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Monday, August 9, 2010

"Buy a (Fractional Interest in a) House to Protect Yourself from Inflation"

In his Bargaineering.com site's 'Personal Finance' article, "How to Protect Yourself from Inflation", Jim Wong strongly recommends buying a house! His arguement is that as inflation erodes the value of your dollars, you would use future dollars of less value to pay off a mortgage established in today's dollars.

But what if you already own a home? The cost of selling your home and buying a new one would exceed the savings from inflation. Buy a rental? Then you have the risks and responsibilities of becoming a landlord with the attendant 'terrible 'T's': tenants, teenagers, trash, taxes & toilets (The real list is much, much longer. I really don't know why anyone would voluntarily become a landlord...)

But what if you could buy a fractional interest in residential real estate and the majority owner that occupies the home takes care of ALL of the ownership responsibilities and expenses for you? It would even make sense to consider borrowing the money (like a mortgage) in order to 'buy a house' today using tomorrow's less valuable dollars!

And, as a bonus, if your fractional purchase is in an appreciating MSA, you would enjoy your share of the appreciation of the property.

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