Inflation Impacts Real Estate Investing #realestateinvesting #inflation #shorts

Name: Inflation Impacts Real Estate Investing #realestateinvesting #inflation #shorts
Uploaded: 2024-02-09T23:00:03+00:00
Duration: 45 s
Channel: Tim Hubbard
Description: Tim Hubbard (creator/speaker) explains that inflation can help real-estate investors who hold fixed-rate mortgages because their nominal mortgage…

9 Feb 2024 · 1 min

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Tim Hubbard (creator/speaker) explains that inflation can help real-estate investors who hold fixed-rate mortgages because their nominal mortgage payments stay the same while prices rise, effectively reducing the real value of the debt. He contrasts this benefit with the harm inflation causes to people on fixed incomes or whose wages lag inflation, giving a numeric example: if inflation is 7% and income rises 5%, purchasing power falls by 2%.

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Remember, if we're borrowing for a fixed period of time and inflation is raising the price on everything but our mortgage payments staying the same, then we're benefiting from that. So inflation helps us as real estate investors. But then the other side of inflation, it's bad for the majority of people is the sad truth. Everyone on a fixed income gets squeezed with inflation. So if inflation went up 7% one year and your salary or someone's salary on a fixed income only went up 5%, then in real terms, they're actually making 2% less that following year. In other words, they have 2% less purchasing power. So that is the sad truth for a lot of the us. Really, for a lot of the world.