Buying Cash Flow Assets In Today’s Dollars

Inflation has taken hold this year and the cost of living is rising every day. Bills, petrol, groceries and mortgage repayments are all going up.

A hallmark of inflation is that every day, your cash in the bank is worth less than it was the day before.

So, as b Invested founder Nathan Birch says, it’s important to turn today’s cash into something that will actually create future value. The best hedge against inflation is an asset that produces an income that will actually be tied to inflation and benefit from it.

What can you buy for $100k?

A lot of people think you need to spend $1 million to buy a property these days, but it is still possible to pick up properties for cheaper than they were 10 or 20 years ago.

Think of what else you can buy for $100k these days. You could use it to pay stamp duty on a $2 million property; you could buy a medium priced car… $100k doesn’t go as far as it used to. Around 20 years ago it would have got you a hell of a lot more than it will today. However, there are still properties that can be bought for that amount. This year, Nathan has bought at least 15 motels, where each room is worth less than $100k; he has bought individual properties for his clients for less than $100k that rent for $250 each a week. Nathan has found that $100k will buy you a property in any state in the country.

A cash stash of $100k would get you a 20% deposit on a $500k property or 10% on a $1 million property, but there are deals where you can buy a whole property outright for that.

If you had $20k saved up, that’s a 20% deposit on a $100k property.

A lot of people think you need $200k plus for a deposit just to get into the market, but you can get in for way less than that and begin to build wealth.

What happens to the cash you invest?

Your $100k might have a relative value of $90k next year if you leave it in the bank and inflation hits 10%. But if you put it into a property, not only is it instantly earning you an income, but it is unlikely to ever be worth less than what you paid for it.

A property that cheap is likely to double in value much faster than an expensive property, especially with continuing supply shortages, building companies falling over and soaring costs of materials.

So that $100k is likely to turn into $200k within the next 5-10 years, while bringing in thousands in income every year. The more of these assets you have, the more money you’re able to double and the more income you make. And rents will continue rising over time as long as there is inflation. Eventually, the debt you have on these assets will be irrelevant.


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