I think the problem many homeowners are facing is similar to mine. If you are a home owner, your wealth is largely tied up in your homes’ equity. Like a dog wining on a board nail, we know we are in an uncomfortable position, but not enough to get up and move.
We have 3 options which I will explain
1. We can stay put and change the terms of our mortgage into a fixed 25 year loan. The debt will become cheap to pay off if we enter hyper inflation and or high interest rates. This is a half solution because the equity value of our house will also drop, not making us any richer.
2. Sell our house and downsize. This is a great solution, but most people don’t want to downsize. Even if we believe the dollar bubble will burst, at some level we are all in a bit of denial that thing will get much worse and think the market cycle guarantees a rebound around the corner.
3. The third option is to sell our house and rent an equivalent house. This is a good suggestion, but again, like a dog on a nail board, most people aren’t uncomfortable enough to make the effort to pack up and move.
So what do we do? How can we have our cake and eat it too? Can this even be done? The answer is YES!!!
This is what I’m planning to do and I will update my post once it’s mission accomplished! I’m looking to sell my house to a real estate investor who want’s a rental income. Then I will be the one renting it back! I will even ask to have a 5 year lease to sweeten the pie. This shouldn’t be difficult to do because I have proven to be credit worthy with the bank, faithfully paying my mortgage. I’m also a responsible home owner. I think a real estate investor would just love a deal like this. I’m the perfect long term tennant and the investor won’t even need a property manager while I rent.
If gold and silver prices go up just modestly more than real-estate, I will be ahead of the game. If the dollar collapses and we enter hyper inflation and high interest rates, I will be buying back the house in 5 years for pennies on the dollar.
This is an unorthodox financial maneuver. I think it’s sound. My friends think I’m nuts and want to dissuade me. What do you think?