Inflation – the Hidden Power Behind Commercial Property

Have you ever stopped to wonder why commercial investing works? There are a variety of reasons but one of the more powerful ones is inflation in conjunction with a properly structured mortgage. Hopefully, if you’ve advanced to the point in your investing career that you actually own a property, you’ve also realized the best mortgages are of the long-term, fixed-rate variety. In fact, to get the best bang for your buck from the presence of inflation you should NEVER pay off the mortgage, but rather “refi ‘til ya die” as Commercial Investing Center founder, Jason Hartman, likes to say.

The reason you never want to pay off a mortgage in inflationary times is that certain kinds of debt prosper and money loses in the presence of inflation. To understand this, let’s take a look at what inflation actually is. When we speak of inflation, we refer to a period of rising prices. If the government announces an inflation rate of, say, 4%, it means that prices have risen that much in the previous 12 months. Put another way, a candy bar you paid a dollar for a year ago now costs $1.04. Four cents might not seem like such a big deal but it is, especially when multiplied at that rate or higher over decades. That’s why the chocolate bar that went for a quarter in your youth costs nearly two bucks now. But the effects of inflation are not limited to cash and coins alone. Anything denominated in currency suffers. That means Wall Street’s darling assets like stocks, bonds, and mutual funds. Conversely, the asset that doesn’t suffer, and actually increases, is commercial real estate tied to a fixed-rate, long-term mortgage. Pay the mortgage off and you immediately begin to suffer the inflation effects like everyone else. Let it sit out there and the principal balance erodes over time, which is bad for the bank but good for you.

Whether you realized it or not, income property investing, either the residential or commercial variety, is propelled by the hidden power of inflation (Top image: Flickr | Indiana Public Media).

The Commercial Investing Team


Finding Mobile Home Parks For Sale Just Got Easier

mobile home parks for saleThough the concept has been flying solidly under the public-at-large radar for a while now, investing in mobile home parks is a wildly profitable segment of the real estate industry for those who do it correctly. One of the chief obstacles, until now, has been locating mobile home parks for sale. In some areas, especially those with a small population base, the pool of such properties available for investment runs out pretty quickly.

It seems like there are always at least a few savvy investors bird-dogging every park that comes up for sale and often you learn about the sweet deal only after someone else snags it. Or maybe your local market is simply wallowing in the toilet right now and you’re skittish about investing in anything until the economy rebounds. Randomly calling real estate agents in thriving areas of the country to see if they have any wobbly box parks on their roster is the opposite of a good use of your time, especially when you can now log onto MHPListings.com to access the inventory of mobile home parks for sale around the entire country.

Finally! A collection of mobile home parks ripe for investing. Browse available properties or list one for free if you’re selling. If this is your first exposure to the idea of investing in mobile home parks, check back frequently because we’ll be delving into the topic in detail with this blog. You always knew real estate investing was good but this twist on the idea makes it even better. For now, bookmark MHPListings.com and check back frequently to find new mobile home parks for sale.

We’re talking serious return on your investment dollar now.

The Mobile Home Park ListingsTeam

MHPListings.com

Flickr / Joe Shlabotnik