Why Real Estate is a Great Inflation Hedge

If you’re ever feeling like your money doesn’t work as much as it was years ago, then you’re right. This unstoppable force is called inflation.

Fighting against inflation is like fighting an endless battle against something unknown and invisible. Inflation is part of the economy and will always be part of it. Everyone must be able to adapt and play along against this force of nature.

But don’t feel helpless yet. Inflation isn’t going to go away but you can do something to minimize the effect. The solution that I want to talk about is real estate.

Real estate much like some other commodities is a great inflation hedge and has been like for a long time. We can learn from the past and the present when it comes to using real estate to fight inflation.

To make it easier to understand, I will explain why real estate is a commodity for you to invest in.

Investing protects you from inflation

Real estate is an investment at its core. And investing your money is how you fight inflation. But only when you are investing in an asset that is expected to increase in value in the future. If you’re investing in an asset that its values are decreasing, then there’s no point to it.

This is why people are investing heavily in real estate. It’s not a secret that the price of land and houses is increasing every year. Real estate is among the most lucrative kinds of investment to ever exist.

Investing in real estate is very common and many people are racing to get ahead of everyone else.

So how can you profit from your investment in real estate? There are 2 types of returns selling back the land or house at a higher price or renting asset for steady income.

Remember that the value of the property should always go up. If you’re lucky, you don’t have to do anything, and it will keep increasing. In other cases, you might have to invest more in renovation and beautify.

Selling at the right time

When you think the price is right, you can sell or rent your property. If you decide to rent your property, the amount of money that the tenants have to pay will keep increasing following the inflation.

There is a chance that the value of the property goes down instead of up. This is why you should be ready to take proper measures to keep yourself in the green. Renovate or sell your property when you think the value is going down.

That said, if the price is still going up and you’re confident that it will stay like that for a long time, you should refrain from selling it.

Tangible assets are the key

Real estate, much like other investment, are tangible assets. The value of money can change unpredictably on top of inflation. That’s why keeping your wealth in money is not a solution.

The leading asset has been gold and it stayed like that for centuries. Investors will turn their money into gold during inflationary times and the price of gold will rise.

The value of money goes down, while the value of gold and other commodities follow inflation. Some commodities’ value might even increase when inflation keeps rising. It’s common when the commodity is still on demand even when the buying power decreases.

Real estate has gone through some bad times in the past, especially during 2008. In 2008 the housing market collapsed, and many homeowners were affected badly because of it. On the other hand, some real estate investors managed to make a profit during this time.

Real estate, when managed properly will always be on-demand. There will always be people who are interested in buying your property. Renting your house is a great way to get a steady income and adapting to inflation.

Being a landlord is awesome

To be a landlord you have to make sure that your property is habitable. You might want to spend more money on your property. Spend your money as if you’re the one staying in the house. But before that, you need to do your research on what kind of money you can expect from the rent.

This is to make sure that you don’t lose money from the renovation. The best scenario is ROI or returns on investment is bigger than the stocks and bonds.

Being a landlord isn’t as easy as some people make it out to be. Keeping your property safe and secure should be your number one priority. Next, you must do a background check on all your tenants.

Conclusion

Purchasing real estate is a great way to keep your wealth stable and get a steady income. But real estate isn’t magic, you need a good plan, management, and decision-making skill. Property values and rents tend to follow inflation, if you’re careful you could be worry-free of inflation in the future.