Utilizing Real Estate Investments to Outpace Inflation

by | Feb 5, 2024 | Invest During Inflation | 5 comments

Utilizing Real Estate Investments to Outpace Inflation




Inflation – it’s a word that’s been flying around a lot lately, and has a lot of people on edge on how they can beat it. Should I invest? What should I invest in during inflation? With the US inflation rate at 6.8%, now is a great time to look at how you can invest with debt, and use it to your advantage. During such a high surge, real estate is one of the best investments during inflation. Home prices continue to appreciate as inflation rates rise, meaning your investment continues to grow in value, while money in a savings account loses value.

Introduction: (00:00)
Depreciation of Savings During Inflation (01:45)
Leveraging Debt During Inflation (02:54)
The Math Behind Real Estate Investments (03:18)
Ready to Fight Inflation? Get In Touch (07:50)

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Using Real Estate Investments to Beat Inflation

Inflation is a term that strikes fear in the hearts of many investors. Simply put, inflation is the decrease in the purchasing power of money, which causes the price of goods and services to rise. This can make it difficult to grow and preserve the value of your assets over time. However, there are certain investments that can help protect against the erosive effects of inflation, and real estate is one of them.

Real estate has long been considered a hedge against inflation, and for good reason. Unlike other types of investments, real estate has the potential to appreciate in value over time, helping to keep pace with the rising costs of goods and services. In addition, real estate investments provide a regular stream of income through rental payments, which can also help offset the impact of inflation.

One of the key benefits of real estate investments is the ability to leverage them with debt. When inflation occurs, the value of the property and the rental income it generates tend to rise, while the fixed interest payments on the mortgage remain the same. This results in a situation where the investor is effectively paying off the loan with less valuable dollars, increasing the real return on investment.

Furthermore, real estate is a tangible asset that provides a sense of security and stability during times of economic uncertainty. Even in times of high inflation, people will always need a place to live, making real estate a relatively stable investment. This can provide investors with peace of mind, knowing that their portfolios are less susceptible to the fluctuations of the stock market.

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It’s important to note that not all real estate investments are created equal, and investors should carefully consider the type of property they invest in. Some properties, such as residential real estate in highly desirable areas, tend to be more resilient to inflation than others. Additionally, factors such as location, rental demand, and property management play a crucial role in determining the success of a real estate investment.

In conclusion, real estate investments can serve as a powerful tool for beating inflation. By providing a potential for appreciation, a stream of rental income, and the ability to leverage debt, real estate can help investors preserve and grow their wealth in the face of rising prices. As with any investment, it’s important to conduct thorough research and seek the advice of a financial professional before making any decisions. Nonetheless, real estate investments offer a compelling opportunity for investors looking to shield their portfolios from the erosive effects of inflation.

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5 Comments

  1. @MattTheMortgageGuy

    Inflation working for you or against you? What do you think about inflation?

  2. @mollyc8177

    This is great perspective

  3. @XpertHomebuyer

    Great video! My thought is that the debt is also an asset when rates are this low. Assuming you carry 3% 30yr fixed rate mortgage on a property, with CPI at 6.8%, the difference is a wealth transfer to the holder of fixed rate debt. Add rental income/cash flow/debt pay down and your internal rate of return should keep up with inflation even if we don't see the same levels of home price appreciation.

  4. @johnyco6454

    Great info Matt! Do we have to factor in the interest you're paying on the home loan as well or not needed?

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