View Full Version : "Land", aka real eastate, a hedge against inflation?
November 08, 2010, 23:40
With all the inflation talk, I have been thinking for months now about buying real estate. I understand the arguments against it, I think.
That said, I live in a college town, right by the colleges. There is a neighborhood near me that has been crushed by foreclosures. I have missed a couple of opportunities, but I am set to make an offer tomorrow on a 3/1 home near the colleges for 20K. After necessary improvements it will run about 25K. I can afford this.
Should rent for 600 / month. Leases last 6 months on average. The rate can be negotiated every six months which will allow for inflation. AFAIK colleges were attended by students in the GD of the 30s. The home will have theoretically paid for itself in less than five years. All depressions end, eventually I will have a desirable rental property paid off to show for it. To my mind this is a safe hedge against inflation. Now this is a circumstance due to the location, but such is life and I see myself in a good position.
Now what will happen with the old family farmland in the boonies, I don't know.
November 09, 2010, 00:25
November 09, 2010, 01:56
Remember the Great Depression? The bank gets the ranch remember? If the bankster don't then the taxman will. You don't think they'll allow the ACTUAL plummeting value of the property to reflect on the tax assessment?
November 09, 2010, 01:58
People are still trying to make money off the collapse, soon they'll just try to retain their wealth, later they'll be happy to have food & shelter.
November 09, 2010, 06:18
If you can afford the freight buy dirt, if not buy Silver Eagles. My property has escalated
200% in 12 years. The tax valuation has only escalated 50%. Most places will allow an exemption for 'non-use' up to 20 acres, I only pay taxes on 7 1/2 acres and the house.
I'm not sure whether I'd prefer a State Income Tax or the Property Tax. It's a tough
call, but it does tend to seperate the elderly and estates from their property.
We're seeing a reverse trend here in SE Texas where the 20-30 acre tracts are bringing
higher per acre prices that are closer to the 5 acre tracts.
November 09, 2010, 06:49
The direction we are headed, I would not suggest investing in any visible wealth.
What can be easily seen, can be taxed or stolen by an ever more desperate govt and public.
November 09, 2010, 12:31
I'm not sure how the bank is going to take a house I buy with cash.
The taxes are an issue, but this is a cheap property and, knock on wood, so far the local tax folks have been good about lowering the value to the most recent purchase or close to it, IF you press them.
The visible wealth argument is good, but what are they going to do, audit the entire neighborhood / city/ country? Seize those assets, the hundreds of thousands of homes? For what? That costs them money, and will likely net them very little.
November 09, 2010, 15:50
Sounds like a fine plan to me old man. Hyper inflation will destroy wealth held in dollars. Your local officials cannot raise taxes to the point of throwing people off their property without risking their necks. The feds are a whole nuther problem.
November 09, 2010, 22:17
99 year lease.
And I don't give a crap who pays the taxes. Or if they're paid.
November 09, 2010, 22:59
Worth the risk IMHO.
November 09, 2010, 23:14
If you are willing to die for it - yep - I agree!
November 09, 2010, 23:23
Did you make the offer?
There will probably be fewer college students soon, but there will be families that have lost their homes because they couldn't pay the mortgage looking for a place to rent. I don't know if you can count on keeping the rent at the same level. On the other hand you may be able to demand even more. I don't have it in me to be a landlord to college kids, but until mommy and daddy stop sending the rent money you should be good.
Land, they ain't making anymore of it.
*and you don't have to only worry about the bank and the taxman if TSHTF, the zombies dude, don't forget the zombies!
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