Real Estate Investment Guru Jason Hartman Explains Four Reasons Why the Debt Ceiling Chaos Points to Real Estate Investing Profits
Irvine, CA (PRWEB) August 22, 2011
Creator of the Complete Solution for Real Estate Investors™, Jason Hartman’s recent examination of the current state of the American economy reveals the stock market’s long run as the de facto Main Street investment is coming to an end. Tumultuous events of the past few weeks, characterized by a dubious debt ceiling agreement in Washington, the first time ever national S&P credit rating downgrade, and a steeply declining stock market are strong warnings that investors must begin to make plans to relocate assets from Wall Street to the more predictable and profitable environment of real estate.
According to Hartman, the 15% decline in stock market valuation in the days leading up to and immediately after the so-called Debt Control Agreement of 2011 are merely confirming indicators of a long-term trend illuminating the inherent weakness of the modern day stock exchange.
1. A Disturbing Trend
Stock investing has always been a tenuous undertaking but this week’s price bounces leave battered investors staring with glazed eyes at charts that appear to be following the life cycle of a ping pong ball. Severe reactions to political events, natural disasters and economic turmoil are a trading pattern that shows no sign of letting up, and even seems to be increasing in instability, all of which leaves the average investor’s assets at severe risk of disappearing in a heartbeat.
“For years, even casual financial observers have wondered what’s wrong with the stock market,” said Hartman. “It’s all over the place and that should scare investors with any skin in the game related to long term financial goals like retirement.”
In a world where stock investments can no longer be trusted, millions have turned to gold, which continues to rocket up in price. But is gold the best you can do when it comes to your investment dollar? Hartman believes the answer to that question is a strong negative. While precious metals are a safer haven than stocks and bonds, they still suffer in comparison to real estate strategies like income property investing for the simple reason that you can’t borrow money to buy it and you can’t rent it out.
2. Profiting from Inflation
At the heart of the stock market’s trouble is the fact that inflation has been a constant companion of the U.S. economy ever since President Nixon took the nation off the gold standard in the early 1970s. The eternally rising specter of inflation coincides perfectly with a decline in the value of our currency, as well as any assets denominated in American dollars, of which stocks are one the most obvious.
The recent debt ceiling debacle proved once more that Washington politicians do not have the spine to implement the type of austere budget measures to rein inflation in. Thus, it is perhaps only slightly less than an absolute certainty that inflation will continue into the foreseeable future.
3. Why Real Estate?
The most obvious reason to choose real estate as an investment is that, when executed correctly via the means of a long-term, fixed-rate mortgage tied to a piece of property that can be rented out, it actually generates larger, more efficient profits in the face of rising inflation. Space constraints preclude an in-depth discussion on the particulars of the strategy, but consider the simple fact that inflation devalues dollars, which means that a dollar today buys more than a dollar will in 30 years.
Flip that around and take the example of an investor who borrows $ 100,000 to buy a rental property. While the sum total of the debt remains the same over time, the nominal value decreases annually along with the prevailing inflation rate. The bottom line is that mortgage debt to your lender decreases in real terms of what you can buy at the rate of about 5% per year. After holding a mortgage for one year, that $ 100,000 number has dwindled to $ 95,000 in value even if you did nothing but make interest payments.
More critical to an understanding of real estate’s superiority is the fact that a tenant essentially makes the monthly mortgage payments for the landlord when he pays rent. At the end of the mortgage term, the landlord owns an asset that has probably doubled in value three or four times, but also has been paid for by the tenant. Per Hartman, the stock market simply does not afford an investor these possibilities. It never has and never will.
4. More Woe to Come
Keep in mind that the debt ceiling agreement was a band-aid not a solution. The federal government retains the ability to run up more debt and continue the devaluation of our national currency. It’s not the first and it won’t be the last in a long line of events that continue to illustrate the folly of funneling your retirement through the dividend-less, speculative frenzy that is the stock market. As history proves time and again, income property is a more trustworthy and ultimately more profitable investment.
About Jason Hartman
One of America’s foremost experts on long-term wealth creation, Jason Hartman is the founder and CEO of Platinum Properties Investor Network, The Hartman Media Company, Open Door Auctions and The Jason Hartman Foundation. Starting with very little, Jason Hartman, at the age of 19, embarked on a part-time career in real estate while in college. Through creativity, persistence and hard work, he soon joined the ranks of the top one-percent of Realtors in the U.S. and earned a number of prestigious industry awards.
By 1997, Hartman realized his entrepreneurial dream and purchased an Irvine, CA real estate brokerage firm. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Hartman’s highly sought after educational events, speaking engagements, and his acclaimed “Creating Wealth” podcast inspire and empower hundreds of thousands of people in 26 countries worldwide.
Hartman’s Platinum Properties Investor Network is an innovative firm designed to help people achieve the American dream of financial freedom by purchasing income property in prudent markets nationwide. His Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to handle all areas of their income property investment needs. For information, call 714-820-4200 or visit Jason Hartman online.
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