Gordon Moss (Coach G), Director of Quixote Ventures Research Institute, argues that inflation (similar to the 1970s Carter-era inflation) is a major risk for 2021–2025 and that politicians may use inflation to reduce large government debt. To hedge this risk he recommends small investors buy quality single-family houses financed with fixed, long-term (30-year) low-interest debt. He illustrates with a 1972 Los Angeles house bought for about $30,000 and sold in 1980 for $100,000, and with a hypothetical $100,000 property whose $1,000/month fixed mortgage becomes a powerful inflation hedge if rents triple to $3,000.
Questions this video answers
1972
About $30,000
1980
$100,000
$100,000 purchase price; $1,000/month payment on a fixed 30-year loan
Chapters
Hello, Covid America. This is Gordon Moss, Director, Quixote Ventures Research Institute, sitting in the Moss beer garden thinking about what I think is the biggest issue on our plate coming up in this next cycle. I think we've got 2021 through 2025. We have some issues in front of us. We have big government lined up here. We have higher taxes, higher regulations, a big, big, big debt that I think they're going to find a way to resolve through inflation. I think inflation is the biggest challenge facing the small investor today. And let me tell you a story about it, to put it in context, and let me tell you what I'm going to do about it and what I recommend you do about it. Let me tell you a quick story. My father, amazing guy, bought a house in Los Angeles county in 1972 for just about $30,000. Regular house, four bedroom, two bath. We all grew up there. Nice little neighborhood. He sold that house in 1980 for $100,000. So let me take that back again. He bought it for 37 years. Later, he sold it for a hundred. You'd say, wow, well, he's something else. He tripled his money. Well, let me put that in context for you. We had the Carter inflation era of the 1970s, which I think we might be coming into again, which is why I'm telling you this story. So the $30,000 house that tripled in value. Well, guess what else tripled in value? Everything. His car that was worth $10,000 in 1972 cost $30,000, three times as much in 1980. As did gas, the price of gas, as did food, a carton of eggs. Tripled in value. Everything tripled in value. So did he really triple his money? Did he really make a great investment and three times his investment? Maybe, maybe not. So what if that happens again? What if they take these trillions of dollars of debt right now and say, how are we going to deal with this? How are we going to fix this problem? Well, what's the most spineless way for a politician to do it? Is he going to raise taxes? Maybe a little bit, but not enough. Are they going to cut spending? Give me a break. They never cut spending. They always spend more. So guess how they get out of this debt problem? They inflate the dollar. They inflate the dollar and resolve the debt that way. Okay, that's my big picture political prediction, okay? It might happen, it might not. Okay? But it happened in the 70s and I told you a story about it, and it might happen again. What if it does how does the small investor protect himself? I'll make it real simple for you. You buy quality assets, easy to manage. I do single family houses for those of you that know me. And if you don't get to know me, and I'll tell you how in a minute, quality single family houses with good fixed 30 year or more long term debt. That good debt, and let me tell you a story about that will save you and protect your financial future and put you ahead of the crowd in this next go around. Okay? What if you bought $100,000, nice quality single family house. Let's just say the payment on it was $1,000 a month on your fixed 30 year low interest loan and the rent was $1,000 a month. So you're getting out a thousand and you're taking in 1,000. Okay? Now that's 20, 21, 22. Seven, eight years goes by and they do what I'm talking about. They inflate the dollar, inflation takes over. And now that $100,000 house is worth $300,000. Okay? And you think, well, did I really make any money? Well, maybe everything else went up too, like with my father, maybe I didn't. But how about this? The rents went from 1000. They tripled to 3000. Okay, but your fixed 30 year low interest, beautiful mortgage stayed at 1000. So now you're getting $3000 in rent and only paying out a thousand. Did you not handle the inflation issue? It's the best way I can tell you to create an inflation hedge against what's coming in the future. I think it is coming. I could be wrong. My name is Gordon Moss. I'm the director of Quote Ventures Research Institute. I've got a website, www.realestateand noteinvesting.com realestate and invest. I've been making videos like this and speeches for 10 years and they're on my website. They're free. I've got a simple plan. Give you kind of an overall grounding of where I'm coming from. And I'm going to do more videos, but I encourage you to go to the website realestateandknoteinvesting.com Take a look around. And then we also did something. Let me just throw this in here. Last month we spent seven hours laying this whole thing out. That course is available on our site also. So take a look at us. This is Gordon Moss, director, Coyote Ventures Research Institute. I look forward to meeting you one day. Thank you.
