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Arizona Investment Property – It Can Protect Your Purchasing Power
Arizona real estate investing has been the source of a lot of news in recent years. First, because of its rapid appreciation until the credit crisis, and then after its equally dramatic depreciation from its 2006 peak. The most amazing thing about Rise and Fall is the number of people who never saw it. And even more amazing is the amount of “wealth” that was destroyed in such a short period of time, ultimately resulting in so many people having more loans than houses.
However, for those who have positioned themselves correctly, the next decade offers an unprecedented opportunity to create wealth using real estate! This is not an exaggeration. Never before in our nation’s history has there been a more perfect time to take a hard look at real estate investing, especially Arizona real estate investing. I know that’s a bold statement, but I’m totally confident in doing it. This confidence comes from knowing that governments around the world are acting irresponsibly and printing money like never before in history. In addition, the government has taken on debt burdens unprecedented in history! These two factors only form a financial house of cards that is not sustainable.
Do the above factors affect you? Yes… Maybe even more than you know.
Let me explain…You’ve worked hard or smart and put some money aside for retirement. I bet your retirement account is denominated in US dollars. Let’s say you’ve managed to put away $100,000. How would the government’s ability to print money affect the purchasing power of your cash? Printing money causes the purchasing power of your cash to decrease.
For example, what new car can you buy today for less than $3,000? Can you buy a new car for under $3,000? Did you know that in 1970 $2,800.00 bought a Camaro with a brand new V8? Today, a new Camaro with a V8 is $31,000! How is it possible? Today’s assembly lines are much more efficient and automated because less metal goes into today’s vehicles. The answer is simple: inflation.
The creation of paper dollars causes inflation, which devalues existing cash. Your cash! How much can this saved 100,000 buy in the future? It depends a lot on what you do with it today.
Another way governments take from you is through taxation. How high will the tax rates be in the future with our nation’s ever-increasing debt? Larger debt requires larger payments. Since the government does not produce or sell anything, this money comes from you in the form of taxes. Over the past 4 decades, the US has gone from being the world’s largest creditor nation to the largest debtor nation in history! Now is the time to protect yourself from future taxation.
Investing in real estate can protect you from both inflation and taxation. In addition, cash flow is an additional benefit. Places like Arizona that have been hit so hard by the change in market direction are getting investors and property hunters to invest at incredibly low prices.
Let’s examine the impact of Arizona Investment Property cash flow on inflation, taxes and cash flow:
Inflation: The price of “real things” increases in an inflationary environment. For example, look at the price of gold, silver, copper, sugar and cocoa. Real estate is a real thing. It is tangible and always has intrinsic value because people have to live somewhere. Crops have to be grown somewhere. Real estate generally keeps pace with inflation.
As the credit crisis unfolds, you’ll see (and we’re seeing) prices stabilize and then continue to rise gradually or perhaps drastically, depending on how much inflation the Fed and Treasury put into the system. That doesn’t mean property prices won’t fall further; however, property should not be purchased for the sole purpose of speculating on price. Real estate investment produces cash flow when purchased properly. Those with the foresight to realize that investment real estate in Arizona, for example, has taken a huge hit, offering the opportunity to buy at incredibly low prices… These price levels offer more appreciation opportunities for those who decide to buy now and own real estate. property for rent. With many properties selling for less than $100,000, the average person has the opportunity to purchase their first real estate investment in Arizona, or for foreigners like our Canadian neighbors to the north, to purchase an Arizona vacation property!
Taxation: Buying and owning investment property can provide great tax benefits. Depending on how you own or own the property, you may be able to write off the costs and depreciation against your other income from your job! Seriously, ask your accountant.
Cash Flow: This is truly a hidden gem of benefits. Let’s say you’ve invested your $100,000 in real estate in Arizona. And that property is paying you $1,000 a month in rental income or cash flow. You have now generated a 12% annual return on your invested money! You also have the potential to rate! And you earn that income in a tax-advantaged way that means you earn more of your earned income! You also own real estate, which gives you the opportunity to sell or own that real estate depending on market conditions.
When was the last time you made 12% of your cash in a mutual fund or bond?
So why Arizona real estate investing specifically? These arguments seem to apply to most real estate investments, right? Perhaps, when investing, one should look for the greatest possible opportunity for a winning investment. And among the states hardest hit by market woes, Arizona offers statistical factors not found in places like Florida or Nevada, which also suffered the downturn.
That at this point, Arizona has not had a year of negative population growth in the last 40 years! Even during the recession, Arizona’s population has grown, which of course requires or demands housing.
Arizona also offers new business growth:
“The region’s top universities have provided a skilled and educated workforce that has positioned Phoenix as a competitive force in business,” says Bill Humphrey, senior vice president and managing director of XONEX Relocation, a global employee relocation services provider.
“Phoenix is projected to see more growth, especially as the technology, green energy and healthcare/life sciences industries take root in the area.” Houses that sold for $500,000 before the recession are now in the $300,000 range, Humphrey said.
That means more jobs, which will draw even more attention to Arizona in this economy as more and more people struggle to find work. These people need housing.
Plus, as the saying goes, “retail follows rooftops,” meaning that business thrives where the population supports it. This influx of people will ensure a faster recovery and a strong economy for Arizona.
When you take the facts mentioned above along with the fact that Arizona investment property prices are at their lowest levels in over a decade, it is easy to see that those investing in Arizona real estate today will benefit from increased cash flow and more stable rental rates. rising property prices due to both demand and inflation, and a stronger local economy in which to operate.
All this gives the investor an advantage over other areas when considering real estate investment.
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