October 10, 2008 Mara Bushari

Though the full effect of the the U.S. Government’s new $700 billion bail-out bill are yet to be seen in the Boston real estate market, we can pretty much be sure of one thing…inflation. As I see it, the government can either raise taxes (unlikely in this election year), or simply print more greenbacks to fund the bail-out. Pumping new money into the economy will almost inevitably lead to high inflation levels. Retirement accounts and investment portfolios will yield less than the sky-high inflation, and then we will be in for some big trouble.

There is a way to hedge yourself against inflation; buy a property and rent it. Now I’m not saying buy a property you can’t afford. There are plenty of deals to be had, even foreclosures. Put at least 20 percent down and take out a 15 or 30 year-fixed loan. Your mortgage will be fixed but the rent certainly won’t. Rental prices will rise due to inflation, but more importantly, due to a higher demand. As more people face bad credit scores and higher down payment requirements for loans, less buyers will actually be able to purchase. Everyone needs a place to live, so demand for rentals will increase. This is not that “buy, hold and pray” or “flip” strategy that led so many people into financial ruin. This is the “real estate as a way to financial freedom” plan.

Mara Bushari

Mara is a creative thinker and strategic marketer. She graduated Summa Cum Laude from Boston University’s College of Communication and worked in international finance before joining The Bushari Team. Mara strives to exceed expectations. As Client Relations Specialist, she is a key facilitator in all team transactions, making the buying or selling process as stress-free as possible for the client. Mara learned many of her extraordinary organizational and problem-solving skills during her service in the Israeli Defense Forces, where she earned the “President’s Award” for exceptional service. In the military, Mara solidified her abilities to achieve top results in high pressure and time sensitive situations. In her spare time, Mara enjoys skiing, photography and writing.

Comments (2)

  1. Rob

    As I see it, the government can either raise taxes (unlikely in this election year), or simply print more greenbacks to fund the bail-out. Pumping new money into the economy will almost inevitably lead to high inflation levels. Retirement accounts and investment portfolios will yield less than the sky-high inflation, and then we will be in for some big trouble.

  2. I agree!

    …and to keep inflation under control, the government will have to increase interest rate. I don’t think that these days of under 7% interest rate will remain for long…

    Real estate proved itself as a shelter against inflation.

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