If inflation were 10% (financing, cash, buy, value)

[toad pad green]

If I buy a home with 100% financing.
Rent the house and pay all of the expenses with the rent money.

Then,
If the value dropped 10%
And if inflation was 10%

Would it be a:
1. Good investment ? 20% gain
2. Neutral investment? 0% gain
3. Terrible investment? 20% loss

[AndrewSoss]

Originally Posted by toad pad green

If I buy a home with 100% financing.
Rent the house and pay all of the expenses with the rent money.

Then,
If the value dropped 10%
And if inflation was 10%

Would it be a:
1. Good investment ? 20% gain
2. Neutral investment? 0% gain
3. Terrible investment? 20% loss

Not enough info. What does inflation cover? Obviously, it didn't apply to your home value. Did rent and expenses both go up by 10%? If so, then at this point all you have is a 10% loss.

Some would say that you have no loss, or an undefined loss, since you technically didn't have an investment to begin with with 0% down.

[toad pad green]

Originally Posted by AndrewSoss

Obviously, Did rent and expenses both go up by 10%?

No, I assume rent would go up 10% but my biggest expense the mortgage would not.

I guess I am asking should I get into a break even real state deal if I am expecting 10% inflation and a 10% decline in value over the next year. or would I be wise to wait until after my predicted 10% decline?

[chet everett]

Depends on where you live while you are "waiting for the decline" and what else happens with your money and life. If your cash (or investments) move counter to the direction of the decline it might work out, so long as you still have your job and don't suffer a pay reduction.

Lots of things to weigh, which is why in "olden times" (like before the 90's) lots of people had no problem renting for YEARS before they decided things in their life were stable enough to plunge into home ownership.

Who knows how far the pendulum will swing?