Jason Hartman

Nope. Not the value, just the mortgage being debased by inflation. Inflation. That's it. Right? Assume the value just kept up with inflation. And by the way, you know, if you think real estate appreciation is going to make you rich, that's not as true as most people think.

Nope. Not the value, just the mortgage being debased by inflation. Inflation. That's it. Right? Assume the value just kept up with inflation. And by the way, you know, if you think real estate appreciation is going to make you rich, that's not as true as most people think.

Because historically, real estate only outperforms the consumer price index, the major, you know, determinant of inflation, which is bullshit, by the way. I call it, you know, it's the CPI. It's a made-up number. Yeah, I call it the CP lie, okay? Right. And we can talk about how the government manipulates that if you want.

Because historically, real estate only outperforms the consumer price index, the major, you know, determinant of inflation, which is bullshit, by the way. I call it, you know, it's the CPI. It's a made-up number. Yeah, I call it the CP lie, okay? Right. And we can talk about how the government manipulates that if you want.

But, you know, the real inflation rates probably double the consumer price index or at least 50% more at any point. Okay. If we just go, by the way, my example is just based on the CPI, which is understated, okay? So what was I saying there? So their payment and their balance got debased by inflation.

But, you know, the real inflation rates probably double the consumer price index or at least 50% more at any point. Okay. If we just go, by the way, my example is just based on the CPI, which is understated, okay? So what was I saying there? So their payment and their balance got debased by inflation.

The appreciation does not really make you rich because it only outperforms inflation by a little bit historically over time.

The appreciation does not really make you rich because it only outperforms inflation by a little bit historically over time.

Well, about 6%.

Well, about 6%.

Yeah, that's a good conservative number, right? And there will be times where it does way better. But those are the stories everybody remembers. Most of the time, if you just average it out, it's going to be about 6% is what we use. You use 5, okay?

Yeah, that's a good conservative number, right? And there will be times where it does way better. But those are the stories everybody remembers. Most of the time, if you just average it out, it's going to be about 6% is what we use. You use 5, okay?

So 6% would go with, so that million dollars in portfolio value of your real estate is worth $1,060,000 after the first year, and then it compounds on that. But that beats inflation only by a little bit. It's not going to make you rich. What makes you rich is leveraging the real estate because then you have a multiplier effect. So now let's assume you break even, right?

So 6% would go with, so that million dollars in portfolio value of your real estate is worth $1,060,000 after the first year, and then it compounds on that. But that beats inflation only by a little bit. It's not going to make you rich. What makes you rich is leveraging the real estate because then you have a multiplier effect. So now let's assume you break even, right?

And if you put 10% down, the 6% is now 60%. Okay? Because of leverage, but also there's that inflation-induced debt destruction nobody's calculating behind the scenes. That's right. Back to the example to finish it. So you're just paying over 1% interest when you thought you're paying 7.37% in the example. But guess what?

And if you put 10% down, the 6% is now 60%. Okay? Because of leverage, but also there's that inflation-induced debt destruction nobody's calculating behind the scenes. That's right. Back to the example to finish it. So you're just paying over 1% interest when you thought you're paying 7.37% in the example. But guess what?

There's one, but wait, there's more, as they say on the late night infomercial. The mortgage interest is tax deductible. That's right. So the government is actually paying part of it for us. So after inflation debases the interest rate, and after tax benefits debase the interest rate, you're actually getting paid 1.16% to borrow the money.

There's one, but wait, there's more, as they say on the late night infomercial. The mortgage interest is tax deductible. That's right. So the government is actually paying part of it for us. So after inflation debases the interest rate, and after tax benefits debase the interest rate, you're actually getting paid 1.16% to borrow the money.

Plus, the people got to live in the house for free for three decades. Wow. That's why people who own real estate are so much richer than people who don't. Because they can just run so much faster in the financial race. You literally get paid to borrow money. It's incredible.

Plus, the people got to live in the house for free for three decades. Wow. That's why people who own real estate are so much richer than people who don't. Because they can just run so much faster in the financial race. You literally get paid to borrow money. It's incredible.