A YouTube video segment explaining how real estate investors can benefit from inflation via the speaker's coined concept, the "inflation triple crown": (1) asset price inflation, (2) debt debasement, and (3) cash-flow enhancement. The speaker gives numeric examples (e.g., $1M property → $1.1M at 10% inflation; $800k loan effectively diluted to $720k) and recommends using leveraged rental property so tenants effectively pay mortgage-related costs. A standard financial-disclaimer closes the segment.
Questions this video answers
$1,100,000.
$720,000 (speaker's illustrative example).
$1,100; the speaker adds that perceived cash flow might increase 20–25%.
Forbes.
Talk to us a little bit about inflation. Share what your insight is about the market today and how inflation is affecting it.
Yeah, for real estate investors, you should be benefiting from inflation three ways at the same time. It's with a concept that I coined called the inflation triple crown. Okay, how can one actually benefit from inflation? Like when you see all this inflation out at the supermarket and it still feels like your grocery bill is going up 10% year over year, even though CPI inflation is lower than that. That and there's tipflation and everyone's asking for tips and you can actually benefit from this arrangement just like I am. So the inflation triple crown is how you benefit from inflation three ways at the same time. The first ways with asset price inflation. The second way is debt debasement. And the third way is cash flow enhancement. And Forbes published my article about the inflation triple crown because they really liked it. But there do get to be a few numbers here. So let me just keep it as simple as I can. If you buy $1 million property and say there's 10% inflation over a couple of years, all right, well then your primary residence is now worth $1.1 million. And that in itself shouldn't feel that good. That's only a hedge against inflation, right? Because now you've got 10% more dollars, but each dollar is worth 10% less. Okay, but at least you do have that hedge. You're kind of right back where you started with that first one with asset price leg of the inflation triple crown. That is called debt debasement. Okay, Save this million dollar property. You didn't pay all cash. You got an 800k loan. This is going to benefit you because the bank doesn't ask to be repaid that 800k in inflation adjusted dollars. So when you got 10% inflation over time, your 800k debt gets diluted. You only owe the bank back 720 because again, the bank doesn't ask to be repaid in inflation adjusted dollars. The principal and interest payment stays fixed and generally wages and salaries go up over time. So now you're beginning to be a beneficiary of inflation as it debases your debt. And then the third leg of the inflation triple crown, this is really the way to do it. When you don't just get a loan for a property, you get rental property with a loan on it. Say it's a million dollars worth of rental property, okay? Now you're benefiting a not just the asset price inflation and not just the debt debasement, but actually with cash flow enhancement because with your rental property, 10% inflation over time, say then a $1000 rent goes up to an 1100 rent. Okay? Even though that went up 10%, the cash flow you feel in your pocket every month might have gone up 20 to 25%. Why is that? Again, it's because your principal and interest payment stays fixed. Inflation cann touch that. So that's the inflation triple crown. Again, it's asset price inflation, debt debasement and an enhancement on your cash flow. So the best way to do it is to get a loan, don't pay all cash and get a rental property because in that case the tenant pays all of your interest payment for you and all the other expenses in a cash flowing rental. So be a beneficiary of inflation rather than it being detrimental to your financial life. Real estate estate is the best vehicle for that I've ever heard of.
Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on the show are not guaranteed. All investment strategies have the potential for profit or loss.
