How Inflation Destroys Debt and Can Make You Wealthy

In this video I explore the topic of Inflation-induced debt destruction, which I first learned about from Jason Hartman. It’s a powerful and often hidden wealth creator for real estate investors.

[Hizenbird]

Your old neighbor down the street who has owned her house for 25 years is paying $400/month mortgage for the same house you are paying $4, 000/month on on your newly purchased house. That’s the crux of the concept. There I just saved you 7 minutes.
BTW one of the reasons the Govt rate is different is because they’ve changed what basket of grocery could be. Ought with 100 bucks. Years ago you could by a prime rib, potatoes, farm fresh eggs, etc. Today the prime rib has been substituted for a cheaper cut of meat, the eggs aren’t farm fresh, etc. So the price difference is slightly higher (lower inflation) than if they tried to buy the exact same items (real inflation would be seen)

[lorettawolfgang]

Very well said, your presentation is absolutely outstanding and easy to comprehend as well. There is a lot going on in the world now which will eventually affect the future either positively or negatively thereby causing on increase or decrease in the financial market and in order not to fall a victim, now is the time to start investing to secure a better future and make the best out of it while it's still worthwhile.
In the mean time, I'm currently building my fiance and increasing my portfolio as I keep track of my progress

[kofiofosu]

Such an important concept which is hardly discussed enough. The best videos often have tiny viewership. Don’t underestimate the power of your message.

[DrEMichaelJones]

Yeah, I bought my house during Covid, locked in a 2.875% mortgage, and it's now valued at 50% more than I paid.

[TheRemnant_Fellowship]

Watching this in 2023 is kinda surreal. Ngl 💯

[jacobthomas]

It goes like this.
When you buy a piece of real estate for example a rental property, at year 1 you are collecting rents to pay your mortgage at current rent price.
For the sake of keeping it simple let’s just say your mortgage is $1k a month than you’ll charge your tenant $1k a month..
Now
Let’s just say inflation year over year is 5% technically you’ll be able to charge your tenant on year 2 $1050 while your mortgage stays at the $1k payment.
Year 3 you’ll be charging $1107.75
Year 4 $1168
Year 5 $1232
And remember, your mortgage is still $1k
Basically inflation is costing the tenant more while your mortgage stays at the payment plane you locked in years prior.

[simplewines]

The amount you owe in 10 years still exists. Your vacancy risk still exists and fixed costs rise with ie, ac units, roofing costs etc, property taxes will rise too. When one buys, the most important thing to consider is does this property cash flow, what's my cap rate, and what is the actual real return. Not the nominal return. Real return factors inflation tax related to cash flow.

[raiuno]

Your mortgage payment is only locked in if you have a fixed rate mortgage. Otherwise the interest and monthly payment will vary based on the actual interest rate at the time.

[kristakertsmik]

Consider also that all those years home owner save on rent, what he never pay. Renting make sense only if you go on vacation.

[Malaka]

Question. I have over a million dollars in mortgage debt from my real estate portfolio. With current inflation, is it safe to say that $70, 000 a year is being destroyed off my loan?

[rms]

Hello thanks for the video. It is very interesting please keep us posted when you know more.

[황해-bp]

Im not sure at current situation where to hide from asset destruction. what your advice? and great lecture... qeustion from korea

[jmoney]

My groceries have gone up a bit more than 1.7 %. They keep changing the way they calculate the inflation rate. Instead of trying to maintain a stable currency they just moving the goal post to make the numbers look less bad. Plus they calculate things like social security increases based on inflation so if it’s only “1.7” they don’t have to increase entitlements as much.

[aaronbrent-fulps]

You need to look more into the CPI, the basket of goods, and how it has changed over time. The way that they have measured inflation has changed over the last 50 years.

[jaymoneytrader]

I bet this video has gotten more popular in the recent months

[jhunSebastian-tt]

Inflation is just a number it always going up adaptability and adjust on it ... Don't put a reason to worry about... Mindset..

[nitindeobhakta]

Great Video, the theory is Present Value = Future Value ( 1+r ) n well done, kind regards.

[abluke]

Great content! Please make more! Also, the glare makes it annoyingly hard to see the board.

[bruceshowalter]

Inflation helps those whose incomes increase at at least the same rate as the inflation, at the expense of those whose incomes are stagnant. Employees see this first hand, yet most are blind to its origin, the private western central banking system.

[mannydavidcastillo]

I understand everything you just said... I love me some corrections on the marketplace