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| Finchek |
Inflationary trends make us feel like the rug’s being pulled away from right under our feet. And when treading such quicksand, it’s what you can use as a hedge that matters. In this case, real estate could actually be your saviour.
Care to explain?
1️⃣ For starters, with home prices going up over the years, loan-to-value for mortgage debt reduces, working as a discount of sorts. The property equity goes up while the fixed-rate loan remains intact.
2️⃣ Real estate investors who are earning rental income from their properties may actually ride the inflation wave. Higher home prices may spur higher rentals. If you can keep those rentals periodically escalating, then you’ve got more earning opportunities and a good hand to beat inflation.
3️⃣ Realty values usually stay steady or go upwards over the longer haul. And no point blaming the 2008 market crash. Those homes recovered to their earlier values in a few years itself. Hence, your overall investment appreciation will comfortably exceed inflation in the case of real estate.
💡 Your mother-in-law will tell you that both commercial and residential property will always be in demand in spite of temporary blips. While inflation is like the sound of inevitability (unless you’ve already made a huge pile), real estate does soften the blow to an extent.
There, that's settled once and for all, then.