Is a mortgage a debt or an asset?

Is a mortgage a debt or an asset?

A mortgage is a multi-dimensional asset! 

Here are the Three Major Dimensions of the Real Estate Asset:

1. Shortage of the asset: Last time we checked they are not making any more of planet Earth. What we have is all there is. No new cards are going to be added to the deck until we begin colonizing the moon or Mars. Every corner of our globe has been mapped and catalogued. Keep that thought in mind while you shift gears slightly to ponder the 2.5 billion new people joining the world economy over the next decade, courtesy of China and India. What do we have? Limited asset supply. Huge demand on the way. Contrast this to the conveyor belt of companies that arrive on the stock market scene with a splash, sell a few stocks, then fade into oblivion. Anything that can vanish overnight (Enron), taking people’s pension and savings with it should never be called an asset in the first place.

2. Your mortgage is a major asset: Many people have trouble wrapping their mind around this idea. The mortgage you hold can never be duplicated due to the ravaging effects of inflation. Every single owner of that property that comes after you will not be able to get as good of a deal because his future dollar will be worth less than you present day dollar. He will have to pay more for the right to take out a loan. Debt is historically cheap right now. Stock up while you can. In five or ten years you will wish you had.


3. Cash flow in the rental market: We just discussed how you have locked in the purchase price of your income property with your mortgage. Now you turn around and rent that property to a tenant, who will pay off your mortgage through monthly rents. What else happens over time? Rents go up but your price to buy in remains the same. The bank puts up the money to buy the asset. Your tenant pays off the asset. You own it in the end. Beautiful.

Real estate has many more dimensions, such as the fact it is the MOST favored tax investment, but these three should be enough for you to see the power it has over any other form of investing. Don’t just take our word for it. Let us show you exactly how it works. Visit www.JasonHartman.com or call 714-820-4200 and ask to speak to one of our investment counselors. They will be glad to answer all your questions.

Submitted by: Team Member Evan

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