Using Real Estate as an Inflation Hedge //

It’s clear that the inflation we are facing is not in fact “transitory” as we had been promised.

The chickens have finally come home to roost – the extreme monetary inflation of the last few years has led to price inflation and consumers are feeling it.

Grocery bills are going up, energy prices have skyrocketed, and real wages aren’t keeping up.

And as a result, the stock market has grown more volatile, especially amidst the uncertainty of central bank interest rate hikes and an economic slowdown. But with all these macroeconomic forces at play, your main concern is simply protecting yourself from eroding buying power.

Over time, real estate has proven to be effective when combatting inflation – through rental rate increases, property value appreciation, and even the use of debt to achieve a lower real interest rate.

In this video, we discuss using real estate as an inflation hedge and different strategies you can take to preserve your wealth.

It’s not the time to simply throw your hands up and concede to a 6-10% reduction in your salary and savings accounts. Instead, it’s important to think critically about asset diversification and develop a strategy for how you’re allocating your investment dollars.

⌛ Timestamps ⌛
0:00 Introduction
1:15 Capitalizing on Short Term Leases
1:45 Rental Escalators
2:20 Triple Net (NNN) Commercial Leases
2:55 Holding Debt
3:54 Real Estate Value Appreciation
4:40 How to Profit During Inflationary Periods

Our mission at Marsh & Partners is to help educate and guide business owners, investors, and developers through the complex world of real estate decision-making.

We’re bullish on the freedom real estate provides, as both a passive investment and long-term wealth creation vehicle.

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LEARN ABOUT: Investing During Inflation

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As the global economy continues to experience fluctuations, many investors are looking for ways to protect their assets from the impact of inflation. One popular option that has been gaining traction in recent years is using real estate as an inflation hedge. Real estate has long been considered a stable and reliable investment, and its potential to provide protection against inflation has made it an attractive option for many investors.

Inflation occurs when the general level of prices for goods and services rises, leading to a decrease in the purchasing power of a currency. This can have a detrimental effect on investment portfolios, as the value of assets can decrease in real terms. Real estate, however, has historically been able to provide a level of protection against inflation due to its intrinsic value and ability to generate income.

One of the primary ways in which real estate can act as an inflation hedge is through its potential for appreciation. As the cost of goods and services increases, so too does the value of real estate. This means that real estate investments have the potential to increase in value over time, providing a level of protection against the eroding effect of inflation on other assets.

Additionally, real estate has the potential to generate income in the form of rental payments. This can provide a steady stream of cash flow that is able to keep pace with inflation, ensuring that investors are able to maintain the purchasing power of their assets. In times of high inflation, rental prices often increase, allowing real estate investors to benefit from higher returns on their investments.

Another way in which real estate can act as an inflation hedge is through its tangible nature. Unlike other forms of investment, such as stocks or bonds, real estate is a physical asset that holds intrinsic value. This means that, regardless of inflation, real estate will always have a tangible worth that can provide a level of security for investors.

Furthermore, real estate can provide diversification benefits to an investment portfolio. By including real estate as an asset class, investors are able to spread their risk across different types of investments, providing a level of protection against the impact of inflation on their overall portfolio.

It is important to note, however, that using real estate as an inflation hedge is not without its risks. Real estate investing requires significant capital and carries inherent risks such as market volatility, changes in interest rates, and potential property depreciation. Additionally, real estate investing requires ongoing management and maintenance, which can add to the overall cost of the investment.

Despite these risks, many investors view real estate as a reliable and effective way to protect their assets from the impact of inflation. By providing potential for appreciation, generating income, offering tangible value, and providing diversification benefits, real estate has the potential to serve as a valuable inflation hedge in an investment portfolio. As always, investors should carefully consider their individual investment goals and risk tolerance before making any investment decisions.