about what two dollars buys now.

“I got it,” you say, “Prices of things typically go up, so what does that have to do with me buying a house today?”  Well, it has a lot to do with it.  If you can purchase a house for $100,000.00, borrowing money at 3.5%, then you have purchased tomorrow’s asset with today’s dollars. This fits the adage that you can borrow today’s dollars and repay with tomorrow’s dimes.  This opportunity is historic. If you have the ability to purchase a house that you can hold long term, do it.  And for the next 30 years, every time you drive by the gas station… you will smile knowing that you have hedged yourself against inflation.

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